Tech

Zuckerberg won't give Congress what they're looking for during libra testimony

Key Points
  • Facebook CEO Mark Zuckerberg will face the House Financial Services Committee Wednesday to discuss the company's cryptocurrency plans.
  • House members called on Zuckerberg to testify after hearing from the leader of the libra project. 
  • Now that the currency's backers have officially formed an association, the Facebook executive working on the currency said, Zuckerberg won't be able to answer for the group.
Mark Zuckerberg, chief executive officer and founder of Facebook Inc., speaks during a joint hearing of the Senate Judiciary and Commerce Committees in Washington, D.C., U.S., on Tuesday, April 10, 2018.
Al Drago | Bloomberg | Getty Images

Lawmakers on the House Financial Services Committee are hoping to get answers straight from the top about Facebook's new cryptocurrency plans at Wednesday's hearing.

Less than satisfied with responses at a July hearing from David Marcus, the executive in charge of Facebook's libra project, committee members called on Facebook CEO Mark Zuckerberg to testify in front of the committee himself.

"I think it is imperative that we get Mr. Zuckerberg before the committee," Rep. Sylvia Garcia, D-Tex., said at the time. "Obviously this is his brainchild and this is his company and I think he would be the one to have the answers."

But when Zuckerberg faces the representatives on Wednesday, he will likely tell them that for many of their questions, they still have the wrong guy.

"By design, we don't expect to be leading those efforts going forward," Zuckerberg will tell lawmakers of Facebook's involvement in libra, according to his prepared remarks.

Marcus told reporters as much at a dinner last week following the formal creation of the Libra Association, the nonprofit group that will govern the cryptocurrency. Twenty-one members including Facebook, Uber and Lyft now officially make up the group, each with a single vote giving them the power to help decide who joins or is ousted from the organization and which rules will govern the currency.

Marcus said at the dinner that Zuckerberg could certainly "share his own views, but he cannot engage or commit to anything on behalf of the association because he doesn't have the power to do that anymore," a Politico reporter shared on Twitter following the event.

Reached for comment on how Zuckerberg plans to address libra during his testimony Wednesday, a Facebook spokesperson pointed to Zuckerberg's prepared remarks.

Such a response from Zuckerberg may not play well with the representatives who brought him to Capitol Hill.

"The genesis for this idea was with Facebook and now one of its senior employees is a key board member," a congressional staffer familiar with the thinking of members of the financial services committee told CNBC in an email. "If Zuckerberg tries to downplay Facebook's leverage in the development of libra, it will come off as disingenuous and not likely to be well received by members."

Since it first announced its plans for the cryptocurrency, Facebook has tried to deflect regulatory attention from itself by pointing to its prominent corporate backers, which included large payments companies like Visa, Mastercard and Stripe. Those companies have all since dropped out of the project after senators warned them to "proceed with caution."

House leaders will likely scrutinize the leaner group of founding members, as they did at the last hearing. Rep. Alexandria Ocasio-Cortez, D-N.Y., honed in on libra's governance last time, emphasizing that the members controlling the currency are corporations and are not democratically elected.

What lawmakers could glean from Zuckerberg this time is a firmer commitment on Facebook's role in the Libra Association, if not on the currency itself.

"Even though the Libra Association is independent and we don't control it, I want to be clear: Facebook will not be part of launching the libra payments system anywhere in the world until US regulators approve," Zuckerberg's prepared testimony says.

Zuckerberg is bound to face questions that span well beyond Facebook's involvement in the new currency. Lawmakers are ready to seize the rare opportunity to speak with the executive on the record and under oath. At past testimonies, congressional leaders have asked why consumers should trust Facebook with their money given their past privacy scandals.

Facebook currently faces multiple probes into its competitive practices, including by the Federal Trade Commission and 47 attorneys general from U.S. states and territories.

Rep. Ro Khanna, the Democrat who represents the California district that includes Silicon Valley, said Facebook should focus on getting its house in order before taking on a new project like libra.

"I just think that they first should regain their trust in their core business model," Khanna, who is not a member of the House Financial Services Committee, said in an interview with CNBC in his office on Monday. "I mean they've got two billion people that are communicating and they're impacting democracy and they're impacting people's kids and they're impacting a way of life. That seems to me a lot to bite off."

Khanna said he understands Zuckerberg's impulse to push the boundaries of what his company can do because the CEO is an "innovator." But that's not enough anymore.

"What I would say to Mark when I see him next is that he has a greater responsibility now than just being an innovator," Khanna said. Making sure the tools he created are not misused is "such a big, worthy project that I would hope he would devote a lot of his energy to that."

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WATCH: House panel releases Facebook CEO Mark Zuckerberg's testimony ahead of hearing

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House panel releases Facebook CEO Mark Zuckerberg's testimony ahead of hearing