Closed Facebook’s Zuckerberg grilled by Congress on Libra — as it happened

Facebook Chairman and CEO Mark Zuckerberg arrives to testify before the House Financial Services Committee on "An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors" in the Rayburn House Office Building in Washington, DC on October 23, 2019.

Facebook Chairman and CEO Mark Zuckerberg arrives to testify before the House Financial Services Committee on “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors” in the Rayburn House Office Building in Washington, DC on October 23, 2019.

Facebook chief expected to defend cryptocurrency project amid criticism

Today’s Libra horoscope

Welcome to the Financial Times’ live blog of Mark Zuckerberg’s testimony to the House Financial Services Committee, which will see the Facebook founder address issues around the company’s Libra cryptocurrency project and alleged discriminatory advertising on the social media platform.

Zuckerberg gets candid on crypto ahead of Congressional hearing

Facebook chief executive Mark Zuckerberg is expected to half-wave the white flag on the company’s cryptocurrency plans as he testifies before the House Financial Services Committee this afternoon.

In candid comments on Tuesday Mr Zuckerberg said the social-media group is in a poor position to promote the Libra project and keen to hand over leadership to an association of its partners. However, he did launch a strong defence of the idea, arguing it is crucial to tackle financial access issues around the world and help maintain America’s financial leadership.

The remarks come as the planned digital currency has lost key financial industry partners, including Mastercard, Visa and eBay.

Bitcoin price on the back foot

There is already a dour mood in cryptocurrency markets on Wednesday ahead of Mark Zuckerberg delivering testimony on Facebook’s digital currency, Libra.

The price of bitcoin, the most well-known cryptocurrency, has shed 5.4 per cent in the past hour alone, to $7,485.08, according to Coinbase. Rival Ethereum has shed 1.6 per cent to $159.62, while Bitcoin Cash has dropped 3.2 per cent over the same time period.

Facebook needs help to launch Libra, analyst says

Facebook’s cryptocurrency project will not survive without the backing of other technology and payments groups, according to one analyst.

Dan Ives, a tech analyst at Wedbush, said Mark Zuckerberg’s prepared testimony ahead of his appearance on Capitol Hill suggests the company will be flexible on the timing of Libra’s launch amid regulatory scrutiny and after several partners backed out.

“Realistically, it is unlikely Facebook can succeed without partner support, as the company lacks the infrastructure to handle a project of this magnitude in our opinion,” Mr Ives wrote in a note to clients.

Some major backers have already withdrawn their support for the Libra project and regulators have voiced concerns that Libra could pose a risk to the global financial system and make it more difficult to combat money laundering.

Mr Ives called today’s congressional testimony “another hurdle the company and Zuckerberg must get over to get this project closer to a launch trajectory in 2020”.

Facebook shares hold up in morning trade

Facebook shares are sitting 0.9 per cent higher within the first half-hour of trade in New York on Wednesday.

They are outperforming the broader S&P 500 and Nasdaq Composite, which are each up 0.1 per cent.

Facebook shares are up just over 40 per cent in 2019.

Crowd turns out for Zuckerberg testimony

The FT’s Kiran Stacey reports from Washington

Here in Congress, interest in Mr Zuckerberg’s testimony is high. The queue for public admission to the session snakes around the vast corridors of the Rayburn office building and several camera crews have set up position outside.

Beyond crypto

The FT’s tech correspondent Hannah Murphy writes

It’s not just Libra. Mr Zuckerberg will also face questions on whether Facebook’s business model sufficiently prevents discrimination.

Several months ago, the US Department of Housing and Urban Development charged the company with violating housing law — for allowing advertisers to use its targeting tools to limit minorities and protected groups from viewing real estate adverts.

Facebook was taken aback at the time because it had just announced plans to overhaul its targeting practices as part of a separate settlement with civil rights advocates. Facebook is now fighting the HUD charges, so Mr Zuckerberg is likely to double down on defending their position – which appears to be ‘we’ve already solved it’.

Perhaps handily, Mr Zuckerberg has been on a charm offensive in recent days: on Tuesday, the company announced it was committing $1bn to “help address the affordable housing crisis” in California.

