Zuckerberg Testifies on Facebook Cryptocurrency Libra

Part 1

Maxine Waters: (00:00) Libra and a digital wallet Colibra raised many concerns relating to privacy, trading risk, discrimination, opportunities for diverse owned financial firms, national security, monetary policy, and the stability of the global financial system. I and other Democrats have called for a moratorium on Facebook's development of its digital currency Libra and digital wallet Colibra until Congress can examine the issues associated with a big tech company developing these digital products and take action. As I have examined Facebook's various problems, I've come to the conclusion that it would be beneficial for all if Facebook concentrates on addressing its many existing deficiencies and failures before proceeding any further on the Libra project. Let's review the record. First on diversity and inclusion, Facebook has utterly failed. Facebook's executive ranks and workforce continue to be mostly white and male. Since Reverend Jesse Jackson and the Rainbow Push coalition called upon Silicon Valley companies including Facebook to release its diversity statistics more than five years ago, the representation of African Americans and Hispanics has increased by less than 2%. Maxine Waters: (01:26) Facebook also told us that they have $0 managed by diverse firms. On fair housing, Facebook has been sued by the National Fair Housing Alliance for enabling advertisers to engage in discrimination on its advertising platforms. The US Department of Housing and Urban Development has also filed an official charge of discrimination against Facebook for its advertising practices, including the company's own ad delivery algorithms, which were found to have a discriminatory impact when advertisers did not target their audience in discriminatory ways. I understand that Facebook has refused to cooperate with HUD's fair housing investigation by refusing to provide relevant data. On competition and fairness, Facebook is a subject of an antitrust investigation by the attorney generals of 47 states and the District of Columbia. On protecting consumers, Facebook as was fined $5 billion by the Federal Trade Commission for deceiving consumers and failing to keep their data private. Maxine Waters: (02:39) On elections, Facebook enabled the Russian government to interfere with our election in 2016 with ads designed to pit Americans against each other, suppress the vote and boost Trump. For example, Facebook allowed a counterfeit Black Lives Matter webpage to operate with the goal of discouraging African Americans from voting. Three years later, these activities are still continuing on Facebook. We learned just this week that Russia and Iran are using the same tactics to mettle in our next election. Now, on political speech. Last week, you announced that Facebook would not be doing fact checking on political ads, giving anyone Facebook labels a politician a platform to lie, mislead and misinform the American people, which will also allow Facebook to sell more ads. The impact of this will be a massive voter suppression effort that will move at the speed of a click. Maxine Waters: (03:44) Your claim to promote freedom of speech does not ring true, Mr. Zuckerberg. Each month, 2.7 billion people use your products. That's over a third of the world's population. That's huge. That's so big that it's clear to me and to anyone who hears this list that perhaps you believe that you're above the law, and it appears that you are aggressively increasing the size of your company and are willing to step on or over anyone, including your competitors, women, people of color, your own users, and even our democracy to get what you want. All of these problems I have outlined. And given the company size and reach, it should be clear why we have serious concerns about your plans to establish a global digital currency that would challenge the US dollar. In fact, you have opened up a serious discussion about whether Facebook should be broken up. Maxine Waters: (04:43) The chair now recognizes the ranking member of the committee, the gentleman from North Carolina, Mr. McHenry, for five minutes for an opening statement. Patrick McHenry: (04:51) Thank you Chairwoman Waters. Thank you Mr. Zuckerberg for your appearance. Today is a trial on American innovation. There's a growing concern about the role that technology plays in our lives. That's warranted. That's necessary. Yes, technology's led to greater prosperity, more freedom of expression and the ability to transcend the limits of space and time to connect us with one another. It's a powerful tool, a powerful tool for our society developed here in the United States, gone global. But we know there's also a downside to all of this. The vitriol on social media is frightening. The growing inequality between those who have access to the latest tech gadgets remain on the coasts, while folks living in rural America are still trying to get the same connectivity necessary to compete in a global marketplace. Patrick McHenry: (05:51) Not to mention the anxiety of the age, that's a deep cultural moment for us, not as politicians but as Americans. That nervous feeling that you need to check your phone throughout the day, that's something that is now a cultural occurrence for all of us, especially members of Congress, most of whom in this room are doing that right now. There's a lot of anger out there, and now it's being directed at the architects of this system. That's why you're here, Mr. Zuckerberg. That's why you're here today. You are one of the titans of what we call the digital age. It's an enormous amount of responsibility, an enormous weight based off the innovation that you've brought. And maybe it's not about Libra. It's not just about some housing ads, no. And maybe it's not really even about Facebook at all. Patrick McHenry: (06:54) It's that larger question. And fair or not fair, you're here today to answer for the digital age. But of course you're not America's first innovator, and we hope you're not America's last. This is not the first time that America's faced difficult questions about technology. Sadly, throughout the history of innovation, a major theme is the exploitation of fear. Politicians enabled by special interests and a lack of understanding of new technology use fear to justify what is ultimately a power grab, new laws, new regulation, but ultimately old and tired ways to centralize power here in Washington or other systems of government. Patrick McHenry: (07:42) Some of this has led in the past to comical results, and we hope to avoid it now. But just as one example, there was a time when legislators pushed for what was then called red flag laws, which required vehicles, so-called horseless carriages of that age, to immediately stop on the side of the road and disassemble the automobile until equestrians or livestock was sufficiently pacified. But other times in history, the use of fear was not so funny. Our last hearing on Libra for example, was a moment when members of Congress on this Dais actually compared the technology, that technology of Libra, to the terrorist attacks of September 11th. Speaker 1: (08:30) Will the gentleman yield? Patrick McHenry: (08:32) Look, I have my own qualms... Speaker 1: (08:33) You're making a reference [crosstalk 00:08:36]. Will the gentleman yield? Speaker 2: (08:40) The time belongs to the gentleman from North Carolina. Patrick McHenry: (08:42) Thank you for taking the bait. Look, I have my qualms about Facebook and Libra. I do. And the shortcomings of big tech, there are many. Yes, there are. But if history has taught us anything, it's better to be on the side of American innovation, competition and most importantly the freedom to build a better future for all of us. Progress is not preordained, and American progress and American domination of free speech and global rights is not preordained. Let us not forget that the wave of innovation is spreading across the world with or without us. Patrick McHenry: (09:23) So that's why I believe that American innovation is on trial this day, in this hearing. And the question is, are we going to spend our time trying to devise ways for government planners to centralize and control as to who, when and how innovators can innovate? Or will we spend time contemplating and leading the way on the question of whether or not it'll be American innovation that leads the next century? Being led by American values, the notion that we have or the rule of law and free speech rights and American driven jobs and innovation. Are we going to spend our time building a brighter future for Americans or trying to tear each other apart? I yield back. Maxine Waters: (10:19) I'd like to welcome today's witnesses. Oh, actually, we only have one. Mr. Mark Zuckerberg, chairman and chief executive officer of Facebook. This is Mr. Zuckerberg's first appearance before this committee, but I believe that Mr. Zuckerberg needs no introduction. Mr. Zuckerberg, without objection, your written statement will be made part of the record. You will have five minutes to summarize your testimony. When you have one minute remaining, a yellow light will appear. At that time, I would ask you to wrap up your testimony so we can be respectful of the committee members' time. Mr. Zuckerberg, you are now recognized for five minutes to present your oral testimony. Mark Zuckerberg: (11:02) Thank you, Chairwoman Waters, ranking member McHenry and members of the committee. Thank you for the opportunity to testify today. As we sit here, there are more than a billion people around the world who don't have access to a bank account, but could through mobile phones if the right system existed, and that includes more than 14 million people right here in the US. Being shut out of the financial system has real consequences for people's lives, and it's often the most disadvantaged people who pay the highest price. People pay far too high of costs and have to wait far too long to send money home to their families abroad. Mark Zuckerberg: (11:40) The current system is failing them. The financial industry is stagnant, and there is no digital, financial architecture to support the innovation that we need. I believe that this problem can be solved and Libra can help. The idea behind Libra is that sending money should be as easy and secure as sending a message. Libra will be a global payment system, fully backed by a reserve of cash and highly liquid assets. Now, I believe that this is something that needs to get built, but I get that I'm not the ideal messenger for this right now. We faced a lot of issues over the past few years, and I'm sure there are a lot of people who wish it were anyone but Facebook who were helping to propose this. Mark Zuckerberg: (12:27) But there's a reason that we care about this, and that's because Facebook is about putting power in people's hands. Our services already give people a voice to express what matters to them and to build businesses that create opportunity. Giving people control of their money is important too. And a simple, secure and stable way to transfer money is empowering. Over the long term, this means that more people transact on our platforms. That'll be good for our business. But even if it doesn't, I still think this could help people everywhere. Before we move forward, there are important risks that need to be addressed. There are questions about financial stability, fighting terrorism and more, and I'm here today to discuss those risks and how we plan to address them. But I also hope that we get a chance to talk about the risks of not innovating because while we debate these issues, the rest of the world isn't waiting. Mark Zuckerberg: (13:18) China is moving quickly to launch a similar idea in the coming months. Libra is going to be backed mostly by dollars, and I believe that it will extend America's financial leadership around the world as well as our democratic values and oversight. But if America doesn't innovate, our financial leadership is not guaranteed. I actually don't know if Libra is going to work, but I believe that it's important to try new things and as long as you're doing so responsibly. That's what has made America successful and it's why our tech industry has led the world. So we co-wrote a white paper to put this idea out into the world and to start a conversation with regulators and experts and governance. And today's hearing is an important part of that process. What we're discussing today is too important for any single company to undertake on its own, and that's why we helped to found the Libra Association. Mark Zuckerberg: (14:09) It's a coalition of 21 companies and nonprofits that are working to give everyone access to financial tools. But even though the Libra Association is independent and we don't control it, I want to be clear. Facebook will not be a part of launching the Libra payment system anywhere in the world, even outside the US, until the US regulators approve. Last time I testified before Congress, I talked about taking a broader view of our responsibility, and that includes making sure our services are used for good and preventing harm. And I want to discuss that across other aspects of our work today as well. People shouldn't be discriminated against on any of our services. We have policies in place to prevent hate speech and remove harmful content, but discrimination can also show up in how ads are targeted and shown too. It's part of a settlement with civil rights groups. Mark Zuckerberg: (14:58) We've banned advertisers from using age, gender or zip codes to target housing, employment or credit opportunities, and we've limited interest based targeting for these ads too. This is part of our commitment to support civil rights and prevent discrimination. I also know that we need more diverse perspectives in our company. Diversity leads to better decisions and better services for our community. We've made diversity a priority in hiring, and we've also made a commitment that within five years, more than 50% of our work force will be women, people of color and other underrepresented groups. We've made some progress here. There are more people of color, women in technical and business roles and underrepresented people in leadership at Facebook now, but I know that we still have a long way to go. Mark Zuckerberg: (15:44) Chairwoman Waters, ranking member McHenry and members of the committee, this has been a challenging few years for Facebook. I recognize that we play an important role in society and have unique responsibilities because of that. And I feel blessed to be in a position where we can make a difference in people's lives. And for as long as I'm here, I'm committed to using our position to push for big ideas that I believe can help empower people. Thank you and I'm looking forward to answering your questions. Maxine Waters: (16:13) Thank you very much. I now recognize myself for five minutes for questions. It is no secret that Facebook allowed Russia to undermine and divide our country through divisive online ads. The Senate's investigation discovered that African Americans were targeted the most by Russia, specifically in places where Black Lives Matter groups were the most active. Despite all of your technological expertise, Russia and Iran are at it again for the upcoming election. Then last week, you announced a new ad policy that gives politicians a license to lie so you can earn more money off this division, I suppose. Facebook changes the rules when it can benefit itself. Last year, Facebook banned all cryptocurrency ads on its platform because, and I quote, they are frequently associated with misleading or deceptive promotional practices, quote unquote. Seems fair. Then earlier this year, Facebook rolled back the cryptocurrency ad ban, bought a block chain company and announced its own cryptocurrency. Maxine Waters: (17:28) So tell us what changed. How did cryptocurrency go from being misleading and deceptive last year and then becomes a means for financial inclusion this year? It seems to me that you shifted your stance because you realize that you can use your size and your users' data to dominate the cryptocurrency market. You change your policy when it benefits you. You re-instated cryptocurrency ads because you had plans to start your own cryptocurrency. So this brings me back to your new policy on political speech. My question to you is how does this new policy benefit you? Because it seems that a policy that allows politicians to lie, mislead and deceive would also allow Facebook to sell more ads to those politicians, thus making your company more money. But you can tell me. How does Facebook benefit? Mark Zuckerberg: (18:25) Chairwoman, thanks for those questions. I'd like to address all of the things that you mentioned in there. On elections, you're right that in 2016 we were on our back foot in terms of preventing Russia from attempting to interfere in our elections. We've spent a lot of the last few years building systems that are more sophisticated than any other company has at this point, and frankly a lot of governments too, for defending against foreign interference. This Monday we announced that we had proactively identified a network of fake Russian accounts and a few networks of Iranian fake accounts that we proactively took down. Which certainly as you say, signals that these nation states are still attempting to interfere, but I hope will also give us some confidence that our systems are now more sophisticated to proactively identify and address these things. Mark Zuckerberg: (19:19) On your question about political ads, look, from a business perspective, the very small percent of our business that is made up of political ads does not come anywhere close to justifying the controversy that this incurs for our company. So this really is not about money. This is on principle, I believe in giving people a voice. I believe that ads can be an important part of voice. I think especially in the political process for challenger candidates and for local candidates or advocacy groups whose message might not otherwise be covered by the media, having ads can be an important way to inject your message into the... Maxine Waters: (20:03) Let me interrupt you for a minute. Are you telling me, I think as you said to me before, you plan on doing no fact checking on political ads? Mark Zuckerberg: (20:13) Chairwoman, our policy is that we do not fact check politicians' speech. And the reason for that is that we believe that in a democracy it is important that people can see for themselves what politicians are saying. Political speeches, some of the most scrutinized speech already in the world... Maxine Waters: (20:32) Do you fact check on any ads at all? Mark Zuckerberg: (20:36) Yes. Maxine Waters: (20:38) Describe what you fact check on. Mark Zuckerberg: (20:40) Well, Chairwoman, actually, thank you for the opportunity to clarify. Facebook itself actually does not fact check. What we do is we have feedback that people in our community don't want to see viral hoaxes or kind of widespread... Maxine Waters: (20:54) So let me be clear. You do no fact checking on any ads. Is that correct? Mark Zuckerberg: (20:59) Chairwoman, what we do is we work with a set of independent fact checkers who... Maxine Waters: (21:05) Somebody fact checks on ads? You contract with someone to do that. Is that right? Mark Zuckerberg: (21:13) Chairwoman, yes. Maxine Waters: (21:14) And tell me who is it that they fact check on? Mark Zuckerberg: (21:20) Chairwoman, what we do is when content is getting a lot of distribution and it's flagged by members of our community or by our technical systems, it can go into a queue to be reviewed by a set of independent fact checkers. They can't fact check everything, but the things that they get to, and if they mark something that's false, then we... Maxine Waters: (21:39) All right. My time has expired, and someone else will continue on this line of questioning. And I now call on the gentleman from North Carolina, the ranking member, Mr. McHenry to be recognized for five minutes. Patrick McHenry: (21:53) So as I mentioned in my opening statement, I think there are bigger challenges and opportunities facing America than your ad model or even the question of Libra. So let's start with your speech last week. Have you changed your view in terms of technology and China from before your speech on Friday to what we read and heard from your speech on Friday? Mark Zuckerberg: (22:20) Congressman, no, I have not changed my views in the last week. Patrick McHenry: (22:23) No, no, 10 years ago versus today on your view of China and technology, versus your speech on Friday. Mark Zuckerberg: (22:31) Congressman, I think it's fair to say that my views have