‘This will easily become the most dangerous antitrust case in history,’ says one cryptocurrency expert
Facebook‘s plan to launch to launch its own currency has once again raised significant privacy concerns, with some critics claiming it could be the most “invasive and dangerous” form of surveillance the technology giant has yet conceived.
The unveiling of the Libra cryptocurrency comes just over a year after the Cambridge Analytica scandal, which saw the private data of millions of Facebook users manipulated for the purpose of political profiling. Since then, the social network has been plagued by a series of privacy scandals that have continuously called into question the way Facebook handles its users data.
Libra is positioning itself as a new global currency that could take on mainstream currencies like the US dollar, as well as traditional financial institutions. But Facebook’s decision to branch out into this area could potentially open its users up to risks far beyond the privacy scandals of the past.
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“If you’re concerned with Facebook knowing too much or having too much access to your private data, Libra will give Facebook even more direct access to your financial information,” said Phil Chen, a cryptocurrency expert who pioneered HTC’s first blockchain smartphone.
“It’s not just access to the information of your transactions, it’s direct access to your wealth and capital. If the top-line question about Facebook and antitrust is about whether to break it up and spin off the likes of WhatsApp and Instagram – well Libra is the most invasive and dangerous form of surveillance they have designed thus far. This will easily become the most dangerous antitrust case in history.”
Alongside Facebook are 27 other major companies involved in the Libra project. It spans financial firms like PayPal, Mastercard and Visa, to tech companies like Uber and Spotify.
Advocates say it will help the 1.7 billion people around the world who don’t have access to basic financial services, but for George McDonaugh, co-founder of blockchain investment firm KR1, the new currency is all about collecting more valuable information from people.
“Let’s cut to the chase, Facebook – and Libra’s supporting corporations – are doing this for one reason and that’s data. It will be spun as banking the unbanked, revolutionising payments and connecting the world, but don’t be fooled. This move into the murky world of cryptocurrency is about tapping new wells of data, the modern day oil,” he said.
“No doubt there’ll be plenty of assertions over privacy protection and ‘decentralised’ hand waving, but this is all about Facebook enriching their reservoirs of data, knowing who you are, what you’re buying, who you’re paying and how much you have.”
Facebook did not immediately respond to a request for comment about how its users’ data will be collected and used, though the Libra Association claims it will be built on a “secure, scalable, and reliable blockchain”.
Libra describes itself as a ‘simple global currency and financial infrastructure that can empower billions of people’ (Libra/ iStock/ The Independent)
The handling of financial data will inevitably come with increased scrutiny, meaning Libra could force Facebook to tighten up its data security across all its apps and service.
At least this is the hope of Aurelie L’Hostis, a senior analyst at market research firm Forrester.
“The Cambridge Analytica scandal has exposed the social network’s lapses of data privacy and security and the news of Libra comes at a time when Facebook is under intense pressure from regulators, shareholders and users to address privacy shortcomings,” she said.
“Now that Facebook is reaching out to financial firms and payments service providers to join the Libra consortium to help them launch their cryptocurrency-based payments system, we can expect regulators and governments to raise questions regarding Facebook’s financial data collection and management process, and whether that system meets all legal and regulatory requirements.”