Facebook and Libra, that’s like the House of Medici on speed. The Medici family were merchants first. During the Italian Renaissance they became bankers, then princes. Then they produced four popes of the Catholic Church. It took them a few centuries to do all that. But in announcing Libra, Facebook is claiming cyber princedom (cyber papacy even?) barely fifteen years after its founding. No wonder the governments of today are stunned.
This evening I had the pleasure of sitting on a discussion panel with a few distinguished experts, at the invitation of The Dappers. The event was organised by Dominika Nestarcova of The Spartan Group. Our topic was ‘Introducing Libra: Facebook’s brainchild’.
Before the talk, Kelvin Koh of The Spartan Group gave a very insightful presentation on Libra. Victor Liew of Xfers was there for the in-depth technical expertise. I tried to provide a historical-politological classification (of sorts). Casper Johansen of The Spartan Group was our moderator. And because I don’t have the time to come up with memory minutes of what each of us said, here are my preparatory notes. Not all of the following was uttered verbatim. You get the gist.
The Historical Precedent
History doesn’t repeat itself, but it often rhymes. Care for some rhymes?
To me, Facebook looks like the House of Medici on speed. The Medici family was ruling Florence throughout the Renaissance (14th to 17th century). They were wool merchants first. So successful were they that they became bankers. Then their commercial power evolved into political power. They became princes. They produced four popes of the Catholic Church, until very recently the organisation with the world’s biggest user base, so to speak.
Machiavelli dedicated his work, The Prince, to the Medicis. The Prince, this treatise on modern political philosophy, which some say is a manual on how to attain and maintain political power regardless of right or morals. Machiavellianism.
In announcing Libra, Facebook, this vastly successful data merchant, has declared it would go into banking now. Not just merchant, retail or even investment banking, but central banking. A central bank is the authority which issues and controls a currency. According to the Libra Whitepaper, the Libra Association is to be the central bank for Libra.
Let’s not forget how fast things are evolving today, in cyberspace in particular. It took the Medici family a few centuries to become princes and, at the height of its power, to control the Catholic Church. Facebook was only founded fifteen years ago. During this time it has gained a lot more active users than the Catholic Church, or any polity, has ever had: 2.38 billion. And now it announces what pretty much sounds like a sovereign currency.
This is a grab for power, a Medici move. It’s a claim for princedom, or even papacy. Not a princedom or even the Holy See in physical space, but in virtual space. And easily the biggest one, too. So big that it will have repercussions on physical state power. 2.38 billion potential users of Libra.
Unsurprisingly, today’s governments are stunned. Historical governments used to know what it’s like to have a competitor with the political weight of the Catholic Church. But today’s governments don’t seem to remember. For now, they feel there’s not much they can do, after Facebook has done no more than to announce Libra. The US Congress has written a soft request letter asking Facebook not to pursue this project for now, please.
But why should Facebook comply?
The New Tune
If When Libra comes and if a significant part of the user base uses Libra, then Facebook, through the Libra Association, will be so much in control, monetarily and otherwise, this will be without precedent. The Libra Association – and everyone who controls it – will have immense power. To impose tariffs, raise taxes, influence pricing. To determine how much Libra there will be in the first place.
And all of Facebook’s promises about neutrality and privacy of Libra aside – Mark Zuckerberg isn’t known as someone who keeps his word – if only a small part of the 2.38 billion user base uses Calibra, Facebook’s designated wallet for Libra, then Facebook, in addition to everything else, will know these users’ credit score and customer behaviour. What’s more, Facebook will also get the direct means to access their wallet. It will be able to give, or to take.
The concerns we have about Facebook today pale against this. This is no longer just a corporation, albeit a big one. This is next level. It’s a new kind of sovereign.
The question arises, to which extent the users will agree to this? And what if they no longer do?