evolved. I probably 10 years ago would have been more optimistic that trying to work in China could have contributed to making a more open society. And today it seems that in some cases working in China not only does not do that, but compromises American company's ability to promote our values abroad and around the world. And I think we've seen that in the last few weeks in a number of cases. Patrick McHenry: (23:02) So you mentioned in your speech, you said a decade ago, 10 of 10 of the top companies on the internet were American. Now six of 10 are Chinese. So the question I have for you is why are we seeing emerging technologies driven by blockchain projects and digital currencies being developed elsewhere, such as the case of Libra? Mark Zuckerberg: (23:28) Well, Congressman, we have a lot of competition around the world. And you're right that over the last decade, pretty much all of the major internet platforms have been American companies with strong free expression values. And I just think that there's no guarantee that that is the state of the world going forward. Today, six of the top 10 companies are coming out of China and certainly do not share our values on things like expression. Patrick McHenry: (23:52) So on that, why Switzerland for Libra? Why not the United States? Mark Zuckerberg: (23:57) So the Libra Association is an independent association. We're trying to set up a global payment system. Switzerland is where a lot of the international organizations are. It also... Patrick McHenry: (24:08) Is there greater regulatory certainty in Switzerland than here in the United States for this type of technology? Mark Zuckerberg: (24:14) I think Switzerland has certainly been forward-leaning on wanting to work through systems like this, but I don't want this to come across as if... Patrick McHenry: (24:24) And the United States is not? Mark Zuckerberg: (24:26) Well Congressman, one of the things that I just want to be clear on is that the independent Libra Association is independent. We're a part of it. We helped stand it up, but we don't control it. But I just want to make sure it's 100% clear to everyone today that my commitment running Facebook is that we're not going to launch anything that is a product or a part of this until we have full support from US regulators regardless of what the international regulators say. Patrick McHenry: (24:49) So the project of Libra internally, before you handed this technology idea over to the association, let's think of this. Why would you have a project like that? Is it about competition with your peers globally? Is that a component? Mark Zuckerberg: (25:06) Sorry, I didn't hear that. Patrick McHenry: (25:06) So you have no payments platform on Facebook. Facebook is not a payments platform, is that correct? Mark Zuckerberg: (25:13) Yes. Patrick McHenry: (25:13) Okay. So in seeking to develop a payments platform internally, before you handed the technology over to the association for Libra, was that because of examples globally of competitors creating payments platforms? Mark Zuckerberg: (25:34) Congressman, it was partially that. And it's partially because I view the financial infrastructure in the United States as outdated. So there are two sets of work that we do on payments. One is building payment systems that allow people to send money on top of the existing financial system that exists. That work is relatively less controversial. We're doing it around the world and in different countries on top of existing payment systems. There's another set of work, which is what we're trying to do with Libra, which is trying to help rethink what a modern infrastructure for the financial system would be if you started it today rather than 50 years ago on a lot of outdated systems. I mean, I just look at the fact that you can send a text message to someone around the world... Patrick McHenry: (26:21) Okay, but let me just drill down on this. Alipay has 900 million users. That is a global competitor in my view to Facebook. You see Alipay and WeChat Pay working. Why not just do a Facebook version of Alipay in order to level this? Mark Zuckerberg: (26:46) Congressman, I think you're right that they're certainly competing, not just with us, but all of the American companies on this. Part of the infrastructure that they're building on is a lot more modern than some of what we would have to build on here. As soon as we put forward the white paper around the Libra project, China immediately announced a public private partnership working with companies like that to extend the work that they had already done with Alipay into a digital renminbi as part of the belt and road initiative that they have. And they're planning on launching that in the next few months. Patrick McHenry: (27:20) Thank you. Maxine Waters: (27:23) The gentlewoman from New York, Mrs. Maloney, who is also the chair for the subcommittee on investor protection entrepreneurship in capital markets is recognized for five minutes. Carolyn Maloney: (27:33) Thank you. Mr. Zuckerberg, you said, and on page three of your testimony, that Facebook will not be part of launching Libra anywhere in the world until all the US regulators approve. So which US regulators are you talking about? There are actually many financial regulators such as the fed, the FDIC, the OCC, the SEC, the CFTC, the CFPB, FinCEN, FHFA, and many, many more. And to be clear, Libra would affect all of those regulators. So which of those regulators do you believe need to approve Libra before you will support the launch? And what kind of approval do you believe is necessary? Do you need to see written approval from each regulator? Will those approvals be public? Mark Zuckerberg: (28:27) Congresswoman, thanks for the question. My understanding is probably all of them for different things. Different of these regulators focus on different areas, whether it's financial stability or fighting crimes and fraud and terrorism. Different areas of the work need to get done and are overseen by different regulators. I think the processes with each of them might be a little bit different, but we're committed to getting all of the appropriate US approvals before launching the Libra payment system in any country in the world, even where those approvals might not be strict. Mark Zuckerberg: (29:03) ... payment system in any country in the world, even where those approvals might not be strictly required. Carolyn Maloney: (29:05) Just to be clear, will you commit to waiting until you get approval from every US regulator that Libra affects before you'll support launching Libra, yes or no? Mark Zuckerberg: (29:15) Congresswoman, all of the regulators that have jurisdiction over a part of what we're doing, we are working with them and we'll seek approval from. Carolyn Maloney: (29:25) A bill of mine passed the House yesterday, which would crack down on anonymous shell companies in the United States, which has become a nightmare for law enforcement. They are the perfect vehicle for laundering money and for terrorism financing and criminal activity. Now with the creation of various digital currencies we face a new challenge with financial transactions being anonymous. That's why I am concerned that the use of anonymous wallets would make Libra attractive to those that are looking to launder money. It's my understanding that the Libra wallet won't be anonymous, but I haven't heard anything about competing wallets. So will you commit not to supporting any other anonymous wallets for Libra? I consider this a national security issue. Mark Zuckerberg: (30:20) Congresswoman, thank you for this question. I think it builds on a question that the chairwoman was asking before as well about our position on cryptocurrencies overall. We see a range of different cryptocurrency projects out there from completely decentralized and deregulated things to what we're trying to do is trying to build a safe and secure and regulated alternative. We think that the digital payment space needs that. Of course, as a big company we're not going to do something that's unregulated or decentralized. We're going to work with the government to build something that gets to the same standard on anti money laundering and CFT that all of the other world class payment systems have or exceed those standards. Speaker 3: (31:07) Not the question. Will you commit to no anonymous- Mark Zuckerberg: (31:09) Sorry, I forgot the actual question. Carolyn Maloney: (31:12) Yeah. Mark Zuckerberg: (31:12) I was caught up in answering the chairwoman's question. Carolyn Maloney: (31:17) Well I don't think you can have strong anti money laundering controls and anonymous wallets. So I see this as a new loophole for criminals looking to hide and launder money. So what is your position on anonymous wallets? Will you commit that you want have anonymous wallets, that it be transparent? Otherwise we'll face the problems that we have with the LLCs where they are hiding, trafficking money, terrorism financing, criminal activity of all kinds. It's a huge problem for safety for Americans, and it's a huge problem for law enforcement. This is their number one concern was this bill we passed yesterday with bipartisan support, but you're creating a whole new currency that could potentially be anonymous and could hide all types of criminal activity, which is a huge concern to the safety of Americans and national security. Mark Zuckerberg: (32:19) Yes, congresswoman, I will commit that Facebook will do what you are saying. Our version of this, our wallet is going to have strong identity, is going to work will all the regulators to make sure that we are at the standard of AML and CFT that people expect or exceed it. I can't sit here and speak for the whole independent Libra Association, but you have my commitment from Facebook. Carolyn Maloney: (32:47) Thank you very much, and I yield back. Maxine Waters: (32:51) The gentleman from Missouri. The gentlewoman from Missouri, Misses Wagner is recognized for five minutes. Mrs.Wagner: (32:58) Thank you madam chairwoman, and thank you Mister Zuckerberg for being here. When Libra was announced 28 companies joined as founding members by signing a non binding letter of intent to join the association, but in recent weeks many of these founding members have dropped out of the association. Perhaps they're not so sure it's going to work either. PayPal, VISA, MasterCard, Stripe, Bookings Holdings, eBay, and Mercado Pago, you've lost these stable partners I would say, and I find it highly concerning. Very briefly, what do you make of these sudden departures from the association, and why do a number of these founding members have concerns whether you're up to the task of meeting our money laundering and regulatory standards? Mark Zuckerberg: (33:53) Congresswoman, thanks for the question. This project is too big for any one company to do on its own, which is we set up this independent Libra Association with a number of other companies and non profits. It's a very complex project, and as you say, it's risky. Mrs.Wagner: (34:11) Why have they departed? Scores of stable partners have dropped out. Why? Mark Zuckerberg: (34:20) Well congresswoman I think you'd have to ask them specifically for their- Mrs.Wagner: (34:23) Why do you think they dropped out? Mark Zuckerberg: (34:26) I think because it's a risky project, and I think that there's been a lot of scrutiny. Mrs.Wagner: (34:31) Yes, it's a risky project. So let me move on to something that's near and dear to my heart. As you may know, I wrote and passed HR 1865, the Fight Online Sex Trafficking act, widely known as FOSTA SESTA. I am committed to rooting out online sex trafficking and believe that what is illegal offline should indeed be illegal online. Mrs.Wagner: (34:55) Three weeks ago the New York Times ran a report titled The Internet is Overrun with Images of Child Sex Abuse, and I'd like to submit it for the record. Maxine Waters: (35:08) Without objection, such is in order. Mrs.Wagner: (35:09) 16 point 8 million, 16 point 8 million as confirmed by the Department of Justice of the 18 point 4 million worldwide reports of child sexual abuse material are on Facebook. 16 point 8 of the 18 point 4 million. These 18 point 4 million reports from last year included a recorded 45 million photos and videos. These are absolutely shocking numbers. Moreover, it's estimated that 70% of Facebook's valuable reporting to NCMEC, the National Center on Missing and Exploited Children would be lost if Facebook implements its end to end encryption proposal. Mister Zuckerberg, how much is this figure growing year after year, and if you enact end to end encryption what will become of the children who will be harmed as a result that they're not reported? Mark Zuckerberg: (36:07) Congresswoman, thanks. Child exploitation is one of the most serious threats that we focus on. Mrs.Wagner: (36:15) What is Facebook doing? 16 point 8 of the 18 point 4 million. Mark Zuckerberg: (36:19) Well congresswoman, those reports come from Facebook. The reason the vast majority come from Facebook is because I think we work harder than any other company to identify this behavior and report it to NCMEC- Mrs.Wagner: (36:29) What are you doing- Mark Zuckerberg: (36:31) ... and the FBI. Mrs.Wagner: (36:31) ... to shut this down? These accounts peddle horrific, illegal content that exploits women and children. What are you doing Mister Zuckerberg to shut this down? Mark Zuckerberg: (36:41) Well congresswoman, we build sophisticated systems to find this behavior. Mrs.Wagner: (36:45) 16 point 8 million and growing of the- Mark Zuckerberg: (36:48) Absolutely. Mrs.Wagner: (36:48) ... 18 point 4 images? Mark Zuckerberg: (36:49) Well congresswoman, I don't think Facebook is the only place on the internet where this behavior is happening. I think the fact that the vast majority of those reports come from us reflects the fact that we actually do a better job than everyone else at finding it and acting on it. And you're right that in an end to end encrypted world, one of the risks that I'm worried about among others to safety is that it will be harder to find some of this behavior. Mrs.Wagner: (37:15) But you have said you want an end encryption. What's going to happen of these children? They won't be reported then, and you are responsible. Facebook is responsible for 16 point 8 million of the 18 point 4- Mark Zuckerberg: (37:29) Well congresswoman- Mrs.Wagner: (37:29) ... that are out there. Mark Zuckerberg: (37:30) ... again- Mrs.Wagner: (37:31) Last year alone. Mark Zuckerberg: (37:32) Again I believe that there are probably a lot more than 18 million out there, and I think we're doing a good job of finding this, but I think you're right that an end to- Mrs.Wagner: (37:41) What are you going to do to shut it down Mister Zuckerberg? Mark Zuckerberg: (37:43) We're working with law enforcement and building technical systems to identify- Mrs.Wagner: (37:49) Well you're not working hard [crosstalk 00:37:51] enough sir, and end to end encryption is not going to help the reporting process. I'm over my time. I have many more questions for you that I'll submit for the record, but we're going to talk about this, and I yield back. Thank you. Maxine Waters: (38:05) The gentlewoman from New York, Miss Velazquez is recognized for five minutes. Miss Velazquez: (38:10) Thank you madam chair. Mister Zuckerberg, Calibra has pledged it will not share account information or financial data with Facebook or any third party without customer consent. However, Facebook has had a history of problems safeguarding users' data. In July, Facebook was forced to pay a five billion dollar fine to the FTC, by far the largest penalty ever imposed to a company for violating consumers' privacy rights, as part of a settlement related to the 2018 Cambridge Analytica scandal. So let me start off by asking you a very simple question. Why should we believe what you and Calibra are saying about protecting customer privacy and financial data? Mark Zuckerberg: (39:08) Well, congresswoman, I think that this is an important question for us on all of the new services that we build. We certainly have work to do to build trust. I think that the settlement and order that we entered into with the FTC will help us set a new standard for our industry in terms of the rigor for the privacy program that we're building. We're now basically building out a privacy program for people's data that is parallel to what the Sarbanes-Oxley requirements would be for a public company on people's financial data. In terms of audits internally any manager who's overseeing a team that handles people's data has to certify quarterly that they're meeting their commitments, and that goes up all the way up to me, and I'll have to certify that on- Miss Velazquez: (39:59) Thank you for your answer. It has been publicly reported that when you acquired WhatsApp, Facebook officials coached the company's founder to tell European Union regulators that it will be and I quote, "really difficult to merge or blend data between Facebook and WhatsApp," and that there was no desire to integrate the two systems. Mister Zuckerberg, 18 months later the platforms were linked. The European Union fined Facebook for providing incorrect or misleading information. So let me ask you, do you understand why this record makes us concerned with Facebook entering the cryptocurrency space? Do you realize that you and Facebook have a credibility issue here? Mark Zuckerberg: (41:00) Congresswoman, I understand that we have work to build trust on this, and that means making commitments and even if we learn new things in the future that could change our mind on how we should operate, that I think we're going to need to make sure that the commitments that we make- Miss Velazquez: (41:21) So have you learned that you should not lie? Mark Zuckerberg: (41:26) Congresswoman, I would disagree with the characterization that I was lying. Miss Velazquez: (41:30) Well, you say you went to the European regulators, and you said that it will not linked, that it will be impossible, and yet 18 months later it happened, and you were fined for that. Mark Zuckerberg: (41:46) Congresswoman, I'm- Miss Velazquez: (41:50) So let's continue. I hope that you learned something about that, about not lying. Facebook internal model was for a long time move fast and break things. Mister Zuckerberg, we do not want to break the international monetary system. Last week the G7 released a report stating that global stable coins could have significant adverse effects both domestically and internationally on the transmission of monetary policy as well as financial stability. Given the G7's concerns and the concerns voiced by us here today, would you commit to a moratorium on launching Libra until congress can develop, not the regulators. You said before that you will not move until all the regulators sign into and support for you to move forward. Here, congress, the people's house needs to have the opportunity to work on a legal framework so that we provide the guidance to the regulators. Would you commit to that, yes or no? Mark Zuckerberg: (43:06) Congresswoman, my understanding is that congress exercises significant oversight over the regulators through these committees, so that would seem to me like the appropriate way for that to happen. Miss Velazquez: (43:24) So that is a no. Thank you. Maxine Waters: (43:24) The gentleman from Oklahoma, Mister Lucas is recognized for five minutes. Mister Lucas: (43:28) Thank you madam chairman. Mister Zuckerberg, the problem of addressing underbanked and unbanked individuals is both real and important. However, significant portion, and I know the Libra project is intended to reach this population. However, a significant portion of the underbanked simply do not trust banks. I suspect they may not trust captains of industry or members of congress either for that matter. Do you see this as being a major hurdle in the wide adoption of Libra? Mark Zuckerberg: (44:04) Congressman- Mister Lucas: (44:05) How do you persuade those people that you're trustworthy and to use the system? Mark Zuckerberg: (44:10) Congressman, we've certainly had a lot of issues over the last few years, but I think it's worth remembering that every day billions of people come to our services, because they trust that they can share content, messages, photos, comments with the people they care about, and more than a hundred billion times a day people do that. They share something with a set of people, because they know that that content is just going to reach the people that they want it to. So I think that if we're able to move forward with this project there may be some people who don't want to use it, because they don't trust us or don't like us, and that's one of the values of having