FACEBOOK is no stranger to accusations of failing to protect the privacy of users and their data. Now the social media giant’s proposed digital currency is also under the spotlight for the same reasons.

 

Facebook is creating its own cryptocurrency?

It’s a global currency called Libra and will come with a digital wallet called “Calibra”, with both proposals announced in June.

It’s being developed by the Libra Association, which was co-founded by Facebook, and the organisation says the aim is to “empower billions” of adults who do not have bank accounts.

 

How will it work?

It is intended to be a a currency that will be transferred via social media, with its value determined by a range of real life currencies, likely to be led by the Euro and Dollar as they don’t fluctuate rapidly day-to-day. Bitcoin, for example, is not anchored to any assets and can fluctuate significantly.

The Libra Association said it is "committed to fostering a secure network" with anti-money laundering and anti-fraud programmes. It also said that the association would not hold personal data.

 

But people are still concerned?

The UK’s data privacy chief, Elizabeth Denham, who runs the Information Commissioner’s Office, has signed a statement alongside peers in the EU, Australia, Canada and America, saying they all have “shared concerns” over “privacy risks posed” by Libra.

And they are calling on Facebook to provide more information on how it will guard user’s data.

 

Aren’t Facebook being fined for privacy violations already?

It was reported last week by the Wall Street Journal and the Washington Post that the Federal Trade Commission in the US has voted to approve fining Facebook around $5 billion in the wake of an investigation into the firm’s privacy violations that launched following the Cambridge Analytica scandal.

It now goes to the justice department to make a final judgement on the fine.

 

What happened with Cambridge Analytica?

It came to light early last year that the political consultancy firm had harvested the personal information of millions of Facebook profiles without the consent of users and utilised the data for political advertising purposes.

It was a turning point in the public understanding of the importance of guarding personal data and sparked discussions on the ethics of social media companies.

 

Isn’t $5 billion a drop in the ocean to Facebook?

It had more than $15 billion in revenue in the first quarter of this year so, yes, it’s not a huge fine in that regard.

Critics also say that the changes being required are insufficient because, as part of the rumoured agreement, Facebook has apparently consented to re-examining the ways in which it handles user data. But, the settlement allegedly does not restrict its ability to share this data with third parties.

 

What are the specific concerns over Libra?

One of the key concerns is the fact that Facebook already has such a vast amount of personal data that it could now connect this to users’ financial details too, “amplifying privacy concerns about the network’s design and data-sharing arrangements”, Ms Denham said.

But she acknowledged Libra “has the potential to change the online payment landscape" and to “offer benefits to consumers”.

 

So what now?

Facebook has opened talks with financial regulators, but the joint statement from the Information Commissioners raises concerns over the lack of detail about how customer data will be handled.

Head of Libra, David Marcus, said he acknowledges people do not want their financial information connected to their social media data, adding: "I know we have to earn people's trust for a very long period of time”.