Facebook Inc. chief executive Mark Zuckerberg says his massive social-networking company is using an open process to get its proposed Libra cryptocurrency into the market and won’t roll it out until all concerns are addressed.
Zuckerberg fielded questions about the controversial Libra project at the company’s second-quarter earnings conference call with analysts Wednesday afternoon, the same day the Federal Trade Commission announced a $5 billion penalty on Facebook for allegedly deceiving members about their ability to control usage of their personal information.
“Our approach has been to try to have a very open dialog about this,” Zuckerberg said. “Facebook from a few years ago would have probably just showed up and tried to release a product on our own.”
Instead, the company is working with the Libra Association, group of 28 member companies—including Visa Inc., Mastercard Inc., and PayPal Holdings Inc.—that have expressed initial interest in the new payments option. Menlo Park, Calif.-based Facebook will have an arms-length arrangement with the association, according to a white paper outlining the project, with members having direct control over their specific Libra ventures.
Despite the lack of details about how the cryptocurrency will actually operate, Libra has drawn intense scrutiny and criticism from consumer groups and regulators over privacy, security and other issues. Even Visa chief CEO Alfred Kelly, while expressing support for the project, said Tuesday his company so far has signed only a non-binding letter of intent to join the Libra Association.
Zuckerberg seemed to acknowledge that clearing all the hurdles to make Libra a live payment option will take time. “We’ve opened a period of however long it takes to address regulators’ and different experts’ questions about this, and then figure out what the best way to move forward is, and that’s certainly what we’re planning to do with Libra,” he said on the call.
In response to another question, Zuckerberg later noted that Libra “is just one of a set of things” related to payments that Facebook will be investing in over the next several years. “We’re very focused on fiat currencies as well,” he said. “That’s certainly a big area for investment.”
One of those projects is Checkout with Instagram, a system that uses PayPal technology to facilitate smooth online payments on the Facebook-owned Instagram network. The company recently began testing the service “in a very small closed beta” with 23 brands, chief operating officer Sheryl Sandberg said on the call. She declined to give details, but said “we’re pretty excited by their [the merchants’] feedback.”
Facebook also is testing payments on its WhatsApp messaging system in India and expects to expand that service to other countries at an unspecified time.
Payments and other fees generated $262 million in revenues for Facebook in the second quarter, up 36% from a year earlier. Advertising remains Facebook’s biggest revenue source by far—$16.6 billion, up 28% from 2018’s second quarter.