an independent association where there will be other competitor wallets and other approaches too, but I think that this is an area where being able to put ideas out into the world and letting the market work and letting people choose for themselves what they trust and what services they want to use is probably the right approach. Mister Lucas: (45:10) I just suggest that it will take a lot of energy and effort to reach that group, the underbanked, the unbanked, and it's real, and it's growing more substantially. Let's shift focus for just a moment. I also serve along with congressman Posey on the science, space, and technology committee, and those of us who've worked on that committee know as all of us do that the digital images can be altered to make it nearly impossible to distinguish between what is real and what is not. Facebook recently launched the Deepfake Detection challenge in collaboration with Microsoft and others to address this problem. Not this seems like a step in the right direction on behalf of the technology companies involved. From your perspective, how great a threat is the deceptive use of deepfake technology, and in what ways do you anticipate that the detection challenge will be successful? Mark Zuckerberg: (46:02) Thank you congressman. I think deepfakes are clearly one of the emerging threats that we need to get in front of and develop policy around to address. We're currently working on what the policy should be to differentiate between media that has been manipulated by AI tools like deepfakes with the intent to mislead people and compare that to just normal content that might have been an interview that might've just been cut differently, and someone might not like the way that it's cut, but it is not a deepfake and is not kind of misleading, manipulated content in that way. So we're working on that policy. I think this is a very important area. The deepfake challenge to technically figure out how to identify these things will certainly help inform the policy, and this is one of the areas that I do think is quite important going forward. Mister Lucas: (47:00) One final question, many experts have suggested that we need to educate the public on how to consume trusted information. Facebook recently announced an initiative support projects on media literacy. Could you elaborate on these projects and what you see as Facebook's role given your critical position within the industry? Mark Zuckerberg: (47:21) Yes congressman. This question may be premature to ask, although later in this week we actually have a big announcement coming up on launching a big initiative around news and journalism where we're partnering with a lot of folks to build a new product that's supporting high quality journalism. I think if there's an opportunity within Facebook and our services to build a dedicated surface, a tab within the apps for example where people who really want to see high quality, curated news, not just social content, but from high quality publishers can go and consume that content, and that could create a place where we can form new business partnerships to help fund high quality journalism as well. So I'm looking forward to discussing at more length in the coming days. Mister Lucas: (48:16) Give back the balance of my time madam chair. Maxine Waters: (48:19) Thank you. The gentleman from New York, Mister Meeks who is also the chair for the subcommittee on consumer protection and financial institutions is recognized for five minutes. MIster Meeks: (48:31) Thank you madam chair. Mister Zuckerberg, you came in, and your opening statement sounded great. I think that your advisors advised you to what we wanted to hear and interests that you think that members of congress on various sides wanted, but words are different than actions, sir. One of the first things that I heard you say when you were testifying was that you were interested in the unbanked and the underbanked. I chair, as the chairwoman said, the consumer protection and financial institutions subcommittee. We had a hearing yesterday with dealing with what we call MDIs, minority depository institutions. Facebook is a multi billion, trillion dollar company. You concerned about the underbanked and unbanked. How much of Facebook's money is in MDIs that would provide services and help the unbanked and the underbanked? Have you invested in any of the minority development depository institutions in America or any place else in the world? Any of your money are sitting in those banks? Mark Zuckerberg: (49:45) Congressman, I'm not sure of the answer to that question, but what I do know is a lot of the people that we serve around the world are underbanked, and this is beyond the US as well. MIster Meeks: (49:55) Well I understand it's beyond the US, but we're here right now, and you've just indicated that you want it to work, and you would not move any place else unless you were in compliance with US regulators, et cetera, and what I'm saying is that for example, I don't even know when you talk about internationally whether or not going after the unbanked and underbanked, whether or not you intend to have Calibra and your digital wallet register in each of those countries so that there be a regulatory oversight, because what we found is a lot of individuals, we have payday lenders who say, "We're interested in the underbanked. We're interested in those that are not banked," and those individuals who are supposed to be helped pay more than anybody else. We've got institutions here, minority depository institutions, and if you want to show that you're doing the right thing then with all of the money that you have you can do it here in the United States and other places also. So that is an answer that you should know, and I would urge you to go back and find out, and I would almost guess that there's zero dollars there, and you should thereby then look at your policy and change it, because action speaks much louder than words. MIster Meeks: (51:35) And you do have a trust factor. I've met with a lot of your investors who are pulling out of Libra. Let's just look at the news, because the other thing that's most important to me is our democracy and democracies around the world. Now you tell me, when you look at around the world, it seems to me that Facebook was an accelerant in many of the destructive politics of today. For example, 2016 Russia interferes with US elections. You've admitted that you were caught on your heels. Question is, what has been and what will be done for 2020? Brexit, another big issue around the world. Misinformation and divisions, attempts at division, and misinformation across North America and Europe. Facebook has been systemically found at the scene of the crime. Do you think that's just a coincidence? Sir? Mark Zuckerberg: (52:47) Well congressman we operate in almost every country in the world except for China and North Korea, so I think we would be in almost every country where different activities are happening. One thing that you mentioned before that I agree with is there are a lot of predatory financial organizations. We ban payday lenders and a lot of folks like that from using our platform for ads as well that certainly we're not interested in- MIster Meeks: (53:13) But what I'm talking about not only banning. If you have the wherewithal, because if these MDIs had the money then they would be able to put the product, because these folks need access to capital and financial institutions. I'm out of time. Maxine Waters: (53:37) Thank you. The gentleman from Florida, Mister Posey is recognized for five minutes. Mister Posey: (53:43) Thank you madam chair and ranking member McHenry for holding this very informative hearing. For many of us Facebook is a reality in our business and our personal lives. I communicate with my constituents as well as my friends through the platform daily. Many benefits accrue from the service, yet in the midst of these great benefits, great challenges have emerged, and I want to welcome you to this hearing. Mister Zuckerberg, I believe Facebook's a great innovation that has much potential for good. That we welcomed an innovation together with the controversies that it's spawned. Unfortunately, some in politics and the media so their role as cajoling Facebook to censor its users' speech. In April, I wrote you that I was disappointed that Facebook would consider restricting free speech rights to communicate the risks associated with vaccinations. I support vaccinations of children and adults, but I also support open and frank communication of the risks of vaccination. Mister Posey: (54:46) Every person should make vaccination decisions with full information. In recognition of the uncertainties, the risks of vaccinations, the federal government has created a vaccination trust fund that has paid out over four billion dollars to compensate those who have been injured by vaccinations. There is no more clear or persuasive statement that the risk associated with vaccinations than the existence and the payment record of that fund. From time to time medical research has established case and context of specific risks associated with vaccinations. I wrote you when another member of the house made claims that the risk of vaccination should not exist and that Facebook should police communications related to the vaccination risks. Mister Posey: (55:33) Today you testified you believed in giving people a voice, and Mister Zuckerberg is Facebook able to assure us that it will support users' fair and open discussions and communications related to the risks as well as the benefits of vaccinations? Mark Zuckerberg: (55:50) Congressman, thanks for the question. We do care deeply about giving people a voice and freedom of expression. Those are some of the founding values of the company. At the same time we also hear consistently from our community that people want us to stop the spread of misinformation. So what we do is we try to focus on misinformation that has the potential to lead to physical harm or imminent harm, and that can include especially misleading health advice. There is a hoax that was going viral a number of months back that was saying- Mister Posey: (56:34) Let's try and stick to this subject, because our time is very limited. Are you 100% confident that vaccines pose no injury to any person on this planet? Mark Zuckerberg: (56:44) Congressman, I don't think it would be possible for anyone to be 100% confident, but my understanding of the scientific consensus is that it is important that people get their vaccines. Mister Posey: (56:58) But you said your platform, you believe in giving people a voice. Shouldn't somebody have the opportunity to express an opinion different from yours? Over four billion dollars has been paid out by the fund. Thousands of people. Don't you think people should be able to have information to make an informed choice? Mark Zuckerberg: (57:23) Congressman I do, and that's why we don't stop people from posting on their page something that's wrong. If someone wants to post vaccine, anti vaccination content or if they want to join a group where people are discussing that content, we don't prevent them from doing that, but we do is we don't go out of our way to make sure that our group recommendation systems try to show people or encourage people to join those groups. Mister Posey: (57:50) Okay. Mark Zuckerberg: (57:51) We discourage that. Mister Posey: (57:53) Okay, well how do you discourage it? Mark Zuckerberg: (57:57) Well, there are a number of different tactics, for example if someone is typing in into the search results ... Mark Zuckerberg: (58:03) ... is typing into the search results, into the search box something that might lead to anti-vax content. We don't recommend anti-vax searches to them. If you type in the name of a group, exactly, you can get the group. We're not going to hide it. We're not going to prevent you from joining it but we're not going to recommend or go out of our way to show people content that would encourage people to join those groups, but people can share that content if they want. Mister Posey: (58:30) Many of the people harmed by this policy are in fact parents with disabled children and I don't think we or you should be so quick to turn our backs on them. If you look at the statistics, I think you're making a bad mistake. All right. Time is expired. I yield back. Thank you. Maxine Waters: (58:48) Thank you very much. The next gentleman from California is Mr. Sherman and today is his birthday. Happy birthday, Mr. Sherman. Mr. Sherman: (59:01) Thank you. Maxine Waters: (59:02) You're recognized for five minutes. You don't get any more just because it's your birthday. Mr. Sherman: (59:11) Donald Trump said, "Crypto-assets can facilitate unlawful behavior, including the drug trade." I ask unanimous consent to put in the record, a report by Rand talking about cryptocurrencies uses by terrorists. Hopefully without objection. Maxine Waters: (59:30) Without objection, such as the order. Mr. Sherman: (59:33) I'm not here to be anti-Facebook. I was anti-cryptocurrency back when you were anti cryptocurrency. Cryptocurrency either doesn't work, in which case investors lose a lot of money, or it does achieve its objectives perhaps, and displaces the US dollar or interferes with the US dollar being the sole reserve currency or virtually the sole reserve currency in the world. That role of the US dollar saves the average American family $1,000 in interest costs because money pours into the United States because of the role of a dollar. The Federal Reserve can turnover up to $100-billion dollars in profits to the US Treasury that we in Congress spend because of the power of the US dollar. Mr. Sherman: (01:00:20) The US dollar is an excellent currency as a means of account. It serves all the needs except it's really bad for tax evaders, drug dealers, terrorists and that unmet need, can be met by new currency. If we make drug dealers just 10% more effective, how many American deaths is that over the next decade? Does it compare to the deaths we experience from terrorism? We'll have to see. Those who are introducing cryptocurrency have got to pause and wonder what effect they'll have on the power of the United States to impose sanctions. Right now, Turkey is stopping at 20 miles into Syria, not because of US troops, we're out, but because of US sanctions, because of the role of US dollar. Mr. Sherman: (01:01:18) We stand to lose all that because cryptocurrency is the currency of the crypto patriot. Alaska has pointed out that you're going to wait for regulators to sign off. Regulators are working with old statutes. Your lawyers are going to show that there's a loophole in a 1940 investment company act that gets you where you want to go and the regulators can't stop you and you're going to call that regulatory approval as if the people in 1940 knew what you had in mind. What you've made clear is that you will go forward unless Donald Trump-appointed regulators stop you, and you will go forward if you can just find loopholes in statutes, but you'll deploy a mountain, a horde of lobbyists to prevent us from writing a new statute. Mr. Sherman: (01:02:09) Ms. Maloney asked you a question that you forgot and you still forgot to answer it, but let's be clear. You're going to be making powerful burglary tools and letting your business partners commit the burglary. You are going with all the power of Facebook, to try to create a new currency. You're going to call it the Libra, but you're the person behind it. That's why I call it the Zuck Buck. You are going to create it and then say, "Oh, it's our business partners." Your white paper says your business partners are going to use your tool to have anonymous accounts and then you have the gall to come here and say you're going to follow all the know your customer. How do you know your customer with an anonymous account? Mr. Sherman: (01:02:54) Mr. Meeks calls your bluff on this idea that you're creating a payment system for the poor and unbanked. The poor and unbanked need pesos. They need dollars that they can buy something at a local store. You've done no effort to help the unbanked anywhere else and any other time and you should. You should create a payment system with a close to zero fee. But, the real money is in the tax evaders and to some extent the drug dealers. I know you've got at least 100 lawyers that will tell you that what you're doing is legal and that you will be safe, but given the harm that this can do, they could be very wrong. Mr. Sherman: (01:03:46) If this explodes the way it might, especially, you will not be able to hide behind the idea that you didn't create the Libra organization. That it's just your business partners that have wallets designed for drug dealers and terrorists. I have a few more things to say, but for the richest man in the world to come here and hide behind the poorest people in the world, and say that's who you're really trying to help, you're trying to help those for whom the dollar is not a good currency. Drug dealers, terrorists, tax evaders. Maxine Waters: (01:04:27) Thank you. The gentleman from Missouri, Mr. [Luca Meyer 01:04:29] is recognized for five minutes. Mister Lucas: (01:04:33) Thank you Madam Chair and welcome Mr. Zuckerberg. I certainly admire you as an innovator and an entrepreneur. You've taken advantage of the economic freedom of this country and I admire that. I think that's fantastic, but you now are trying to get into a different world here with this, with your Libra experience here. In the past, you've been dealing with communications systems where people are able to exchange everything from retail information to personal information. It was buyer beware in the retail world. Mister Lucas: (01:05:07) In the financial world, people transact because they can trust that the transactions are going to be secure from the standpoint of the stability of the dollar or whatever they're exchanging their money. There's the secrecy of the activity. There's consumer protections as well as not being able to do things in an illegal fashion. That takes a lot of regulation. As you're finding out, regulation is an important part of the financial services world to be able to give people those kinds of protections and earn that trust. You've indicated already that you want to have conform to the regulation to be able to do this and earn that trust. Mister Lucas: (01:05:52) Can you continue to... The first question is, can you continue to innovate and be able to make the changes to this product as it needs to be able to conform to the regulation and still be able to make this work? Do you believe that that can happen? Mark Zuckerberg: (01:06:06) Congressman, I currently do. I think we'll have to see how this process plays out, but I do sitting here today. Mister Lucas: (01:06:15) Are you willing to stop this project if you see that it can't go forward anymore? Mark Zuckerberg: (01:06:20) Congressman, I will certainly stop Facebook's part of it. The independent Libra Association is a separate thing that exists at this point and if I feel like Facebook can't be a part of it and keeping with the principles that I've laid out, then Facebook won't be a part of it. Mister Lucas: (01:06:37) On a follow-up on Mr. Sherman's line of questioning with regards to the reserve currency, what effect do you think that you get implemented, Libra implemented here, that this would have on the reserve status of the US dollar? Mark Zuckerberg: (01:06:52) Congressman, because the reserve will be primarily US dollars, I actually think that a project like this could be important for extending America's financial leadership and to the contrary of the risks that are being pointed out. We have to be careful about all of the risks around financial stability and there are certain regulators who oversee that. We're also mindful of that. We want to do something that strengthens America's leadership. I just think that we can't sit here and assume that because America is today the leader, that it will always get to be the leader if we don't innovate. Innovation means doing new things and that does mean... And the new things have risks, and we need to address the risks, and we need to be careful in doing that. I personally worry that if we don't do things like this, whether it's this project or others like it, then eventually we lose our leadership. Mister Lucas: (01:07:48) I appreciate the fact that you're pointing out that China's already doing this. That means if we're going to allow them to play in this area, we need to be looking at it as well. I think right now the Colibra says that what? 50% of the currencies that are in the basket here that they use to set the value of this as a dollar. Is that correct? Mark Zuckerberg: (01:08:09) Congressman, I