Separately, Mr Zuckerberg on Monday announced a raft of measures for better tackling disinformation and foreign interference targeting elections on the platform.

Zuckerberg takes his seat

The Facebook founder, decked out in a white shirt under a dark suit and tie, has taken his seat before the House Committee, with testimony to begin shortly.

House Committee chair Maxine Waters delivers opening statement

The FT’s Hannah Murphy reports from New York

And we’re off! Maxine Waters, chair of the House Financial Services Committee, kicks off proceedings by arguing that Facebook needs to focus on addressing “existing deficiencies and failures” before launching a big project like Libra.

She also slams Facebook’s recent highly contentious decision to exempt politicians’ content and adverts from fact checking – something that’s likely to come up more than once today. This will allow politicians to “lie and mislead…the American people” using the platform, while raking in advertising funds for the company, she argres.

“The impact of this will be a massive voter suppression effort that will move at the speed of a click. Your claim to promote freedom of speech, does not ring true Mr Zuckerberg,” she says.

Zuckerberg hears talk of breaking-up Facebook, within minutes of sitting down

The FT’s Kiran Stacey reports

Amazingly, Maxine Waters seemed to suggest in her opening statement that Facebook had opened discussions into breaking itself up. She told the committee: “You have opened up a serious discussion about whether Facebook should be broken up.”

It is possible she knows something we do not — she met Mr Zuckerberg separately on Tuesday for a private meeting. But Facebook company sources tell me they are not sure what she is referring to and that the company will “go to the mat” to prevent a breakup.

Zuckerberg delivers opening statement

Mr Zuckerberg delivered his opening statement, with a key focus on Libra.

“I get that I’m not the ideal messenger for this right now”, he said to the Committee, echoing comments made yesterday.

Bipartisan opposition to Libra

The FT’s Kiran Stacey reports

Facebook was expecting Mr Zuckerberg to get a mauling from Democrats on the committee, but the scepticism towards Libra is shared on both sides of the political divide. Ann Wagner, the Republican member from Missouri, just said she found the fact that seven companies had left the Libra Association “highly concerning”.

Mic drop from Nydia Velazquez

Congresswoman Nydia Velazquez from New York dug into the Facebook founder in during her initial five minute question session.

She pointed to the company flip-flopping on a promise to not integrate the WhatsApp messaging system with Facebook, and said to Mr Zuckerberg “Do you understand why this record makes us concerned about Facebook entering the cryptocurrency space?”

She continued, pressing whether Mr Zuckerberg would you commit to a mortatorium on Libra until Congress has had the opportunity to work on a legal framework to provide to the regulators.

Mr Zuckerberg started his answer, saying “Congress exercises significant oversight through these committees …” until Ms Velazquez cut him off.

“So that is a no. Thank you,” she said.

Facebook shares hit intraday high

Shares in the social media-cum-cryptocurrency-wannabe company hit an intraday high.

With Mr Zuckerberg addressing a series of five-minute Q&A sessions with House committee members, shares found themselves 2.2 per cent higher at $186.26, and breaking past the stock’s previous intraday high 10 minutes after opening bell.

Stop press

Mark Zuckerberg teased an announcement on a partnership with media to support “high-quality journalism” that he says will come later this week. He referenced a “big initiative around news and journalism” but offered no further details.

I think there is an opportunity within Facebook and our services to build a dedicated surface, a tab within the apps, for example, where people who really want to see high-quality, curated news, not just social content, but from high-quality publishers can go and consume the content. That could create a place where we can form new business partnerships to help fund high-quality journalism as well. I’m looking forward to discussing that at more length in the coming days.

Also read the FT’s piece on Facebook picking winners and losers ahead of its news page launch

Zuckerberg on data privacy

The FT’s Hannah Murphy reports:

Asked about privacy and trust, particularly after the company was hit earlier this year with a whopping $5bn fine from the FTC for its practices related to the Cambridge Analytica scandal, Mark Zuckerberg said major change was afoot.

Facebook is setting up a new privacy programme that is equivalent to “what the Sarbanes-Oxley requirements would be for a public company on people’s financial data”, he said. This would mean regular data “audits”, and reporting on these audits up to Mr Zuckerberg.

