Facebook backs down
It's official, Libra as it was originally conceived is dead. Facebook has ceded to regulatory pressure and is now going to market without the cryptocurrency backed by a basket of assets as an option:
Succumbing to pressure from regulators, Facebook has decided not to make the proposed Libra currency available on its own services for the time being, and will instead offer its users digital versions of government-backed currencies, including the U.S. dollar and the euro, according to three people familiar with the matter. Facebook still plans to go ahead with the launch of a digital wallet that would allow users to make purchases and send and receive money, though it will delay the rollout by several months.
This is what happens when you try to disrupt a heavily concentrated, politically-connected sector and let it know ahead of time. Facebook should have developed Libra in secret, released it, and then dealt with the regulators. The last thing a bureaucrat wants is a surprise as it forces them to actually deal with it.
So what's left of the Libra project? Without the cryptocurrency, there's basically no innovation at all. "Digital versions of government-backed currencies" already exist in spades, and its Calibra digital wallet has been delayed until at least October.
If Facebook didn't have an enormous network effect and the ability to force users of its other services (WhatsApp and Messenger are the prime candidates here) to eventually give it a try, it's hard to see anyone using whatever Facebook eventually trots out over a standard 'neobank' (digital-only bank). They've already been operating for years and are well integrated with establishment monetary schemes, eg:
What do you get when you cross an international money transfer (IMT) provider with a neobank? A pretty cool collaboration. In a first of its kind, IMT provider, Transferwise and neobank, Up Bank have teamed up to make sending money overseas easier than ever. More than 130,000 Up Bank customers will now be able to send money internationally in 52 currencies, all from their transaction account.
Moving into the payments space makes sense for Facebook, but it didn't think this one through at all. When something is eventually released, expect nothing more than a Facebook-integrated version of Venmo. And if we're being honest, that's probably what Facebook should have done from the start. It's now too big and too cosy with regulators to disrupt anything.
Enjoy the rest of this week's issue. Cheers,
Other bits of interest
The United States is botching its Covid-19 response
The US now has the highest Covid-19 mortality rate in the world, which means there are a LOT of cases going unreported. The issue stems from the government's reluctance to test people, no matter how obvious it is that they have the virus. Here's one case study, via Twitter:
Shocking stuff (read the whole thread). Here's a good chart by the Economist - spot the outlier:
The CDC is still refusing to allow many facilities to test for the virus, but at least a Bill Gates-funded foundation is about to roll out home test kits. Clearly he needs to be taxed more.
- Tourism flows and death rates suggest covid-19 is being under-reported
- Gates-funded program will soon offer home-testing kits for new coronavirus
- Cuomo tells CDC to ‘wake up’ and let New York hospitals run coronavirus tests
- Twitter thread by Liz Gumbinner
Trust us, we're from the government
Governments are every bit as incompetent as stereotyped:
Joshua Schulte stands accused of stealing the highly valuable materials directly from the CIA’s innermost sanctum and slipping them to WikiLeaks to share with the rest of the planet...
All this raises a question, though: just how bad is the CIA’s security that it wasn’t able to keep Schulte out, even accounting for the fact that he is a hacking and computer specialist? And the answer is: absolutely terrible.
The password for the Confluence virtual machine that held all the hacking tools that were stolen and leaked? That’ll be 123ABCdef. And the root login for the main DevLAN server? mysweetsummer.
- Alleged Vault 7 leaker trial finale: Want to know the CIA's password for its top-secret hacking tools? 123ABCdef
China is forcing malware onto people's phones
As China encourages people to return to work despite the coronavirus outbreak, it has begun a bold mass experiment in using data to regulate citizens’ lives — by requiring them to use software on their smartphones that dictates whether they should be quarantined or allowed into subways, malls and other public spaces.
But a New York Times analysis of the software’s code found that the system does more than decide in real time whether someone poses a contagion risk. It also appears to share information with the police, setting a template for new forms of automated social control that could persist long after the epidemic subsides.
This will get worse before it gets better, but I see China's embrace of all things digital eventually working to undermine the government's social control.
Speaking of governmental social control
Old mate William Barr looks to be turning his focus to antitrust and the tech sector:
Barr indicated during his confirmation hearing last year that antitrust would be one of his priorities. “I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of the antitrust enforcers,” he told senators.
Sigh. Only a lawyer could look at companies that either give their products away for free (Google, Facebook) or consistently improve quality and charge lower prices than their competitors (Amazon) and scream "antitrust!". Consumer welfare is what matters, not William Barr's opinion on how concentrated a particular subset of a particular industry might be.
AT&T Inc. is working with the Justice Department as the government considers whether to bring an antitrust case against Alphabet Inc.’s Google, two years after the telecommunications giant was at loggerheads with the department over its acquisition of Time Warner, according to people familiar with the matter.
AT&T has conferred several times with Justice officials to share its views that Google is stifling competition in the advertising sector, where AT&T is seeking to make inroads with its Xandr division, the people said.
Google is stifling the competition in the advertising sector by being better at it. If AT&T wants a piece of that pie it needs one of three things to happen: lift its own game; hope Google slips up; or complain to William Barr, a former antitrust lawyer and now Attorney General, who has time and time again shown a complete lack of understanding of everything "Big Tech".
In what should surprise no one, AT&T selected option three 🤦♂️.
- Bad news for Silicon Valley: William Barr is taking control of antitrust probes
- AT&T Cooperates With Justice Department in Google Probe
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