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The Senate Banking Committee on Monday released the testimony of David Marcus, the head of Facebook's cryptocurrency projects ahead of his testimony Tuesday.
In his prepared remarks, Marcus perfectly outlines the business model behind the social network's upcoming Libra digital currency and its Calibra digital wallet.
"We do not expect Calibra to make money at the outset, and Calibra customers' account and financial information will not be shared with Facebook, Inc., and as a result cannot be used for ad targeting. Our first goal is to create utility and adoption, enabling people around the world — especially the unbanked and underbanked —to take part in the financial ecosystem.
"But we expect that the Calibra wallet will be immediately beneficial to Facebook more broadly because it will allow many of the 90 million small- and medium-sized businesses that use the Facebook platform to transact more directly with Facebook's many users, which we hope will result in consumers and businesses using Facebook more. That increased usage is likely to yield greater advertising revenue for Facebook."
The key word in Marcus's remarks is "utility."
Facebook CEO Mark Zuckerberg is obsessed with the idea of utility, a former Facebook employee who left the company in 2017 told CNBC. If Facebook is essential, then you simply cannot dispatch it from your life because it provides fundamental value.
For many people, Facebook already plays this role. The company's social networks serve people as their address book, their events calendar, their messaging services and their photo albums. Facebook will further cement itself as a utility in its users' lives if they begin to use it as their digital bank.
The rest of Marcus's statements follow the classic Facebook game plan. By focusing on user adoption first, the company is prioritizing growth with the assumption that ad revenue will shortly follow.
Marcus said Facebook will not use people's Calibra data to target ads to them, which is surely a relief for any users concerned about privacy. But the company doesn't really need this data to sell more ads. If people exchange their money for Libra, the company expects they and businesses will increase their use of Facebook. That in turn will lead more companies to pay to promote their products and services within the Facebook ecosystem.
Facebook may be pivoting to privacy, but the company's breadwinner will continue to be advertising.