don't know if that's been fully finalized, but I think principles that it will be primarily those dollars. Mister Lucas: (01:08:14) My concern though is, that right now, that's good for the United States. But what happens whenever the board of Colibra decides that the Chinese Yuan suddenly is because of the economy, looks to be a very stable currency, and a growing currency, and importance in the world, and suddenly they diminish our amount down to one-third of the value of the basket of currencies? And now the Yuan one-third, and suddenly now we have a really big problem from the standpoint that the currency that is being utilized most around the world is the Libra, and we are only one-third of that? That to me is concerning. Does that concern you at all that the association could set this, and we would have nothing about it, and it'd be a negative effect on our position? Mark Zuckerberg: (01:09:01) Congressman, that is certainly something that I think we should look at upfront. I can't speak for the Independent Association on this, but I think it would be completely reasonable for our regulators to try to impose a restriction that says that it has to be primarily US dollars. Mister Lucas: (01:09:19) Okay. One more quick question then. I don't think the Chairman will give me enough time for you to answer this, but what is the advantage of Facebook to be involved in Libra? Mark Zuckerberg: (01:09:28) Sorry, for what is the advantage of having Facebook be involved? Mister Lucas: (01:09:30) What is the advantage of your company, Facebook, to be involved in Libra? What is the end game for you to be able to realize a benefit from this? Mark Zuckerberg: (01:09:37) Well, Congressman, we build some of the most widely used messaging services around the world. WhatsApp and Facebook messenger. The vision here is to make it so that people can send money to each other as easily, and securely, and cheaply as it is to send a text message. I think that sending money would be a very useful utility to add for people around the world, in addition to the messaging products that we have. Mister Lucas: (01:10:01) Thank you very much. Maxine Waters: (01:10:03) The gentleman from Missouri, Mr. Clay, who is also the chair for the subcommittee on Housing Community Development and Insurance, is recognized for five minutes. Mr. Clay: (01:10:12) Thank you Madam Chair and Mr. Zuckerberg. The Housing Rights Initiative, a DC-based watchdog group and an aggrieved DC woman, have recently found human rights complaints in DC and Maryland against seven major housing companies who are accused of using Facebook's ad targeting tools to deny prospective tenants the ability to see housing ads based on their age, which is a protected class under local fair housing laws. The lawsuit also alleges that Facebook's algorithm disproportionately showed the ads to younger users. Mr. Zuckerberg, do you agree to comply with any potential subpoenas and document requests Facebook might receive seeking information about how housing companies have discriminated? Mark Zuckerberg: (01:11:16) Congressman, I imagine that if it's a valid subpoena, we will certainly comply with it. Our legal team will. Mr. Clay: (01:11:27) Will Facebook agree to produce information about the algorithm it uses to decide which ads users receive? Mark Zuckerberg: (01:11:38) Congressman, for a bit of background here, it is always been against our policies for people to use any of our products and especially our ad products to discriminate. We recently, as you know, entered into a settlement with the ACLU and other civil rights groups to remove certain targeting features from advertising so that way if you're doing targeting for housing, employment, or credit opportunities, you can't target based on age, or gender, or zip code. We also limited the number of interest-based targeting options that were available there as well. Mr. Clay: (01:12:15) Yeah, but for so many years, your company engaged in that kind of conduct. Was that because it was a lack of awareness as far as your employees are concerned, as far as they have any sensitivity to inclusion, diversity, and non-discrimination? Mark Zuckerberg: (01:12:37) Congressman, it's always been against our policies for anyone to use the ad systems to discriminate and we enforce those policies through a mix of technical systems and human review. When this complaint was filed by the ACLU and others, we were able to reach a settlement that we thought would strengthen our policies, and our products, and help them uphold the principles that we care about, and have always been committed to on this. Mark Zuckerberg: (01:13:02) Part of this is also agreeing to study further the effects of how the algorithm works and what it shows. One of the challenges that we have here that I think it's worth calling out, is that we don't collect data on the race or ethnicity of people who use Facebook. That is somewhat of a challenge in trying to study whether there are disparate impacts or issues. It's an open question from my perspective whether one would want us to collect race data on the people who use our services, but that's one of the questions that we'll need to figure out as we're studying this further. Mr. Clay: (01:13:39) Yeah, and let me follow-up with that and ask, despite Facebook's commitments to address civil rights, there is no one in Facebook senior leadership with substantial civil rights experience. Why is this? Mark Zuckerberg: (01:13:57) Congressman, this is certainly something we care about a lot. We have people at the company who've worked on civil rights. Recently, we started this civil rights audit that's being led by very established folks in the civil rights movement. Sheryl Sandberg, our COO, is personally leading a civil rights task force that we formalized inside the company to make sure that we implement suggestions from the audit and to make sure that this receives our senior attention at the company. Mr. Clay: (01:14:31) Is the audit independent? Is it independent or is it from within the company? Mark Zuckerberg: (01:14:39) Congressman, yes. The audit is independent. It is being done by Laura Murphy who I think is an established leader in this space. Mr. Clay: (01:14:48) Yeah, [inaudible 01:14:49] with Laura Murphy. Are they allowed to publicly report whatever problems they find? Mark Zuckerberg: (01:14:55) Congressman, Yes. The reports that they're making as part of the audit will be public and I think that they've already also published some things. Mr. Clay: (01:15:03) Do you have a right to limit what is said publicly about the audit? Mark Zuckerberg: (01:15:08) Congressman, I'm not sure the answer to that. I think at a high level the answer would be no, but there may be some specific things around if there's individuals private data, or business confidential data, or something like that where they might not publish it. But broadly speaking, they're going to be able to publish what they believe and what they find. Mr. Clay: (01:15:29) Thank you so much. I yield back. Maxine Waters: (01:15:32) The gentleman from Michigan, Mr. Huizenga is recognized for five minutes. Mr. Huizenga: (01:15:36) Thank you Madam Chair and Mr. Zuckerberg. You have accomplished something that nobody and I mean nobody thought was possible. Brad Sherman, Chair Waters, many on the other side of the aisle, actually agree with and in fact, use tweets by the president to support their position. I never thought I would see the day, but here we are. You have taken the puzzle pieces of politics, shaken up the box, thrown them out on the table, and everybody's trying to figure out where they fit when it comes to Facebook and when it comes to this technology use. Mr. Huizenga: (01:16:12) I don't fault you for what your tool has become because I do believe it is a tool. I want to explore that a little bit, but first, my question is what share of Colibra is Facebook? I know it's an association. I'm sorry, of Libra is Facebook. It's an association that you've referenced. I mean, do you own half of it? Is it equal shares among all the partners? David Marcus, who had been at Facebook is heading up Colibra, is it one in the same? Is Colibra Facebook? Mark Zuckerberg: (01:16:49) Okay, Congressman, there are two organizations here. There's the Independent Libra Association. Mr. Huizenga: (01:16:54) Yep. Yep, that's what I'm wanting to get to know. Mark Zuckerberg: (01:16:55) Which is a nonprofit, so it's not a for-profit entity that there's ownership. Mr. Huizenga: (01:16:59) Yet, So yeah, but how does the vote... Here's what I'm trying to get at. Mark Zuckerberg: (01:17:01) Sure. Mr. Huizenga: (01:17:01) How does the voting go? Is it what David Marcus says? Is it what Facebook says? Is it you can be overruled by others in the association? Mark Zuckerberg: (01:17:10) That's correct. Right now there are 21 companies and nonprofits. There are a lot more that want to join. Each company and nonprofit organization that's a member has one vote in electing the board. Right now there are five board members. David Marcus is one of the board members but is not running Colibra. Mr. Huizenga: (01:17:28) Well, he's been here, in fact, sat where you sat. Mark Zuckerberg: (01:17:32) Sorry, sorry. I just misspoke. He's not running Libra. He is running Colibra, which is Facebook's payments subsidiary? Mr. Huizenga: (01:17:40) Yes. Mark Zuckerberg: (01:17:40) But, we are looking for... The Libra association is recruiting an independent director and David is not even on the search committee for that. Mr. Huizenga: (01:17:48) Okay. I asked him the question because it had been put forward that Switzerland was where you were going to domicile this or that the association was going to domicile. He had said that he had been talking to the Swiss regulators. The Swiss regulators said that he hadn't been talking to them and that the association hadn't been talking to them, so I'd like you to clarify that. Have you been talking to the Swiss regulators? Mark Zuckerberg: (01:18:10) Congressman, yes. The misunderstanding there was that I believe that he and the team had been working with the primary Swiss financial regulator, FINMA and now we are also working with the data regulator, which is going to be relevant to this project. Mr. Huizenga: (01:18:24) Okay. You say that you've worked with 30 different jurisdictions in examining this. Can you provide us with the list of the regulators that you have talked to? Mark Zuckerberg: (01:18:33) Congressman, I can get back to you with the full list if that would be helpful. Mr. Huizenga: (01:18:36) Okay, that would be great. That's all I want. It's not a trick question, just want to know that. I'd also like to know which US regulators you have been talking to? Mark Zuckerberg: (01:18:45) Congressman, are you asking me personally or our team? Mr. Huizenga: (01:18:48) Well, I mean you use the royal we on page three of your testimony. I'm assuming it's not you specifically. I'm assuming it's you and your team, but I want to know who Facebook, and Colibra, and Libra have all been talking to in the US because I think one of the questions that I have is why Switzerland and why not the US a little bit about as the ranking member had started to go down? I want to move quickly on that though, but will you get me a list of those US regulators? Mark Zuckerberg: (01:19:17) Yes. Mr. Huizenga: (01:19:18) Okay, great. Thank you. All right, here's the real crux. You said that you won't launch without US regulatory approval. What happens if the association decides to launch despite that? Mark Zuckerberg: (01:19:31) Congressman, then I believe we would be forced to leave the association. I would hope that the association will weigh our recommendation, and what we say publicly that we think should happen, but if at the end of the day we don't receive the clearances that we feel like we need to move forward, and the association chooses to move forward without us, then we will be in a position where we will not be a part of the association. Mr. Huizenga: (01:20:01) Okay. My remaining 30 seconds here, as I said, I believe Facebook is a tool. I believe cryptocurrency and Libra as a tool. I believe all technology is a tool. It's a neutral tool, just like a car, a plane, a gun, a knife, all of which had been used at weapons, and for nefarious things at times, and all of the things that have been used to benefit. These various tools are in society, though regulated. Whether it's Ms. Wagner's concern and all of our concerns about child sexual exploitation or others, you need to help us understand where the line between people's first amendment rights, yours, mine, all of society's lie, and the safety of our society regardless of the platform or tool. I'd like to continue that conversation at some point. Maxine Waters: (01:20:49) The gentleman from Georgia, Mr. Scott, is recognized for five minutes. Mr. Scott: (01:20:55) Mr. Zuckerberg, thank you for joining us today. Back during the 1960s and 70s, Congress passed a series of laws intended to stamp out discrimination in lending and housing. Both Republicans and Democrats in Congress worked together and passed legislation like the Community- Excuse me, Reinvestment Act and the Fair Housing Act, and the Equal Credit Opportunity Act. All of these laws were designed to target and stop discrimination in the sale and advertising of housing and in particular, redlining. Redlining is a series of practices of quarantining off certain groups of people by race, by geographic area, and systematically refusing to lend to those communities. We're even suffering right today from the aftershock of these practices. Mr. Scott: (01:22:07) Now, it is my understanding, Mr. Zuckerberg, that Facebook allows advertisers to target their messages to certain users or groups of users both directly by identifying their race, their gender or age, but also by indirectly targeting their education, their interests, their location, their income. As investigation heard our Federal Housing Agency, found that your platform allowed advertisers to restrict certain users from viewing ads on your platform. You have even enabled the practice of this dreaded redlining of certain communities restricting them from housing and employment opportunities. Mr. Scott: (01:23:15) You were charged with this by our federal agency that protects our housing and lending laws. Mr. Zuckerberg, we in Congress have worked hard for the past 50 years to eliminate the very racial discrimination practices that your platform is guilty of. On your platform, you screened for and you prevent all sorts of criminal activities such as sex trafficking, drug trafficking, even as you mentioned a few minutes ago, you outlaw payday lending, terrorism, illegal drugs. Why don't you prevent redlining, which is also illegal and criminal as well? Mark Zuckerberg: (01:24:13) Congressman, we do now. Our policies have always been that discrimination is not allowed. We recently entered into a settlement with civil rights groups, ACLU and others, and FHA... Sorry. NFHA to remove certain categories from our targeting including age, gender, and zip code. Mr. Scott: (01:24:43) You say, "To remove." Mark Zuckerberg: (01:24:46) It's implemented. Mr. Scott: (01:24:47) You haven't said we have removed. There's a difference. Mark Zuckerberg: (01:24:53) My understanding is this is already implemented. If I'm incorrect on that, I will get back to you quickly and update you, but my understanding is that that is already in effect [crosstalk 01:25:08]. Mr. Scott: (01:25:07) But Mr. Zuckerman, I have here HUD's report and it clearly says that your platform allows advertisers to restrict certain users from viewing ads on your platform and you have even enabled, the practice of redlining certain communities. What is your answer? I mean, what was your response to HUD? Have you put things in practice to eliminate this? Mark Zuckerberg: (01:25:45) Well Congressman, I think at the beginning of the discussion with HUD and some of these groups that I just referenced, we entered into a settlement with the civil rights groups to create a new standard where we block that kind of targeting. I think it's worth noting that the standard that we set is industry-leading. Right, I don't think any of the other internet platforms restrict the kind of targeting that we do for these categories. I think that doing so helps us uphold the principles around preventing discrimination. I'm happy and supportive and glad that we're doing that. Mr. Scott: (01:26:26) Thank you, Mr. Zuckerberg. Maxine Waters: (01:26:28) The gentleman from Ohio, Mr. Stivers is recognized for five minutes. Mr. Stivers: (01:26:31) Thank you Madam Chair. I appreciate you holding this hearing. Mr. Zuckerberg, good morning. How are you? Mark Zuckerberg: (01:26:36) I'm doing okay. Mr. Stivers: (01:26:37) I understand. That was honest. Speaker 4: (01:26:41) [crosstalk 01:26:41]. Mr. Stivers: (01:26:41) Thank you. First, I want to say I appreciate innovation and we need innovation in America. No innovation is going to be perfect. To the questions that the gentleman was just asking, I want to let you maybe clarify a little bit. If I want to advertise housing on Facebook today, can I use age, sex, and... Mr. Stivers: (01:27:03) Can I use age, sex, and zip code to target people today as we sit here? Mark Zuckerberg: (01:27:07) Congressman, I believe the answer to that is no. Mr. Stivers: (01:27:10) Thank you. Mark Zuckerberg: (01:27:10) I'm right on this? Mr. Stivers: (01:27:13) Thank you. Mark Zuckerberg: (01:27:14) All right. Just confirmed with my team as well that that is [crosstalk 01:27:17]. Mr. Stivers: (01:27:17) So you cannot do that today and- Mark Zuckerberg: (01:27:19) Yes, those options are no longer in the system for housing, employment, or credit opportunities advertised. Mr. Stivers: (01:27:25) And nobody wants to red line it. I'm sure that was accidental. I want to talk about Calibra a little bit because I am concerned about the establishment of a private currency which is used for transactions, because I think it does undermine other currencies in the world. There's 195 countries, two of them are sovereign countries, two don't have currencies, so 193 countries, that you are opening yourselves up to regulation from. Why not just pick another currency? You're going to make money through the transmission of whatever it is. It's not about what currency. Why did you think you had to create a private currency? And I guess I would ask you to maybe go back to your folks and think about whether the pain you're going to have in creating a private currency is worth it. But why create a private currency? Why not just pick a currency and use that as part of your payment system? Mark Zuckerberg: (01:28:26) Sure. Thanks, congressman. The goal of Libra is to build a global payment system rather than a currency. Because it is global in nature, we figured that it might be better to not solely rely on one country's currency. But because we're an American company, and because the American economy is the strongest in the world, it makes sense for any reserve to be primarily US dollars and extend America's financial leadership in that way. Mark Zuckerberg: (01:28:59) But like you're saying, we clearly have not locked down exactly how this is going to work yet. I, personally, am much more focused on being able to help innovate and build a global payment system than I am in any specific makeup of what a currency or reserve might look like. And I think that there's already some discussion about whether it might make sense to build the kind of digital payment system that we're talking about based on individual sovereign currencies rather than a kind of combination of these currencies into some new one. So that's something that's already being considered. Mr. Stivers: (01:29:42) Great. And I think you'll find that the Bank Secrecy Act, Anti-Money Laundering, all those things are going to be really hard with the digital currency, and, ultimately, you may find a sovereign country that creates a digital currency that you could then use, or you could do it based on several stable currencies around the world. If you're in Europe, you can pick one, and in the Americas you can pick one, whatever. But there are a lot of people around the world who need what you're talking about, this cross-border opportunity to efficiently send money back and forth in countries where there is no stable currency. Mr. Stivers: (01:30:16) Think about Venezuela for a second. The Venezuelan bolivar is worth nothing, and it's worth less now than it was just a second ago. So there are countries where there is no stable currency, and there are millions of people in the world who are hoping that your innovation works. But I think you may have bitten off more than