By Jeff Horwitz and Deepa Seetharaman
In the 18 months since Mark Zuckerberg last testified on Capitol
Hill, Facebook Inc. has focused heavily on three big initiatives:
its cryptocurrency plans, a push to private messaging, and fixing
the abuses of its platform.
As he returns to Washington for another congressional grilling
this week, he and his social-media giant find themselves embattled
on all three fronts.
Mr. Zuckerberg is set to appear before the House Financial
Services Committee Wednesday, the sole witness in a hearing focused
on Facebook's libra cryptocurrency plans, which have lost key
financial industry partners and been criticized by regulators since
it was announced in June. Lawmakers also are expected to cover
concerns about potential discrimination in how the company handles
housing and credit-related advertising.
Mr. Zuckerberg's testimony follows a denunciation by British,
Australian and American officials, including U.S. Attorney General
William Barr, of Facebook's plans to extend encrypted messaging
across its platforms. That encryption push was part of a broader
shift unveiled in March toward private messaging after heavy
criticism about privacy violations, misinformation and other abuses
on its core, public social platform.
Facebook executives, including Mr. Zuckerberg in his April 2018
testimony, have vowed to fix those problems on the platform, but
the company remains mired in controversy over issues like how to
moderate political speech. And the company faces calls from
numerous politicians, including Sen. Elizabeth Warren and other
Democratic presidential candidates, to break up Facebook and other
big tech companies.
On Tuesday, New York Attorney General Letitia James said the
number of state attorneys general investigating Facebook on
antitrust grounds has grown to 47. A group of state attorneys
general and federal investigators met Monday in New York with
public policy and antitrust experts to explore the legal grounds on
which they could build an antitrust case against the social-media
giant, according to people familiar with the matter.
All those controversies are rooted in persistent discomfort
among users, regulators and politicians about Facebook's ability
and willingness to oversee activity by its billions of members on
its vast platforms. This discomfort is made more acute as the
country heads into another U.S. presidential election year after
widespread abuse on Facebook during the 2016 campaign.
"They serve as a potent target to both parties who want to beat
up on them," said Roslyn Layton, a visiting scholar at the
conservative American Enterprise Institute who studies the
regulation of tech companies. She argued that the company's plans
have been uniquely singled out among the tech giants for
scrutiny.
Mr. Zuckerberg won generally positive reviews for his last
appearance before Congress, looking poised and avoiding any major
gaffes but also deferring answers on many of the most difficult
questions. He has stepped up his outreach to Washington, with a
recent trip to the White House and Capitol Hill.
On Thursday, the 35-year-old billionaire fueled new controversy
with a speech asserting Facebook's commitment to free expression in
the face of criticism over its decision to exempt ads by political
candidates from fact-checking. His sweeping speech at Georgetown
University framed social media as the "Fifth Estate," a check on
both government and media that could foment discussion and mobilize
people in keeping with the legacy of the Rev. Martin Luther King
Jr.
"Most progress in our lives comes from regular people having
more of a voice," Mr. Zuckerberg said, pledging to hold the line
against efforts to expand restrictions on speech. "Democracy
depends on the idea that we hold each others' right to express
ourselves and be heard above our own desire to always get the
outcomes we want. You can't impose tolerance top-down."
The remarks prompted criticism, including from liberal
organizations and civil-rights advocates including Dr. King's
daughter, who took them as an abdication of Facebook's
responsibility to police its platform. She will be meeting with
Facebook officials later this week.
"Frankly, I think a lot of folks are just flummoxed about what
the path forward is and if there's any point to engagement at all,"
said Vanita Gupta, president and CEO of the Leadership Conference
on Civil and Human Rights, of working with Facebook. Before recent
disagreements, Ms. Gupta said her organization had been talking
with Facebook operating chief Sheryl Sandberg and other officials
for much of the past year about the company's efforts to combat
online voter suppression.
Sen. Josh Hawley, one of Facebook's most outspoken Republican
critics, accused Facebook on Twitter of being willing to censor
content when it suits its business interests. Some other
conservatives, who have claimed their views are limited by
social-media companies, applauded Mr. Zuckerberg's stance.
"He was trying to walk down the middle, but using the language
and parlance the right would understand," said Ms. Layton, who
argues that the company has a better chance of placating
Republicans than Democrats about how it moderates speech --
especially when it is publicly sparring with Democratic
front-runners Joe Biden and Ms. Warren.
The libra effort has encountered staunch opposition both from
Democratic members of congress and the Trump administration, and
that has led the project's most prominent financial industry
backers to jump ship.
"If you take this on, you can expect a high level of scrutiny
from regulators not only on libra-related payment activities, but
on all payment activities," warned Democratic Sens. Brian Schatz
and Sherrod Brown in a letter to Visa Inc., Mastercard Inc. and
Stripe Inc. earlier this month. Treasury Secretary Steven Mnuchin
said his department had also written letters to the partners
raising questions about libra.
Simon Gleeson, a partner at law firm Clifford Chance who has
talked with Facebook about libra but doesn't represent the company,
said he expects Mr. Zuckerberg to encounter further antipathy in
Wednesday's hearing. The company's scale and reputation means that
libra has received far more scrutiny than other asset-backed
cryptocurrency efforts.
"The association with the name Facebook suddenly causes people
to think about it not as a startup but as a thing that is
enormous," he said.
Barring a calamitous performance by Mr. Zuckerberg, the hearing
will likely do little more than put Washington's skepticism of
Facebook on display, Mr. Gleeson said. He predicted that libra's
governing council, which held its first meeting in Switzerland last
week, stands a better chance of progress in a less dramatic
setting, such as the Group of Seven's working group on stablecoins,
which are digital assets backed by baskets of global currencies
like the U.S. dollar or other investments.
Regardless of the forum, Mr. Gleeson said, Facebook would best
serve libra by emphasizing the cryptocurrency project's
independence.
"I strongly suspect he's going to spend a lot of time explaining
that libra is not Facebook," he said of Mr. Zuckerberg's
testimony.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com
(END) Dow Jones Newswires
October 22, 2019 12:22 ET (16:22 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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