Inkling of a Libra compromise

The FT’s Kiran Stacey reports:

Mr Zuckerberg has been polite but unrelenting so far in his determination to plough on with Project Libra despite the criticism from across the political spectrum. We have just seen the first inkling of one potential compromise however.

Asked whether he would agree to restrictions on the basket of currencies that will sit behind the currency, he replied: “I think it would be completely reasonable for our regulators to impose a restriction that says it has to be primarily US dollars.”

Facebook would leave Libra association in absence of US regulatory approval

Facing a line of questioning from Bill Huizenga from Michigan, Mr Zuckerberg said Facebook would be forced to leave the Libra association if it did not receive approval from US regulators.

Mr Huizenga enquired about the make up and voting rights of the independent Libra association, before arriving at his crux question. What happens if the other members of the association, which at present includes 21 companies and non-profits, vote to proceed with the project without receiving US regulatory approval.

Mr Zuckerberg said earlier today Facebook would not launch Libra without US regulatory approval.

Responding to Mr Huizenga’s question, he said “we would probably have to leave the association”.

A lighthearted moment

Mark Zuckerberg drew some laughter in a lighthearted moment.

Steve Stivers, a Republican congressman from Ohio, began his questioning with this: “Mr Zuckerberg, good morning. How are you?”

After a brief pause, Mr Zuckerberg deadpanned: “I’m doing okay.”

“I understand. That was honest. Thank you,” Mr Stivers said amid laughter in the room.

Back shortly

Mr Zuckerberg gets a brief reprieve as the committee takes a five-minute recess. The hearing is expected to resume shortly.

‘Criticism is cheap’

In a hearing with plenty of criticism aimed at Facebook and Mark Zuckerberg, Kentucky Republican Andy Barr lodged a defense of the company’s attempt at innovation in financial services.

He said:

Criticism is cheap. Anybody can criticize. As you can see here today, politicians in Washington are pretty good at lodging criticism. But creating something of value is significantly more difficult, and I would commend you for being an innovator and trying to create something of value.

Mr Barr added that Congress should view innovation for opportunities in promoting financial inclusion, aiding small businesses and bringing the financial system to underbanked communities. The burden should be on the government to justify regulation, he said.

Later, Mr Barr said Facebook shouldn’t be “bullied” by politicians into being “speech police” online. He then asked Mr Zuckerberg if he would pledge that Facebook will not censor political ads on the platform or in support of President Trump, in particular.

“We believe that people should be able to see for themselves what politicians are saying,” Mr Zuckerberg said.

Bitcoin hits low of the day

The price of the cryptocurrency staged a mini-correction on Wednesday as Mr Zuckerberg continued his testimony and faced questions about Facebook’s digital currency project.

Bitcoin fell as much as 10.1 per cent to a session low, before clawing back some of that decline to sit 7.9 per cent lower at $7,481.90.

Blocking Libra would be a win for China, Zuckerberg says

The FT’s Hannah Murphy reports:

Mark Zuckerberg has repeatedly invoked trade tensions in his defence of Libra, by pointing to the threat of a forthcoming Chinese digital currency. He noted that “as soon as” Facebook put out its Libra white paper, China announced plans to launch a similar project – a public-private partnership with some of the country’s biggest companies – in the next few months.

This “digital renminbi” would be “part of their Belt and Road initiative, their kind of foreign and economic policy to grow influence in Asia and Africa and other areas”, Mr Zuckerberg offered.

By contrast, he added, “Libra is going to be backed mostly by dollars and I believe that it will extend America’s financial leadership around the world, as well as our democratic values and an oversight.”

Who will be responsible for Libra?

Michael San Nicolas from Guam said in the same way that a dorm room-based start-up could not have fully understood how it would now have to police content, it could be difficult to imagine the problems today Libra might encounter down the track.

“When it comes to Libra, there is no singular entity … who is going to be responsible if Libra fails?” Mr San Nicolas asked.

“The Libra association will have the reserve [assets backing the currency],” Mr Zuckerberg said.

“This is one of the tings we will be working with [the Financial Stability Oversight Council] and other organisations to meet their standard,” he added.

