Libra’s Governance Structure Calls User Data Privacy into Question
Protecting and managing consumer data has undoubtedly proven to be a difficult task for Facebook in recent years. In 2018, the Cambridge Analytica scandal saw the personal data of up to eighty-seven million Facebook users misappropriated for political purposes. An internal investigation led Facebook to suspend sixty-nine thousand applications that improperly collected personal information from users. More recently, during the summer of 2019, the Federal Trade Commission levied a record fine of $5 billion against Facebook for deceiving users about their ability to control their data privacy on the platform. Despite these data privacy difficulties, Facebook founder and CEO, Mark Zuckerberg, now champions the development of a new technology, Libra, with the potential to collect even more intimate data on its users.
Zuckerberg is a zealous public advocate for Libra, a new blockchain-supported cryptocurrency created by Facebook. Unlike most blockchains, Libra’s blockchain will not be decentralized. Computers used to process and verify the blockchain will only be run from servers of the members of the Libra Association, which is a non-profit corporation established to develop and secure the Libra network. The Founding Members of the Libra Association will operate the computers necessary to support the blockchain when Libra launches. Each Founding Member contributes one representative to the Libra Association’s governing body, the Council, which will determine Libra’s operating structure and whether data on users’ financial habits will be utilized or protected. The Council formed in October 2019 with the current twenty-one Founding Members represented; however, the Libra Association aims to have a one-hundred member founding class represented on the Council when Libra launches.
Lawmakers, regulators, and the public at large share concerns about Facebook’s prominent role in developing Libra due to Facebook’s troubling data privacy history. Zuckerberg and the Libra Association have tried to assuage concerned parties by asserting that, after 2019, Facebook will no longer hold the primary governance position in the Libra Association. That promise may seem satisfying at a cursory glance; however, a deeper look into the structure of the Libra Association and its members call the truth of that statement into question.
The Founding Members’ voting shares in the Council are allocated in proportion to the funding each member committed to Libra. Founding Members must initially commit $10 million for Libra Association membership; each additional $10 million committed buys members an additional vote. However, the voting rights of Founding Members are capped to prevent a concentration of power in the hands of any single Member. This model would be sound if diverse interests and viewpoints were represented by the Founding Members. Currently, the Libra Association consists of twenty-one Founding Members: four of which are non-profit or academic institutions and seventeen of which are for-profit corporations ranging from tech giants like Uber and Facebook to the venture capital firm Andreesen Horowitz. The Libra Association claims that the Council’s capped-voting model will foster a diverse range of interests, which will lead to governance decisions benefitting Libra’s users, not its Founding Members.
Though the capped-voting model purports to spread decision-making power among the Founding Members, the tangled web of connections among these companies and their executives undermines decentralized decision-making. The business connections and personal relationships formed among Founding Members challenge a model of stewardship which assumes that each company will represent an independent voice and desire on its governing Council. One example of this is Zuckerberg, who sits on the board of Breakthrough Initiatives and is a close personal friend of Spotify’s CEO, Daniel Ek. Facebook, Breakthrough Initiatives, and Spotify are all Founding Members with voting power in the Libra Association.
GLTR Staff Member; Georgetown Law, J.D. expected 2021; University of South Carolina, B.A. English 2016 © 2019, Caitlyn Cook