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The social media giant Facebook announced its own cryptocurrency last week to criticism from regulators around the world. Libra, the company’s cryptocurrency could be a strong argument against cryptocurrencies and create Facebook’s bigger ever anti-competitive trust case.
Why is Facebook a problem?
Facebook is a near-monopoly in the social media sector. It already owns its own platform and Instagram and solidified its position by buying WhatsApp as well. In its main markets, Facebook is a part of a duopoly and holds 82% of the digital advertising market with Google.
Facebook has followed predatory practices in the past to either acquire or destroy companies it competed with. Instagram and WhatsApp posted a threat to its products, so they were acquired. Snap Inc., the creators of Snapchat, also faced the company’s burn. When Facebook was threatened, it introduced the ‘Stories’ feature of Snapchat and introduced it everywhere on its platform- right from Instagram to WhatsApp and even on Facebook Messenger.
Facebook is a data-hungry corporate that has collects users’ information with their consent. This makes them one of the biggest consumer tracking products of all time. This kind of power is unavailable even to the government, and with a company like Facebook, which has a bad track record in protecting privacy, the situation becomes even more dangerous.
Why is Libra a call for a monopoly?
With a cryptocurrency offering, Facebook can create a hegemony of products that only a few will be able to avoid. It will enjoy a monopolistic power of payments, consumer data, and advertising dominance that will be unprecedented in human history. The company, which already has tons of data on consumers about what they eat, what they studied, and where they work will now also know their spending patterns.
Facebook’s handling of privacy has been lethargic at best. The amount of data it collects could help advertisers specifically target users they want. This will give Facebook the power to control everything in a user’s life. Note that privacy is one of the pillars of cryptocurrencies, and Facebook takes that feature away to give you a convenient system of payments that provides even more data on your daily life.
Thankfully, the financial services sector is quickly adopting blockchain. JP Morgan and Signature Bank are already working on blockchain based payments solutions, and they will be competitors for Facebook in the future. Banks have limited information about users, as compared to Facebook. The information disadvantage could be Facebook’s way to create a monopoly. The time is for the government to break up Big Tech and create safer online spaces for users.