Mr San Nicolas comments echoed those of other Congress members earlier in the day, including Al Green from Texas, who raised the example of financier Bernie Madoff.

“Things can happen, things can go wrong” and lawmakers have to clean up the mess, Mr Green said, pointing out he was not comparing Mr Zuckerberg to Mr Madoff.

Zuckerberg rattled by questions on Facebook’s ‘civil rights task force’

The FT’s Kiran Stacey reports:

One of the most uncomfortable moments for Mr Zuckerberg came when he was quizzed by Joyce Beatty, the representative from Ohio, on the company’s “civil rights task force”.

“Who’s on the civil rights task force?” Ms Beatty asked.

“Sheryl Sandberg is the person who is…” Mr Zuckerberg began, before he was quickly interrupted.

“We know Sheryl is not really civil rights,” Ms Beatty said. “She’s your COO and I don’t think there is anything – and I know Sheryl well – about civil rights in her background, so come better than that for me.”

Water, water everywhere …

The House Committee is taking a five minute recess.

Ahead of questions from Katie Porter from California, Mr Zuckerberg asked for a break.

“I’ve been drinking a lot of water,” he said, prompting some mirth in the room.

Mr Zuckerberg’s water drinking habits became the subject of numerous internet memes at a previous Congressional testimony.

La La Land

A moment of levity as Rep. Riggleman asked Mark Zuckerberg how realistic a portrayal was the movie The Social Network. He joked, “we are getting to the beginning of Social Network 2 and I just want to be in charge of my own casting. I want that on the record.”

He later added that Tom Cruise will be playing him in the movie. Mr Zuckerberg was played by Jesse Eisenberg in original.

Zuckerberg warns blocking Libra will be boon to China tech

The FT’s Kiran Stacey and Hannah Murphy report:

China will steal a march on American technology if the US blocks Facebook’s plans for a global digital currency, Mark Zuckerberg warned as he was questioned over the company’s Libra project in front of Congress for the first time.

Mr Zuckerberg, chief executive of the social media company, testified on Wednesday for several hours during an often hostile hearing, which ranged far beyond the digital currency, touching on everything from false advertising to election interference.

Read more here.

AOC makes her mark

The FT’s Kiran Stacey reports:

After five and a half hours, Alexandria Ocasio-Cortez, the Democratic congresswoman from New York, got the chance to make her mark, as she has during many committee meetings in the past.

She pressed Mr Zuckerberg mainly on when Facebook does and does not censor politicians’ advertising. The Facebook chief said the company would take down adverts that were trying to suppress voting by certain people or groups, but would not filter them for veracity.

Zuckerberg succeeds in delivering message despite testy hearing

The FT’s Kiran Stacey reports:

The hearing is going to wrap up in the next few minutes. It will not have surprised Mark Zuckerberg that the tone was overwhelmingly hostile, with criticisms coming from both Democrats and Republicans. The Facebook chief executive had a few awkward moments — explaining the company’s civil rights and political advertising policies for example. But he succeeded in his main objective, which was to insist that Project Libra would continue despite Congressional opposition, while also promising to get regulatory approval before it launches.

Zuckerberg faces renewed call to break up Facebook

Late in today’s hearing, Mr Zuckerberg faced a call from Jesús García from Illinois to break the social media company up.

“I think that Facebook has acquired too much power, it has become too big and we should seriously consider breaking it up,” Mr Garcia said.

Asked by Mr Garcia whether Facebook should be regulated as a bank and regulated by the Securities and Exchange Commission, Mr Zuckerberg struggled to answer either question concisely.

“That’s a no … You are unable to give clear answers about which laws should apply to your project, which is concerning” given the near-monopoly status the company commands in the social media segment, Mr Garcia said.

Maxine Waters, chair of the House Financial Services Committee, said in her opening statement the events surrounding the company had opened a discussion about whether it should be broken up.

Mr Garcia reiterated his support for the Keep Big Tech Out of Finance Act, a proposal that was reportedly circulated over summer for discussion by the Democratic majority that leads the House Financial Services Committee.

And that’s a wrap

The hearing has concluded. Thank you for joining our live blog. You can read more about Mark Zuckerberg’s day on Capitol Hill here.