you can chew by trying to create a private currency. Mr. Stivers: (01:30:42) So I would ask you, and I know you're already re-looking at it, but I hope you'll think about that, because you can make a difference, and, frankly, you can have a payment system without creating that private currency. And I think you'll find that the compliance with the individual laws, whether it's Anti-Money Laundering, Bank Secrecy Act, sanctions, all those things will be easier to do if you use an existing sovereign currency. So I would just ask you to think about that. You can comment if you want to, but I wanted to use my time to ask you to think about those things. Mark Zuckerberg: (01:31:16) Congressman, thank you. I think that those discussions, in my understanding, are already happening. Some of them are happening publicly. I think that there have been some public comments on this, and I just want to reaffirm what you're saying about how this could be valuable to people around the world. We serve more than 2 billion people around the world. We serve a lot of people in the United States, but there aren't 2 billion people here, so most of the people we serve are in countries that have developing economies that I think could really benefit from this. Mr. Stivers: (01:31:45) Thank you, [crosstalk 00:04:46]. Maxine Waters: (01:31:46) The gentleman from Texas, Mr. Green, who is also the Chair for the Subcommittee on Oversight and Investigations. is recognized for five minutes. Mr. Green: (01:31:54) Thank you, Madam Chair. I thank the ranking member as well. I thank the witness for being here today. Mr. Green: (01:32:01) Sir, is it true that the Libra Association oversees the Libra Project? Mark Zuckerberg: (01:32:11) Congressman, yes. Mr. Green: (01:32:14) And is it true that global corporations make up the association? Mark Zuckerberg: (01:32:21) Congressman, the association is made of, today, 21 companies and nonprofit organizations as well. Mr. Green: (01:32:32) Of the 21, how many are headed by women? Mark Zuckerberg: (01:32:42) Congressman, I do not know the answer to that off the top of my head, but I can get it for you. Mr. Green: (01:32:46) Well, I believe you can get it, Mr. Zuckerberg, but one would assume that you would know who heads these corporations that are going to be running this global company. How many of them are minorities, Mr. Zuckerberg? Mark Zuckerberg: (01:33:11) Congressman, I do not know off the top of my head. Mr. Green: (01:33:15) Are there any members of the LGBTQ+ community associated with this association, Mr. Zuckerberg? Mark Zuckerberg: (01:33:26) Congressman, I don't know the answer. Mr. Green: (01:33:29) Who acknowledge ... that many people who acknowledge that they are a part of the community. Mark Zuckerberg: (01:33:36) Sorry? Mr. Green: (01:33:36) You do not know? Mr. Zuckerberg, is it true that the overwhelming majority of persons associated with this endeavor are white men? Mark Zuckerberg: (01:33:49) Congressman, I don't know off the top of my head the list of the people who are running the organizations in the association. Mr. Green: (01:33:58) Well, is it true that one would have to have $10 million, aside from other qualities, to become a part of the association? Mark Zuckerberg: (01:34:13) Congressman, I believe that was the initial idea, but I don't think that that has been locked down yet. Mr. Green: (01:34:18) Well, isn't it true that persons have already bought into the association and paid $10 million? Mark Zuckerberg: (01:34:25) Congressman, I do not believe that has happened yet. Mr. Green: (01:34:29) Well, I spoke to your person who manages Calibra and he indicated that he is one of the holders of a post with the association. Is he incorrect? Mark Zuckerberg: (01:34:44) Congressman, you're right that David Marcus, who runs the Calibra subsidiary for Facebook, is Facebook's delegate to this independent association. The question that I was answering is I don't know if the organizations that are members of the association have yet contributed any financial support for the organization. Mr. Green: (01:35:13) Well, I must say that I would assume that you would have the answers, but I would greatly appreciate it if you would share this with me because I plan to share it with the public. The public needs to know whether this is an organization that is truly diverse or whether it is an organization that is owned and operated by a small group of persons, all of whom have similar characteristics, for want of better terminology. Mr. Green: (01:35:49) Now, let me share this with you quickly. This does not apply to you, Mr. Zuckerberg, but you need to know why there's a good deal of consternation. There was a man whose name was Bernie Madoff. Mr. Bernie Madoff was the chair of the NASDAQ. He had all of the trappings of being a successful, responsible person. He's now serving 150 years in prison. His Ponzi scheme involved some $64.8 billion. The people who are for free markets bought into this Ponzi scheme. They were laissez faire. But once they lost their money, they made their way to us, and they wanted us to make them whole. Mr. Green: (01:36:43) This is why we have to be concerned, not because you're a Bernie Madoff, I want the press to clearly understand I'm not saying this, that you are, but because things can happen, things can go wrong. And when they do, we are the people who have to make them right. I yield back the balance of my time, Madam Chair. Thank you. Maxine Waters: (01:37:03) The gentleman from Kentucky, Mr. Barr, is recognized for five minutes. Mr. Huizenga: (01:37:08) Mr. Zuckerberg, welcome to the Financial Services Committee. Criticism is cheap. Anybody can criticize. As you can see here today, politicians in Washington are pretty good at lodging criticism, but creating something of value is significantly more difficult. And I would commend you for being an innovator and trying to create something of value. Mr. Huizenga: (01:37:33) It seems like in Washington, whenever the private sector produces some type of innovation or new advancement, politicians and bureaucrats rush in to criticize or regulate. In an era when some politicians in Washington, and even some politicians on this committee, are openly embracing socialism and central planning, it seems like the presumption is always that private sector innovation is a bad thing. I think that presumption should be reversed. We in Congress should view innovation for its potential opportunities in promoting financial inclusion, reducing friction in transactions, aiding small business, and bringing the financial system to un-banked and under-banked communities. Mr. Huizenga: (01:38:14) That's not to say we shouldn't ask questions, which is, of course, what we're doing here today. But in America, a country built on free enterprise and capitalism, it's always better to be on the side of innovation. And we should always place the burden on the government to justify regulation and intervention. Mr. Huizenga: (01:38:34) Now, I was very interested in your testimony, Mr. Zuckerberg, when you alluded to the risks of not innovating and the danger of the US falling behind some other countries or foreign companies who are creating similar platforms. Will you elaborate on the initiatives in those other countries? Mark Zuckerberg: (01:38:52) Yes, Congressman. Thanks for the opportunity. Mark Zuckerberg: (01:38:56) Today, as soon as we put out this white paper on Libra, what we saw was, in China, especially, they immediately kicked off this public private partnership with some of their biggest companies in order to race to try to build a system like this quickly, a digital renminbi, that they could use as part of their Belt and Road initiative, their kind of foreign and economic policy, to grow influence throughout Asia and Africa and other areas. And they're planning on launching this in the next few months. Mr. Huizenga: (01:39:29) Well, I would say I think AML/BSA issues is important when we're talking about Libra and Calibra, but I think the American competitiveness angle and the competition with China is a national security issue. And the fact that Facebook and the Libra Association is launching into innovation, I think is positive for our national security. Mr. Huizenga: (01:39:54) Mr. Zuckerberg, I do want to commend you on statements you made recently at Georgetown University about free speech and the First Amendment. I was particularly happy to hear you say that you will, quote, "Continue to stand for free expression, understanding its messiness, but believing that the long journey towards greater progress requires confronting ideas that challenge us." Mr. Huizenga: (01:40:13) I'm reminded of what John Stuart Mill wrote on liberty, and I would commend it to my colleagues and my friend, the chairwoman. Mr. Mill wrote that, quote, "If all mankind minus one were of one opinion, and only one person of the contrary opinion, mankind would be no more justified in silencing that one person, than he, if he had the power, would be justified in silencing mankind." And this sentiment is important and relevant to Facebook, especially in today's age of political correctness, accusations of offensive speech, safe places, and the dramatic polarization of our political discourse. Mr. Huizenga: (01:40:51) I do find it highly troubling that politicians are trying to bully you to be a fact-checker and to be the speech police, especially in politics, at the core of the First Amendment. And so along those lines, I want to ask you a question about censorship and whatever fact-checking board you're delegating these responsibilities to. Will you commit that Facebook will not censor any political ad placed on your platform, or in support of, President Donald Trump? Mark Zuckerberg: (01:41:25) Congressman, my commitment on this is that, or the principle, at least, here, is that we believe that people should be able to see for themselves what politicians are saying. That doesn't just go for Trump. That goes for any of the candidates for any of our national offices. People need to be able to see for themselves and be able to make judgments on what the candidates are saying and their character. Mr. Huizenga: (01:41:52) Well, I applaud you for that. And I don't want you to be bullied by politicians to relinquish our treasured free speech under the First Amendment. Protect it. And don't be bullied by politicians who want to censor politically incorrect speech. I yield back. Maxine Waters: (01:42:14) The gentleman from Missouri, Mr. Cleaver, who is also the Chair for the Subcommittee on National Security, International Development and Monetary Policy, is recognized for five minutes. Mr. Cleaver: (01:42:25) Thank you, Madam Chair. Thank you, Mr. Zuckerberg for being here today. Mr. Cleaver: (01:42:29) In response to a letter that I sent to FSOC, I was told that it's unclear whether US and foreign regulators will have the ability to monitor Libra and require any kind of corrective actions. And then at the same time, if US and international regulators are, as they said in my letter, or the letter to me, unaware if they have the ability to monitor your network and then protect against money laundering and terror financing, how are you going to get over the regulatory hurdles if they're already saying that? And what happens if regulators just throw up their hands and say that, "We cannot guarantee the soundness of this product."? Mark Zuckerberg: (01:43:34) Thank you, Congressman. So there are two parts of the process here. The first is what we and the rest of the association are trying to do to design this system so that it eliminates those risks. And the second is the process of working with the regulator on their concerns and questions to make sure it meets approval. Mark Zuckerberg: (01:43:55) On the former, the key part of this is that the system will be fully backed at one-to-one in the reserve by a mix of cash and highly liquid assets. So that sets it in contrast to the way that most banks work with a fractional reserve where there could be a run on the bank if a lot of people want to withdraw from that system. Here, everything will be backed one-to-one. So in theory, that shouldn't be possible. Mark Zuckerberg: (01:44:23) Now, in practice, I get that sometimes there are additional risks beyond what the theory says should be possible. So we need to work with the regulator to work through their questions and concerns and make sure that we are operating at the highest level of rigor for financial stability. And that's why my commitment is that we're not going to launch the Libra payment system here or anywhere around the world until we get the approval from FSOC and the other relevant US financial regulators. Mr. Cleaver: (01:44:55) I was pleased to hear you say that. Now, there is a mechanism that you've talked about that you wanted to roll out, or I guess you already have begun to do that, which would be some kind of a review mechanism. Can you share that review mechanism that would in some ways tell you, an independent group would tell you, what they believe to be violations of human rights that end up in Facebook and so forth? Mark Zuckerberg: (01:45:35) Thank you, Congressman. I believe you're talking about the issues around content and hate speech and areas like that. Mr. Cleaver: (01:45:41) Yes, yes. Mark Zuckerberg: (01:45:42) Yes. So this has been an area where ... Our principle is we want to give people as much a voice and as wide a definition of freedom of expression as possible. But of course there are going to be some things that infringe on other's rights or can cause harm. Mark Zuckerberg: (01:45:57) One of the things that we've struggled with is, " How do you develop a nuanced set of policies that can identify all of the different types of harms?" We've talked about a number today, including terrorism and child exploitation and aspects of of hate speech, or health misinformation. There's about 20 different categories that we track, all in, and we develop policies. We now have more than 35,000 people at the company who work on safety and security overall. We spend billions of dollars a year on this. Our budget on safety and security is now greater than the whole revenue of our company was at the time that we went public in 2012. So it's a big effort. Mark Zuckerberg: (01:46:38) But, nonetheless, I believe that it should not sit on any one company's shoulders to make so many important decisions about speech. So one of the things that I've tried to focus on doing is building an independent oversight board that will consist of people with diverse backgrounds and views, and is global, but who all value freedom of expression. And this group will be able to make final binding decisions on what content stays up and comes down on Facebook that even I or our team won't be able to overrule. So it'll create a check and balance and oversight of our company's operations, so I think that's important. Mr. Cleaver: (01:47:25) Are you able to extricate yourself from that body that you would be creating? Mark Zuckerberg: (01:47:27) Congressman, the way we are setting this up is so that we will appoint the first set of co-chairs for the body, and we hope to do this in the next few months, and then they will nominate a set of other members, and we will jointly agree on them. Once the board is up and running, it will nominate and refill itself. So we will not be involved in the selection process after that. Mr. Cleaver: (01:47:50) Thank you. Back to Madam Chair. Maxine Waters: (01:47:52) The gentleman from Colorado, Mr. Tipton, is recognized for five minutes. Mr. Tipton: (01:47:57) Thank you, Madam Chair. Mr. Zuckerberg, a number of my colleagues have ... I'm over here to your left. [crosstalk 01:48:04] There we go? Okay. But they've expressed some consideration that needs to be taken in in regards of the Prospective Payments Industry within the Labor Association. As you're well aware, a number of businesses that have had extensive experience in international payments, MasterCard, Visa, have pulled out of that association. Would you view Facebook as an expert in the payments industry? Mark Zuckerberg: (01:48:32) Congressman, we're not traditionally primarily a payments company, but the person who's running the Calibra subsidiary for us, David Marcus, was president of PayPal before, which is one of the great payments companies, and we certainly have other financial experts on the management team and board of the company. Mr. Tipton: (01:48:53) You'd also noted in your testimony today that you're going to be looking for US regulatory approval in terms of AML/BSA to be able to make sure that Facebook, for its part within the association, will continue to participate. If the Libra Association can't satisfy those regulations with the US regulations that are in place, will Calibra pull out of the association? Mark Zuckerberg: (01:49:19) Congressman, the short answer would be yes. If we don't come up with a solution that gets the US regulatory approval, then presumably we'll continue working on the proposal until we can, but we're not going to launch anything that doesn't have US regulatory approval. Mr. Tipton: (01:49:39) So the wallet portion of this you would pull out? Mark Zuckerberg: (01:49:42) Sorry, I didn't hear that. Mr. Tipton: (01:49:43) You would pull out on the wallet portion of this with the Calibra? Mark Zuckerberg: (01:49:47) The case that I was referring to before where we might be required to pull out is if the association independently decides to move forward on something that we're not comfortable with. But right now I think my understanding is that everyone is aligned on making sure that we have US regulatory approval to launch anywhere in the world. And that's the goal, and that's the plan. Mr. Tipton: (01:50:11) From what you know currently of how it's being structured, is there an internal monitor in place? Could you describe that in regards to AML/BSA? Mark Zuckerberg: (01:50:21) Congressman, sure. There are multiple levels of the work here. So there's going to be some work at the network level, so at the Libra Association level, the architecture of the system itself, that supersedes all of the individual work that the companies are doing to implement this. And then, of course, the companies that are members of the association, or are transacting using this payment system, will be responsible for themselves implementing and following those rules. So within Facebook we have a big effort to make sure that we can verify people's identities and authenticate them. This predates Calibra. We do this today on if someone wants to run political ads or run a large page. We require- Mr. Tipton: (01:51:12) I do appreciate that, but one of the concerns with Facebook, and then, perhaps, potential participation with Libra, Calibra, that's going to be going in, you'd had major hacks, losing personal information for millions of users that had gone through. What assurances are actually going to be in place to make sure that the users with the most sensitive information that you can have in terms of finances are going to be protected? And then also, again, including BSA and Anti-Money Laundering? Mark Zuckerberg: (01:51:44) Thanks, congressman. The payment information that people share is stored separately from other information in our services. All of our information is stored securely, and we work hard on security. This is especially secure, and I don't think we've had an issue with this to date. Even though we haven't launched Calibra as a product yet, we do take payments for a number of things today, ranging from fundraisers to people buying ads, and we have a secure tier in our data center focused on payment information, and that has worked well so far. We also, as part of- Mr. Tipton: (01:52:27) You've had no data breaches in that field? Mark Zuckerberg: (01:52:30) My understanding is we haven't had any issues on that in the payment area. Mr. Tipton: (01:52:34) Okay. Thank you on that. Mr. Tipton: (01:52:37) One of the issues that I am concerned about is if Libra comes into place, can we use it to buy anything that is legal in this country? Would you support that? Mark Zuckerberg: (01:52:49) Congressman, I think the intent would certainly be to give people as much control over what they want to do as possible. Of course, there are certain types of goods that are regulated and that require additional process to allow that. And then there are certain content policies that I just think we haven't developed yet. That's much further downstream of where we are now, of basically just trying to make sure that we can architect a system that works and that gets the appropriate regulatory approvals. Mr. Tipton: (01:53:21) Thank you. Maxine Waters: (01:53:22) The community will now take a five minute recess.

Part 2

Mr. Perlmutter: (00:00) ... of regulators and wanted to know if you would wait for their approval. And she went through a whole laundry list of them and your answer was, "Well, for the parts that apply, yes we're going to go seek their approval." Used the word 'seek their approval'. Other times you've said, "We will get their approval." So just from a Facebook standpoint, are you just willing to seek the approval, or are you going to wait for the approval before anything is launched? Mark Zuckerberg: (00:42) Congressman, it is the letter. Thank you for the opportunity to clarify that. We are not going to launch anything until we get the approval. I also, if it's okay, want to take a moment to correct and add some context on one of the other questions I asked before. In catching up with my team- Mr. Perlmutter: (01:02) So long as it doesn't take too long, you got 30. Mark Zuckerberg: (01:06) Correct and add some context on one of the other questions I asked before. In catching up with my team- Mr. Perlmutter: (01:11) So long as it doesn't take too long. You got 30 seconds, correct. Mark Zuckerberg: (01:16) The question before was around whether we'd implemented the changes to ads targeting ... to make it so that people can no longer target, age, gender and ZIP codes and a bunch of interest categories in housing, employment and credit opportunity ads. And the answer is we have implemented that change in the primary surface for buying ads on Facebook. That covers 80% of the ads and is part of the agreement in the settlement. We have agreed to a timeframe to implement it for the other 20% by the end of the year, which we're on track to but have not done yet. Mr. Perlmutter: (01:51) Okay. Thank you for that answer. I mean, the reason you're in our committee is we may have issues about the ads that you've allowed, whether Russians were involved, the disinformation. You're here because of Libra and Calibra, the financial services committee. And Mr. Marcus was here to testify. And really we want to understand what this is: is it a currency? Are you a bank? What is this association? And so I appreciated Mr. McHenry's questions and Mr. Huizenga. We all like innovation, but it seems like this innovation is going to be housed in an association in Switzerland, not in America. The Constitution is the one that starts all of this with Article One, section 8.5. We are given, the country is given the obligation to coin money and regulate the value thereof. So do you consider Libra to be money? Mark Zuckerberg: (03:02) Congressman, I consider Libra to be a payment system, and I think that those are two ideas that it can sometimes be hard to tease out. The US dollar is certainly very strong, as we've talked about today, in a number of places. We certainly do not seek to undercut that. We want to extend American financial leadership across the world. [crosstalk 00:03:24] Mr. Perlmutter: (03:23) All right, so you don't consider it to be money? Mark Zuckerberg: (03:28) Congressman, I consider it to be a payment system, which is an area where I view the industry that we have here is relatively stagnant and not [crosstalk 00:03:38]- Mr. Perlmutter: (03:38) And I appreciate that. I'm just starting with the Constitution here. Okay? Which puts the responsibility on us to coin money. So I'm just trying to figure out, and I was trying to figure out with Mr. Marcus too, so let's go to the next step, which is Calibra, which is the wallet, which in my opinion is the bank because the Libra is in the Calibra. Is that not right? Mark Zuckerberg: (04:06) Sorry, I didn't understand. Mr. Perlmutter: (04:07) Libra, the currency, is in the wallet, Calibra? Mark Zuckerberg: (04:14) Yes. Calibra is our ... Mr. Perlmutter: (04:14) So it's like me having my money in Wells Fargo bank. Mark Zuckerberg: (04:22) You could think about it that way. Although, we're not a bank. We're not applying for a bank charter. I think that the right analogy here ... Mr. Perlmutter: (04:28) But that's the problem. Mark Zuckerberg: (04:30) This is a payment system. Mr. Perlmutter: (04:30) Mr. Zuckerberg, that's the problem. That's what we're facing here. And this was the same place where I ran into kind of trying to understand what this thing is that you all are creating. And I appreciate creation. I'd like it to stay in America, not go to Switzerland. But you putting an association together ... As I've been thinking about this, it reminds me of two movies: Dune and The President's Analyst. And if you want to talk about either one of them, I'm happy to do it, but The President's Analyst was everybody had information, or the phone company had information on everybody and wanted to take over the world. So we need to know what this is. We have to regulate this. And I'm not sure you guys understand what it is. Chairwoman: (05:19) Thank you. The gentleman from Texas, Mr. Williams, is recognized for five minutes. Mr. Williams: (05:25) Thank you, Madam Chair, and thank you for coming before our committee today, Mr. Zuckerberg. Your biography is a textbook example of the power of capitalism. I'm a small business owner for 50 years and I'm amazed at what you've done. You were a college student and you had an entrepreneurial spirit to create a company in your free time. And after years of hard work, you transformed what started out as a simple idea into one of the largest, most powerful technology companies in the world. And I don't agree with everything that Facebook has done in the past, but that does not diminish what you have built. And it makes me proud to live in a country where this type of hard work is rewarded, and my colleague, Mr. Barr, even talked a little bit about that. So before I continue, I want to ask you a very simple question. Mr. Zuckerberg, are you a capitalist or are you a socialist? Mark Zuckerberg: (06:12) Congressman, I would definitely consider myself a capitalist. Mr. Williams: (06:16) Thank you for that. And it's always great to hear that. Now, you have received lots of scrutiny for taking on something as bold as the Libra initiative. This project has understandably drawn the attention of pretty much every banking regulator in the world, and I don't think there is anything wrong with asking questions to ensure this product will be not used for illegal activities. However, I said this when David Marcus came before this committee back in July and it still rings true today, we should not discourage the private sector from investing their own time and money to research these new technologies. Private sector always seems to get it right most of the time. Mr. Williams: (06:53) There could be undeniably be benefits in bringing this product to market. No matter what policies we enact up here in Congress, the private sector will be the engine that brings game-changing technologies into existence. So Mr. Zuckerberg, can you explain why the private sector is better equipped to develop a digital currency like Libra than the Federal Reserve or another government entity? Mark Zuckerberg: (07:16) Well, Congressman, I'm not sure I'm here to say that others shouldn't try to put their own ideas forward. I just think that as part of the American system we should encourage more people in companies, small businesses, large companies, even efforts from the government to try new things. I think that this is an area where our financial system has been stagnant and isn't serving a lot of the people that it needs to. And I think that when that's the case ... This is an important area, so there are always going to be risks to any project that comes forward and we need to make sure we diligently address those risks. And that's why the regulations are in place. Mark Zuckerberg: (07:54) But I do think that there are risks to not trying new things too and not having a lot of different approaches towards that. So I'm not here saying that my idea or this approach is absolutely the very best one. I wish that other people were trying to do different things too. I think that that would be important for helping to serve people both here and around the world. Mr. Williams: (08:15) Thank you. Now, some of my colleagues on the other side of the aisle, which you've heard today, have come up with the legislation that would prevent technology companies from offering digital currencies. I personally feel like this is an extremely short-sighted approach to this issue and that it would put a self-imposed handicap on American companies and entrepreneurship, like we talked about, which make this country great compared to our counterparts around the world. So you've already touched a little bit about this with Congressman Barr, but I think we need to repeat it. Mr. Zuckerberg, what are other countries, primarily China, are doing in the digital currency space? Mark Zuckerberg: (08:52) Congressman, I think right now, especially related to Libra in this idea, Chinese companies would be the primary competitors. There is an ongoing public ... private partnership in China where they're very focused on building this and exporting it around the world, which I know that there are a lot of questions that are ... I think are completely valid questions about how a project like this would impact America's financial leadership, our ability to impose sanctions around the world, our oversight of the financial system in a lot of places. Mark Zuckerberg: (09:27) I just think that we need to trade off and think about and weigh any risks of a new system against what I think are surely risks if a Chinese financial system becomes the standard in more countries, because then it would be very difficult, if not impossible, for us to impose our sanctions or the kinds of protections that I think we're right to want to have oversight around the world on all of these different countries. That's something that I worry about. Mr. Williams: (10:02) On the first page of your testimony you state, "We've faced a lot of issues over the past few years, and I'm sure people wish it was anyone but Facebook." I appreciate that you address this issue head on. And I'm probably running out of time, so I'll stop right there. I do want to yield my time back and also say I am really glad you're a capitalist. Thank you for being here. Mark Zuckerberg: (10:20) Thank you. Chairwoman: (10:21) The gentleman from Connecticut, Mr. Himes, is recognized for five minutes. Mr. Himes: (10:26) Thank you, Madam Chair. Mr. Zuckerberg, thank you for being here. I want to take us slightly off topic today because I sit on the intelligence committee and I'll never forget looking at the thousands of Facebook ads and Twitter posts that the Russians had purchased in order to attack our democracy. Those posts, as you know, played on the painful and often explosive divisions in our society: race and gender and religion. I'll never forget in particular a post that was in Spanish that urged people, presumably Latino people, to vote on their cell phones. And I wonder how many actually did. I read your recent speech at Georgetown a couple of times actually on freedom of expression, and I really celebrate your commitment to freedom of expression. But if you don't mind my saying, it also came across as one-sided. Mr. Himes: (11:11) It spoke about Martin Luther King and civil rights and the importance of Black Lives Matter having a voice, but it didn't say anything about Indian Muslims killed because somebody used a Facebook post to organize a mob or Rohingyas dying in Myanmar because the authorities used a post to organize a mob. And my point is obviously that what your Georgetown speech missed, in my opinion, is that like all of our rights, freedom of expression is really hard. At least, it's really hard if it means anything. It means that the government will defend the rights of Nazis to march through a Jewish neighborhood in Illinois. It means we'll spend our taxpayer dollars to defend the right of a black football player to take a knee during the National Anthem. It'll defend the right of an American to burn the American flag with all of the passions and anger and emotion that that would generate. Mr. Himes: (12:04) So back in 1788 we didn't just naively say freedom of expression is a good thing. We put in place and committed the resources and invested in those things that would make us worthy to live in a context of freedom of expression. We established regulation through a democratic and transparent process. We spent a lot of resources to regulate commercial speech and most importantly, we invested trillions over the years in educating Americans so that when they see something that they hate, instead of picking up a gun or a knife, they actually formulate a rebuttal. The town I live in invests about half of its tax revenue in education. Mr. Himes: (12:43) So my question is really simple. Facebook, and I'm a customer, today is more like a country in my opinion than like a company. You have global reach. Apparently half of Americans get their news from Facebook. So my question is really simple. Given the investment that we made in establishing the context for freedom of expression, what commitment will you make? What investment will Facebook make? You have almost $50 billion in cash on your books. Tell us what investment you're making so that this freedom of expression which you enable is a good thing rather than a bad thing? So that the good side of freedom of expression overwhelms the Rohingyas and the Indian Muslims and all that can be bad coming out of freedom of expression. Mark Zuckerberg: (13:33) Congressman, thank you for the opportunity to address this. You know, I talked about a number of these risks in the speech that you referenced, but at a high level I think you're right. When you serve billions of people, even if only a very small percent of them use our services to do harm, that can still be a lot of harm. And we certainly have a big responsibility to make sure that we address all of the new threats that come from the internet, as well as existing threats that have been there all along. So this is something that in terms of our resources and what we're doing, since 2016 we've built much more sophisticated AI systems to proactively identify harmful content. Now, 99% of the terrorist content that we take down, our AI systems identify and remove before anyone sees it. That's the kind of thing that we want to be doing for all of the categories of harmful content. Mr. Himes: (14:34) But let me stop you there because I got that. I get that. And that's important. But what I'm really looking for is what is the parallel commitment that Facebook will make with its half trillion dollars of market cap and $50 billion in cash? What investment will you make in education? In good public discourse? In basic decency? I'm looking for a commitment ... Mark Zuckerberg: (14:55) I see. Mr. Himes: (14:56) ... for what you will do to help make this society worthy of free expression. Mark Zuckerberg: (15:01) So I think it's two things. One is on the safety side. It's a major investment in proactively eliminating harm. And then on the proactive side, we're going to be investing a lot more in partnerships with high quality journalists and publications to foster that kind of content. But you know, as I mentioned earlier, we now have more than 35,000 people at the company who work on safety and security. We spend billions of dollars a year on it. It's a very significant portion of our budget and expenses. We spend more money now on safety and security in a year than the whole revenue of our company was at the time that we went public just earlier this decade. So a lot of the things that we're doing now simply just would not have been possible even six or seven years ago for us to do. But now, we're a big company. I feel like we have a responsibility to do this and you have my commitment- Mr. Himes: (15:51) My time has expired. I think you have a responsibility to do more than police. I think you have a responsibility to actually invest. But thank you. My time has expired. Chairwoman: (15:59) The gentleman from Arkansas, Mr. Hill, is recognized for five minutes. Mr. Hill: (16:03) Thank you, Chair. Thanks for holding this hearing. Mr. Zuckerberg, we're glad to have you in the House financial services committee. As a former startup investor and entrepreneur and banker over many years, I congratulate you like so many of my colleagues on a extraordinary investment and entrepreneurial success in creating Facebook. And I do also admire people in our capitalist system here that are disruptors, that find a gap, find a weakness, and tried to exploit it with a new product that's better for consumers. If we hadn't done that over the past 50 years in finance, we wouldn't have ATMs. We wouldn't have credit cards. We wouldn't have debit cards. We wouldn't have free checking or securitization or 401k plans or mobile apps. Mr. Hill: (16:47) So, of course, this committee is keen to embrace innovation. In working with my friend Dr. Foster down there on the Fintech Task Force and the AI Task Force, this is important, and it's supported bipartisanly that we support innovation on this committee. And I certainly don't want to punish the Libra Association for a product that hasn't even existed yet, but I was reading the G7 report that Mr. Marcus participated in and the G7 report says the G7 believes that no global stable coin projects should begin operations until the legislative regulatory and oversight challenges and risks outlined above are adequately addressed through appropriate designs adhering to regulations that are clear and proportionate to those risks. Is that a statement that you agree with? Mark Zuckerberg: (17:40) Congressman, I haven't reviewed that report in detail, but in general, we understand that working in financial services and payments, I mean, this is an area that's very sensitive. People's money is obviously extremely important to them, and there are good regulations that are in place to make sure that all services basically protect people. And I want to make sure that we do the same and are at the same standard or higher in everything that we do. Mr. Hill: (18:10) Well, I appreciate that. That's good. I think you've made it clear to Mr. Huizenga, Mr. Luetkemeyer and others that Libra will not go forward in the world in any country unless it meets an adequate standard here in the United States. And I think that what I'm saying is this G7 announcement last week I would say mirrors that exactly, that the G7 countries beyond the United States agree with that view as well. Let's talk about privacy for a minute. Mr. Hill: (18:37) George Gilder has written a great book called Life After Google. I'm sure you've read it. If not, I commend it to you. Ind a quote in there that I'm paraphrasing, "Private keys are held by human beings, not by governments. Not by Google." And I would add parenthetically and not by Facebook. Do you support the idea that a future digital world, we as individuals, each control our data and that we exchange it only when relevant at the time necessary to conduct a particular transaction? Is that a world you acknowledge as the future? Mark Zuckerberg: (19:10) Well, Congressman, I think it might be a little more nuanced. I certainly think that there should be private tools that people can use to exchange messages and information privately. That's why WhatsApp is end-to-end encrypted. That's why we're moving our private messaging tools to be end-to-end encrypted. At the same time, I think that as content gets to be broader and more publicly visible there, the equities and values and the balance there shifts towards upholding public safety in addition to privacy. If someone is sharing something very broadly, we need to make sure it's not broadly inciting violence or calling for it. [crosstalk 00:19:51] Mr. Hill: (19:52) Right. No, I understand that. I'm talking about people's personal data, the privacy of people's personal data. That it's theirs to share as they deem fit under some authentication. Mark Zuckerberg: (20:05) Absolutely. Mr. Hill: (20:05) But let me move on. Let's talk a about digital currency. Dr. Foster and I also sent a letter to Chairman Powell at the Federal Reserve about the idea of a digital dollar. My interest in that was actually raised by Mr. Marcus in his testimony. Wouldn't it be easier if there was a digital token that was a US dollar, for that to simply be the digital token you're looking for, and as noted here that you don't go and try to create something separate? Mark Zuckerberg: (20:38) So my understanding, Congressman ... Mr. Hill: (20:41) Wouldn't that meet all the standards you need? You want to help remittances. You want to lower costs. You want to create a different rail for payments. Wouldn't that be successful in doing that? Mark Zuckerberg: (20:50) My understanding, Congressmen, is that the community is fairly split on this point. I think from a US regulatory perspective, it would probably be significantly simpler, but because we're trying to build something that can also be a global payment system that works in other places, it may be less welcome in other places if it's only 100% based on the dollar. Mr. Hill: (21:14) You're right. Thank you, Chair. Chairwoman: (21:17) The gentleman from Illinois, Mr. Foster, is recognized for five minutes. Mr. Foster: (21:21) Thank you. And I'm proud to join Representative Hill as the other half of the Chairman of the AI Task Force that we're working on. I may be the only AI programmer in the US Congress, so I have to admit that I play around more with TensorFlow than with pie charts, so sorry about that. Mark Zuckerberg: (21:41) We'll get you over over time. Mr. Foster: (21:42) Okay. And as you may know, I'm introducing with Senators Warner and Hawley the Dashboard Act, which provides transparency to consumers and regulators about what data is being collected and also how it is monetized. It also provides limited rights of deletion. And I was wondering if you'd be willing to comment for the record on what you think is the technical feasibility of that, as well as any policy concerns you might have. Mark Zuckerberg: (22:08) Congressman, could you clarify which part you want me to ... Mr. Foster: (22:11) Well, the feasibility of the data specification, the collection, delivery to consumers. There's lots of details that have to be filled out in any project like this. How would a consumer authenticate himself to make sure that he's actually looking at his data and so on. And also one, if you have the right to delete, you also have to authenticate yourself appropriately. That's a whole bag of snakes, as you're aware. So I was just wondering ... Have your staff have a look at that and if you could get back to us for the record if you see any technical problems in the implementation of it. Because I think it's a good step forward. Mr. Foster: (22:51) Now, you've been asked, and I don't think we received a clear answer, as to whether or not Libra will allow truly untraceable anonymous transactions. Can we have a clear statement on that? Will it be possible to conduct anonymous transaction using Libra? Mark Zuckerberg: (23:11) Calibra, the project Facebook is doing ... Mr. Foster: (23:12) No, Libra. Libra. Libra. If you're an on-ramp onto an anonymous platform that allows anonymous transactions, then there's a whole host of problems. So will Libra allow anonymous transactions? Mark Zuckerberg: (23:26) I think that it is an open question whether we allow ... Mr. Foster: (23:29) But you published your code, all right? To look at your code, it seems to me from my looking at the description of the code, that if you have the public key, I'm sorry, the private key, you have control of that Libra balance period. Full stop. And that makes it pretty hard ... it's equivalent to self-custody. And if you allow self-custody, it's pretty hard to stop anonymous trading. Have I missed something there? Mark Zuckerberg: (23:53) Congressman, I think that this is probably more of a policy issue in question than- Mr. Foster: (23:57) But as your code currently exists, can you transact anonymously with Libra? Mark Zuckerberg: (24:05) Congressman, it certainly would be possible to build a system that would allow that. I think that there's a policy question about what the restrictions are that need to be placed on that, and there were equities on both sides. If the goal is to enable inclusion, especially in countries where there might not be [crosstalk 00:24:20]- Mr. Foster: (24:21) I understand the arguments. I'm just simply asking as you currently plan, as it currently exists, it seems to me that anonymous transactions are allowed. If there's something wrong with that, I understand you can change the way it operates, but as it currently exists and the code currently exists, I believe that it's not possible. If I'm wrong about that, please get back to us for the record. The second thing that you have to come up with an answer to is under what conditions fraudulent or mistaken transactions can be reversed. Mr. Foster: (24:51) Now, you mentioned in your testimony that Calibra intends to refund unauthorized transactions. Okay? But now what are the limits to that? For example, if there's a, I don't know, a million dollar ransomware payment that's made through Calibra, is that something you're going to then refund? What are the limits to that, or are there no limits? Mark Zuckerberg: (25:15) Congressman, I don't know if we've worked out all those policies yet, but our intent in principle here is to be at the level of or exceeding the level that people expect from other payment instruments, whether it's credit cards or other things like that, in terms of fraud protection and consumer protection. Mr. Foster: (25:36) Yeah, but you have to charge something. Depending on what class of fraud you're actually insuring against, then you're going to have to charge someone for it or it's not going to be a profitable product. And so you haven't thought about what the details you ... there's nothing you can give us written on what your current plans for when you can reverse fraudulent or mistaken transactions. Mark Zuckerberg: (25:58) Congressman, I'm not saying that we haven't thought about it. What I'm saying is that we haven't nailed down the policy yet. These specific product policies in Calibra I think are downstream to working out an architecture for the overall project that [crosstalk 00:26:13]- Mr. Foster: (26:14) ... details because if someone puts a gun on their head and says, "Give me your Bitcoin," it is not a reversible transaction. And so I don't think people want to live in that kind of situation. And so trying to understand who will provide what guarantees to allow you to reverse a fraudulent or mistaken transaction. Mark Zuckerberg: (26:31) Congressman, Facebook is committed to reimbursing people and figuring out the right policy on that. There may be restrictions like you're asking. We haven't nailed down all of those policies exactly, but the goal is just like when you're using a credit card, you expect the credit card company to pay if there's ... Mr. Foster: (26:52) Correct. And there are limits on that. There are well-defined legal limits on ... that's why the credit card agreements are so long and no one reads them. All right, thank you. My time's expired. Chairwoman: (27:07) The gentleman from Georgia, Mr. Loudermilk, is recognized for five minutes. Mr. Loudermilk: (27:12) Thank you, Madam Chair. Thank you, Mr. Zuckerberg, for being here today. Madam Chair, last evening I was reading The Washington Post website because they had leaked some information that was interesting and right below their headline was a caption of their motto that says democracy dies in darkness, and I want to thank you for holding this hearing today in this hearing room in the light of the public, not in the basement of The Capitol complex behind locked doors as some other hearings are being held today. And I thank you for that because I think it's important that the American people be able to see what we're doing here in Congress. Mr. Loudermilk: (27:49) Mr. Zuckerberg, you've faced a lot of criticism here today in a lot of what you're doing. I was in the technology information technology sector for 30 years. I've seen it. When people shake up the status quo, they get criticized. But even some of your harshest critics here today, I will venture to say if they haven't already, will post their comments and maybe even the videos of their questioning on Facebook, which is a testimony to the impact that your vision, your innovation has had, not only on American culture, but on business, on technology. And it doesn't come easy. And much of the criticism that I've seen in my tenure, because I'm one of those, I love innovation. I love finding the place that technology can fit. And I think you share that as well. Mr. Loudermilk: (28:35) I remember back when Bill Gates was attacked because he challenged Linux. I mean, these are the types of things that that innovators face. And I hope that you take this in the complimentary way that I mean it, but there's another gentleman in this town that I think you and he share a lot together, and that's President Trump. You're both very successful businessmen. You're both capitalists. You're both billionaires. You've done very well. But I think really what you share in common is you both challenge the status quo. He calls it draining the swamp. You see it as innovation. Now, this town is intolerant to shaking up the status quo. Bureaucrats, politicians learn to manipulate the system to their advantage and when you bring in new ideas, it's really hard for them to understand them. Some of the questions in here today have been indicative of everyone wants to put what you're doing in a box and quite often when you're thinking outside the box, there isn't a box to put it in. Mr. Loudermilk: (29:36) I think we should advance. I think we should seek innovation. I am not opposed to some of the things that you're trying to do. I'm gravely concerned about the implications they may have, the operation of it, but I think we need to give it due consideration. So my questions are really evolved around how this thing is going to operate, how do you see it operating? Because I don't see it fitting in a box. Now, the Federal Reserve Chairman told our committees earlier this year that if Libra causes problems related to money laundering, terrorism, financing, privacy or consumer protection, they would rise to systemically important levels simply due to the size of the Facebook network. Mr. Loudermilk: (30:23) Now, David Marcus has said if Libra is not done right it could present systemic risks. Do you believe Libra is systemically important, especially since you're calling a payment system, which is really done by central banks? Do you compare what you're doing with Libra to central banks, and should you be regulated as such? Mark Zuckerberg: (30:48) Congressman, the distinction on what is systemically important, my understanding is that a big part of that is scale. And I think it's worth noting that just because Facebook serves a lot of people around the world doesn't mean that if we rolled out a product that on day one all of those people would be using it. So, like any of the things that we do, we'd probably have to experiment and make the product work over time, and that would be risky. I mean, we're talking about a ... there's a long public period where we're discussing this before actually getting any approvals and shipping stuff. Mark Zuckerberg: (31:24) But I actually think that there's also quite a risk that we ship something and it takes a long time to even make that work. So I think that if the plan works over time, it certainly could rise to the level that someone might determine is systemically important. I'll defer to the regulators' judgment on when that is, but I don't think it's automatically the case that if something launches and it's a small subset of the people who use our services, that it has to be that on day one. Mr. Loudermilk: (31:55) Well, if it does get to that, that it's deemed systemically important, based on your previous statements that you're going to work with regulators, are you prepared to meet the requirements and the regulations that come with a systemically important financial service? Mark Zuckerberg: (32:13) Congressman, we would be. And that's why we're working on this project, because we believe that in addition to the other ideas for digital currencies and cryptocurrencies that are out there, having a payment system that is based on some of those technologies but is regulated at the highest levels and upholds the highest standards on all of the areas around safety and security, whether it's financial stability or fighting terrorism or fighting crime or fighting fraud, we think that that can exist with a digital currency too, and that's what we're trying to help create here. Mr. Loudermilk: (32:50) Thank you. I have several other questions I'll submit to the record, but I see that I'm of time, and I yield back. And thank you for being here. Chairwoman: (32:59) Thank you. The gentlewoman from Ohio, Mrs. Beatty, who is also the Chair for the subcommittee on diversity and inclusion is recognized for five minutes. Mrs. Beatty: (33:08) Thank you, Chairwoman Waters. Mr. Zuckerberg, I want to get through a number of questions: diverse asset management, fair housing issues, diversity and inclusion, and privacy and security. Diversity and inclusion is very important to me and it's personal for me. I've been here before with Facebook about the lack of diversity and inclusion. I've discussed this repeatedly with your company over the past years. I'm Vice Chair of the Congressional black caucus, and the Congressional black caucus, for the record, has had multiple meetings with your company and here we are again. Let me get into asset management. Certainly, that's a large industry, as we know, something like a $70 trillion industry. Facebook has more than $46 billion on record in cash or cash equivalents and marketable securities. Are any of these funds managed by diverse-owned companies, yes or no? Mrs. Beatty: (34:11) Yes or no? Mark Zuckerberg: (34:12) Congresswoman ... Mrs. Beatty: (34:13) Yes or no? Mark Zuckerberg: (34:14) I don't believe so. Mrs. Beatty: (34:15) So I take that as a no? You have a stable of big law firms that work on your legal cases around the country. How many diverse-owned or women-owned law firms are contracted by Facebook? Number. Just give me a number or range. Mark Zuckerberg: (34:30) Congresswoman, I don't know- Mrs. Beatty: (34:31) I'll take that as I don't know. How many women or minority partners work on these cases? Mark Zuckerberg: (34:38) Congresswoman, I don't know the answer to that question off the top of my head, but I'm happy to get back to you on it. Mrs. Beatty: (34:42) My time. Did you review the packet that went out in notification to you and your team about what was included today, and diverse asset management was in it? Did you read that? Mrs. Beatty: (34:54) There's a piece of legislation that I'm working on that was in the packet. Did you or your team review it? I mean, everybody's talked about your scholarly resume. Did you review the packet that- Mrs. Beatty: (35:03) Everybody's talked about your scholarly resume. Did you review the packet that was sent to you from this committee? Obviously that's a no. Let me go to something you introduced. You introduced Laura Murphy. You know who Laura Murphy is because you said her name, right? Mark Zuckerberg: (35:15) Yes. Mrs. Beatty: (35:16) Okay. So, you hired her as a consultant, and in your opening statement, you talked a lot about civil rights. I think we should probably phrase it a little differently, that you work with civil rights work, is because as a result of the number of lawsuits that you've had. NAACP. Even secretary Ben Carson filed a fair housing lawsuit against you for violations. So let me ask you this. Do you know what red lining is? Mark Zuckerberg: (35:46) Yes. Mrs. Beatty: (35:46) Okay. Then you should have known better, and maybe if you had real diversity or inclusion on your team, somebody in that room would have said what you were doing when you looked at what you were doing in the housing, how you were red lining, or using zip codes to eliminate people from getting information. Now, have you read the report that Laura Murphy sent to you? Mark Zuckerberg: (36:13) Congresswoman- Mrs. Beatty: (36:15) You've talked a lot about diversity, and you introduced her name, that about this great study and her work. Have you read it? Do you know what the recommendations were? Do you know when she issued the report? Yes or no? Mark Zuckerberg: (36:27) I've seen the report. Mrs. Beatty: (36:28) Okay. Tell me what the top three things were, because I have it right here. What were the top three things in her report? Somebody talked about lying in this committee. I'm only saying. Mark Zuckerberg: (36:39) Well, one of them was around housing ads, which we've talked about. The other was around setting up a civil rights task force. Mrs. Beatty: (36:47) And who's on the civil rights task force? Mark Zuckerberg: (36:49) Sheryl Sandberg is the person who's she- Mrs. Beatty: (36:52) What civil right... Okay, we know Cheryl's not really civil rights, so I'm trying to help you here. She's your COO, and I don't think there's anything, and I know Cheryl well, about civil rights in her background. So come better than that for me, if we're going to talk civil rights. Mark Zuckerberg: (37:09) It's an internal task force- Mrs. Beatty: (37:11) Do you know who the firm that you employ for civil rights is? Mark Zuckerberg: (37:16) Congresswoman, I don't- Mrs. Beatty: (37:18) How could you not know when you have employed the most historical, the largest civil rights firm to deal with issues that are major? And this is what's so frustrating to me. It's almost like you think this is a joke. When you have ruined the lives of many people, discriminated against them... Do you know what percentage of African Americans are on Facebook in comparison to majority folks? Do you know what the percentages are? Mark Zuckerberg: (37:48) People using the Facebook- Mrs. Beatty: (37:49) Yes. Do you know what the percentages are for African Americans? Mark Zuckerberg: (37:53) I don't because we don't collect the races of people- Mrs. Beatty: (37:56) Well, it came out in a report and in the Pew Research Center that was sent to you, so maybe you just don't read a lot of things that deal with civil rights or African Americans. I have a lot of questions I'm going to send to you that I'm not going to be able to get through, and I would like an answer because this is appalling and disgusting to me, and I yield back. Chairwoman: (38:19) The gentleman from Ohio, Mr. Davidson, is recognized for five minutes. Mr. Davidson: (38:25) Mr. Zuckerberg, thanks for coming and talking with our committee. I appreciate your presence here and your testimony, and frankly, I go back to when I first saw Facebook and I said, "Why would anyone put this on the internet?" And obviously, you had a vision for this company that frankly, some early stage venture capital companies took a pass on, and they missed it. I'm sure they're kicking themselves today, but you've pulled off a truly innovative company that, while we haven't yet captured all of the possible innovation on the internet, you really hit a spot, and as a capitalist, as a guy who launched a successful company, scaled it up, and as a founder, are still in large measure in control of that organization, though it's publicly traded. Mr. Davidson: (39:11) So congratulations. It's a rare feat, and I just wanted to get your insight about where technology is headed. I mean, so prior to prior to Facebook, talking about Libra or digital wallet, Colibra, there were people saying, "Well, Bitcoin's this niche thing." Listening to how some of my colleagues have addressed you, I suspect you may actually envy whomever Satoshi Nakamoto is, because he's very anonymous. It's hard to subpoena Satoshi Nakamoto or ridicule them, but then again, no more control over Bitcoin. There is no headquarters or anything else, so clearly made blockchain synonymous with Bitcoin early on, but blockchain itself and distributed ledger technology I believe, is going to be substantially bigger, and I think a lot of people took Facebook's entry into this space as a sign that you and others view this as a much larger space for emerging technology. Mr. Davidson: (40:09) Could you tell us a little bit about your views on that? Mark Zuckerberg: (40:13) Sure. I think that there needs to be a number of approaches here. I think some of the innovation in cryptocurrencies and the decentralized nature of that can be very valuable. I just think that that's not what a big company like Facebook can add to the industry. Once we're in the position that we're in, we're not going to create something that's decentralized that can't hold up the highest standards of protecting against all the risks that we're talking about today, whether it's financial stability or fighting terrorism or crime or fraud. Mark Zuckerberg: (40:49) We want to work with regulators to make sure that we can build something that's at that highest standard. So I'm generally in favor of of ideas and innovation all across the space. I think that the US financial industry, and especially the infrastructure on top of which to build financial services, is just frankly behind where it needs to be to innovate and continue American financial leadership going forward. Mr. Davidson: (41:14) Yeah, thank you for that. And I will say that, when you talk about Colibra, I get your idea of that, to stay in control of that, because as a company the size and scale of Facebook, you would certainly have know your customer provisions, Bank Secrecy Act requirements and have appropriately proposed to regulate Colibra as a money service business, including talking to FINCEN, all the things that people have to do and compliance with that. However, when you're proposing Libra, a cryptocurrency in the truest sense, you're really talking about creating money, the idea of money. Mr. Davidson: (41:49) And many of the things in this space that are proposed, we've been very sloppy with our language collectively to call everything in the space cryptocurrency, where many of these tokens don't aspire to be a currency at all. They just represent a good or a service, and in some cases a commodity, and they're not trying to be a security or a currency. And so, that lack of clarity is driving a lot of the American innovators offshore, not because they're avoiding our laws, but because they do have regulatory certainty in other jurisdictions. Mr. Davidson: (42:23) Frankly, Switzerland is one of the leaders in this space for regulatory clarity. But when we think about Libra, your one 21st, which is a bigger number than one 435th I would say, and I'm weighing in here today. Do you believe that Libra has a role to be centralized, or could the money itself be decentralized? Mark Zuckerberg: (42:49) Well, Congressman, I think you're highlighting an important point, which is that there's a big difference between trying to create a new type of digital payment system and creating a new type of currency that is... I mean, what we're trying to do is a payment system that is based on a reserve of existing currencies. Mr. Davidson: (43:10) Right. And I think centralization is the key. And I apologize. I'd love to talk to you this about an hour, but I only get 10 seconds left. Centralization versus decentralization is the key because if you can distort or change the value, all of the effort in America's securities law depends on the central actor and in America currently, that would be regulated as a security, which has big implications. My time's expired. Chairwoman: (43:35) The gentleman from California, Mr. Vargas, is recognized for five minutes. Mr. Vargus: (43:42) Well, welcome. It's great to have you here. I'm sure you're very excited. Mark Zuckerberg: (43:46) Thank you. Mr. Vargus: (43:47) Still doing okay? Mark Zuckerberg: (43:48) Yeah. Mr. Vargus: (43:50) I'm almost tempted to ask you, since you can't lie to Congress, when you were compared to Mr. Trump, did you take that as a compliment? Mark Zuckerberg: (43:57) Oh. Mr. Vargus: (43:57) No, don't answer. That was a joke. But I do want to compliment you. I mean, I think... Don't answer that other question. Make sure you don't answer. Not even with a smile. Okay. No. The question I was going to ask you is this. I've heard you, and since I'm on this role, I've heard a lot of your testimony. You've said that you won't go forward with Libra unless you get approval from all the regulatory agencies that are required in the United States. That's correct. Right? Mark Zuckerberg: (44:31) Yes. Mr. Vargus: (44:32) Yes. Before you got here, you sent David Marcus to us, and I think that wasn't exactly the answer that he gave. I think that he was a little more aggressive in wanting to go forward, so certainly what you say supersedes what he says if there's any conflict in the two. Mark Zuckerberg: (44:49) Yes. I also think that our views on what we should do have gotten clarified since then. Mr. Vargus: (44:55) And how did they get clarified? Mark Zuckerberg: (44:57) I think through the public discussion that's happening. I think we felt that he wasn't able to provide enough clarity to Congress when he was here, and we wanted to make sure that we came and had a clearer answer on this. Mr. Vargus: (45:10) Okay. Well thank you for doing that. One of the things I think that you're probably sensing from us is that the dollar is very important to us as a tool, a tool of American power and also a tool of American values. So we would much prefer to put sanctions on a country than send our soldiers there. As you know, the power that we have because of that, because the banking system is significant, you can see some of the outlaw states that we have today were able to work with our colleagues around the world to do something about what they're doing because of the power of the dollar. Mr. Vargus: (45:44) So when something threatens the dollar, we get very nervous, and I think we should be, because that's something that again, has been very useful for foreign... How do I say it? Projecting American values in foreign power. Do you understand all that fairly? Because I think you do. I mean, you've been hinting at that, but I want to make sure that you understand that, because you're playing in a space. It is a delicate space for us. Mark Zuckerberg: (46:12) Congressman, at a high level, I certainly understand it, and that's why part of what we're doing is trying to design the system from the ground up so it can enforce US sanctions, travel rule, a number of the regulations that are important for creating stability and security around the world. I think some of what is at stake here is that, I just think that if we don't innovate, there's no guarantee that we'll be able to extend those same rules and project that kind of influence around the world going forward. I think we need to innovate as a country in order to keep on ensuring that we can do that. Mr. Vargus: (46:50) And I think we want you to innovate, and obviously you're a disruptor in a positive way, but I think when we see that you want to go to Switzerland... Switzerland. It was said here that Switzerland is the... It gives you regulatory clarity. Well, I would quote James Henry, that Switzerland is the grandfather of the world's secretive tax havens and also one of the leaders in places where you can hide your money and do all sorts of other notorious things. Now, they are starting to loosen up because of that history, so I would give you some advice and think of staying here in the United States. Don't go to Switzerland. Mr. Vargus: (47:23) If you're going to follow all our rules, why do you want to go to Switzerland? Mark Zuckerberg: (47:26) The independent Libra association- Mr. Vargus: (47:29) Seems to be falling apart without you guys, frankly. Mark Zuckerberg: (47:33) Sorry. Mr. Vargus: (47:33) So they don't seem to exist without you. You're the big dog in this fight. I mean, honestly you, if you decide to bring it to the United States, it comes to the United States. I mean, you can hide behind that a little bit, but I won't believe it. I believed you up to now, but that I don't believe. I think that if you wanted to bring it the United States, you could. Mark Zuckerberg: (47:51) Congressman, if you're trying to build a global payment system, I think that there is some value in housing the independent association in the country and in the place where a lot of the world's international institutions are based. Mr. Vargus: (48:08) Which would be the United States. Mark Zuckerberg: (48:10) A lot of them are in Switzerland too, but a lot of them are in the US. You're right. And certainly our work on this through Colibra and everything that we do through Facebook, we're an American company. We're doing it here. That technology is here, and that's an important part of why I'm committing that no matter where we're working around the world, we're going to follow a US regulations. Mr. Vargus: (48:30) But I hope you go and take a look at that once again, because I think that it would relieve a lot of fears if you did in fact, house it here in the United States and not in Switzerland. And again, my time's almost out. Again, I appreciate. I think for someone like an innovator like you, it's good to have someone that's sturdy and resilient. You're probably the right person at the right time to take this beating. Welcome. Mark Zuckerberg: (48:52) Thank you. Chairwoman: (48:54) The gentleman from North Carolina, Mr. Bud, is recognized for five minutes. Mr. Bud: (48:59) Thank you Madam Chair, and Mr. Zuckerberg again, welcome here. I appreciate your time and also appreciate your example as an entrepreneur. Just by chance, you're not a securities attorney, are you? Mark Zuckerberg: (49:11) I am not. Mr. Bud: (49:13) I didn't think so. Well, we've got several draft bills before this committee, and as a part of this hearing which amend the securities laws including the Securities Act of 1933 and the Securities Exchange Act of 1934. And before the committee takes any action on these bills, I'd hope we could receive testimony from various experts in securities law to provide their views on whether these bills might have impacts which really reach beyond stable coins. It's crucial that members of this committee be able to differentiate between Libra, which is really not a cryptocurrency, and actual cryptocurrencies like Bitcoin, Ethereum, and XRP, before we discuss draft legislation. Mr. Bud: (49:57) Many of the proposals would stifle financial innovation, and if we're to remain a world leader in financial technology, it's vital that this committee not embrace reactionary laws against cryptocurrencies. So Mr. Zuckerberg, Libra has been in the works within Facebook for the past year, and since the announcement of the potential members, PayPal, Stripe, Visa, MasterCard, and Ebay, have walked away from the association due to various regulatory and political concerns. Now, it's notable that every US payment processor has exited the association. Mr. Bud: (50:38) Unlike current Libra Association members like Uber and Lyft and various venture capital firms, payment processors were given one of the most difficult tasks when it comes to digital assets, and that's anti money laundering and know your customer compliance. So with no major US payment processors left in the Libra Association, how do you see the Libra Association building a compliance regime that adheres to the AML, BSA, or the anti money laundering know your customer provisions that this body has worked hard to put into place? Mark Zuckerberg: (51:11) Congressman, thank you. So my understanding is there are still payment companies that are a part of the association, and of course David Marcus, who runs the Colibra subsidiary for Facebook, has run large financial services companies. He was the president of PayPal before coming to Facebook. So I think we have the right expertise to work through these problems, and we will work with regulators to come up with solutions on them. We also have a big security effort at Facebook. So for Facebook's part of this work, this certainly isn't going to be the first time in our company's history where we need to fight against sophisticated threats or people who are trying to defraud others, or other types of harm. Mark Zuckerberg: (51:58) And we've built quite sophisticated AI systems in order to be able to work on some of those things. Mr. Bud: (52:03) But you'd say it's almost more starting from scratch now that these members have left the association. Mark Zuckerberg: (52:08) Congressman, I don't believe that is the right characterization. Companies joined because they were interested in trying to explore what we were doing. A lot of more companies are interested in joining in the future, and I would bet a lot more do join. The association was I think just officially incorporated, or I don't know what the right verb is, but it kind of was officially formed just in the last few weeks after months of planning, and there's certainly a lot of work ahead. Mr. Bud: (52:38) Thank you. So given its centralized initial nature, how does Libra align with Facebook's earlier claims of building a pro privacy future, and how will you guarantee privacy and data autonomy during the initial phase of Libra? Mark Zuckerberg: (52:54) Congressman, thanks for the opportunity to talk about our privacy vision. So at a high level... The way that I think about this is that, in our lives we have public spaces like town squares, and we have private spaces like our living rooms, and I think we need digital equivalents of both. We have digital equivalents of the town square. That's what Facebook and Instagram and Twitter and YouTube try to be, but we don't today really have a digital equivalent of the living room, where you can interact in all of the ways that you would want to in an intimate and secure space. Mark Zuckerberg: (53:28) Our text messaging apps today are still primarily just text messaging, but I think that there's an opportunity to just like we've done with Facebook, to build in a lot of the different utilities and tools for how you would want to interact with people in a broader space, whether that's joining communities, starting fundraisers, starting businesses, finding people to date, all of these kind of broader utilities. I think there needs to be something like that in private spaces too, and one of the most important private ways that people interact is through payments. Mark Zuckerberg: (53:59) So we're working on a number of different approaches here, some that work on top of the existing financial system, that have the limitations of the existing financial system but are easier to implement because we can build on top of everything that exists, and some that are more ambitious like what we're trying to do here, where we are trying to do a more thorough rethink of the system. Mr. Bud: (54:20) Thank you. I yield back. Chairwoman: (54:22) The gentleman from New Jersey, Mr. Gottheimer, is recognize the five minutes. Mr. Gottheimer: (54:27) Thank you Madam Chairwoman. Mr. Zuckerberg, thank you for coming today to address our concerns. Yesterday, I wrote to Twitter about this letter that they had sent to me and to other members of Congress allowing foreign terrorist organizations, Hamas and Hezbollah, to have a presence on their social media platform, drawing a distinction between good terrorist actors who've been elected, and bad terrorist actors. I ask unanimous consent to enter this letter into the record please. Chairwoman: (54:53) Without objection, such is the order. Mr. Gottheimer: (54:55) Thank you. This issue is particularly troubling to me since individuals connected to Hezbollah and Hamas terrorist groups were recently found in my home state of New Jersey. Mr. Zuckerberg, do you agree with Twitter, that foreign terrorist organizations as designated by the United States of America, belong on a social media platform? Or should Twitter have to take down Hamas and Hezbollah as affiliated accounts and content? Mark Zuckerberg: (55:18) Congressman, it's a little hard for me to comment on what Twitter should do, but I believe that we take down those accounts. Mr. Gottheimer: (55:27) Well, you're a leader on this issue, and your company Facebook currently chairs the global internet forum to counter terrorism, of which Twitter is also a founding member. So this is just pretty simple. Yes or no, should Twitter have to comply with US law and take down Hezbollah and Hamas' official Twitter accounts? Do you think they should have Twitter accounts? Mark Zuckerberg: (55:43) Congressman, as a principal, I think all American companies should comply with American law. Mr. Gottheimer: (55:49) So it sounds like yes, you believe Hamas and Hezbollah and other terrorist groups as designated by the United States of America, should have to take down their content just like you have taken steps at Facebook to do so? Mark Zuckerberg: (56:02) Congressman, it's really not for me to tell Twitter what to do, but certainly our policy, and I just confirmed with our team here, is that we do not allow them on our services. Mr. Gottheimer: (56:12) Right. And I hope that Twitter will also follow suit as the steps that you have taken and Google has as well. And while I greatly appreciate that Facebook has taken steps to remove terrorist content from your platform, I'm still concerned that violent extremist content still exists in parts of your platform. For example, today there are still videos circulating on Facebook of the horrific shootings in Christchurch in New Zealand. I assume that troubles you, sir? Mark Zuckerberg: (56:39) Congressman, of course that would trouble me. We build really advanced systems to detect all of these different types of harm and to take action very quickly. In general, this is an area where we've invested billions of dollars and have tens of thousands of people working on this. It's not that we're ever going to do a perfect job, but a lot of what I'm committed to is, every six months now, we publish a transparency report on how we're doing proactively identifying each of the categories of harm that exist, what the prevalence of them is on our services, what percent of that content our systems proactively identified versus someone had to report it to us, and our goal is to improve every period until we can drive that amount to be- Mr. Gottheimer: (57:28) Right, so some of those videos... You're taking all these steps, and some stuff... Of course, it's hard to get to everything is the point, but you're doing your best to try to get to everything. Mark Zuckerberg: (57:35) Congressman, I think that's right. Mr. Gottheimer: (57:36) Is that a fair characterization? Thanks. If I can... Given that it still exists on the platform, it's part of the concern that I've heard from some about Facebook's ability to prevent Libra from being used to launder money or fund terrorism. Do you feel that you will have appropriate measures in place to do so? Mark Zuckerberg: (57:57) Congressman, I believe that we will be able to do so. We've built some of the most sophisticated systems in the world for addressing new threats. Election interference was brought up before. I mean, these are sophisticated nation state actors from Russia and Iran and China now, we see too. And they're just... They're very sophisticated, but we've been able to build systems that can proactively identify a lot of those efforts at this point, and I think if we can do that, that's a good example that suggests that we'll be able to address some of these challenges too. Mr. Gottheimer: (58:33) And I appreciate that Libra is part of a much broader ecosystem related to our leadership in the technology space, and as we all have talked about, it was established in Switzerland rather than here, where we have plenty of highly educated, intelligent citizens, ready to be employed. And I think we should do everything humanly possible, which I appreciate your comments on today, to keep our jobs in the United States of America and to make sure that we grow this space here. How do you think we can maintain this competitive advantage in the FinTech space, and how do we keep technology jobs of the future? Mr. Gottheimer: (59:01) You've brung them here. How do we continue to do that here? Mark Zuckerberg: (59:06) Well Congressman, most of the work I think is still going to be done here in the US. I think the biggest question for the future is competitiveness. There are clearly very real risks of building anything new in financial services. There are all the risks that we've talked about today. I just think that we need to make sure we balance, making sure we get to very good answers on those things, while still enabling American innovation. Mr. Gottheimer: (59:34) Thank you. Thank you for your candid answers today. Thank you for being here. Thank you. Chairwoman: (59:37) The gentleman from Tennessee, Mr. Kostoff, is recognized for five minutes. Mr. Kostoff: (59:45) Thank you Madam Chairwoman, and appreciate you calling this important hearing today, and appreciate Mr. Zuckerberg for appearing. I think we've all heard loud and clear what you've said about the need for innovation in this area, especially highlighting the challenge that we have in regard to China and where we are in this space, as we compete with China or as China competes with us. I could roll back the clock though, and when you came up with this idea and went to your board of directors, how did you tell them that Facebook could monetize or profit from the creation and the use of of Libra and Colibra? How did you explain that to your board of directors? Mark Zuckerberg: (01:00:33) Well Congressman, you may not believe this, but that's actually not the first thing that we talk about at the company. We focus on building services that are going to create value in people's lives, and we believe that if we do that, that we're able to get some of the value downstream. Mr. Kostoff: (01:00:51) It eventually came up though. Mark Zuckerberg: (01:00:53) Yes. Mr. Kostoff: (01:00:53) And how did you explain that? Mark Zuckerberg: (01:00:55) And so, we identified what we thought was a big need for financial inclusion and the ability to easily and quickly and affordably send money. The way that this will help Facebook over time, or our business, is that basically in our ads system, it's an auction, which means that if you're a small business and... We don't have a rate that you have to pay. You bid and tell us what the ads are worth to you if you can get a new customer into your store, or if you can complete a transaction. Mark Zuckerberg: (01:01:27) And what we basically see, is that when we eliminate friction for a customer buying something from a business, then the value for that business of advertising on our system goes up. So they bid more in the ad system. So if we can make it so that now, in addition to finding businesses that people want to interact with, people can also transact with them directly, I would expect that over time, that will lead to higher prices for ads because it will be worth more to the businesses, so they will bid more in the ad system. Mark Zuckerberg: (01:01:59) But in order for that to happen, there were a lot of steps between now and then. We have to build a system that passes all the regulatory approvals. It has to end up being successful and useful for people, and then as kind of a third step far down the line, if all that plays out, then we may see a positive business impact. Mr. Kostoff: (01:02:20) Facebook also becomes a marketplace where the currency is traded for the goods sold over Facebook. Mark Zuckerberg: (01:02:27) Congressman. that's correct. And that's a separate area that we're working on already. We distinguish between services that we're trying to offer and payments like this, and some of the other payment efforts that we have, from commerce efforts. We already have Facebook Marketplace, which a lot of people use to buy and sell things that they've made. There's a lot of secondhand goods that are sold there. A lot of people use it. It's hundreds of millions of people a month. We're building Instagram Shopping, which is a new way for people to basically connect with the creators and influencers who they care about and any kind of brand, to make it so that they can buy things in line, and I think that that's going to end up being a useful product for people as well. Mr. Kostoff: (01:03:12) You mentioned of course, one need is the under banked or even the unbanked in our communities across the nation. Of course, another problem with that is that some of those people who are unbanked or underbanked, also live in areas without broadband service or without sufficient broadband service to trade. Does Facebook have a plan to address those areas that lack the broadband access? Mark Zuckerberg: (01:03:41) Congressman, we do. We work on this both in the US and abroad, and we started working on this in 2013 when we launched the internet.org project. We now also have the Facebook connectivity project, where we build technology. We build open source technology that mobile carriers can use to decrease their costs, which in a competitive market we hope some of those savings will be passed along to consumers. We've seen certain of these innovations when they get implemented in countries around the world, because the cost of delivering broadband go down, now some people can afford to do access broadband who weren't able to before, and the amount of the population that gets connected goes up. Mark Zuckerberg: (01:04:27) Overall, the connectivity initiatives that we've had, we've measured that across the world, we believe that they've helped more than a hundred million people access the internet who weren't on the internet before. Mr. Kostoff: (01:04:38) Right. And very briefly, you've heard concerns from both sides of the aisle about the operation locating in Switzerland. You've heard it even before today's hearing. With all that considered, will you consider yes or no, locating in the United States versus Switzerland? Mark Zuckerberg: (01:04:58) Congressman, at this point, we do not control the independent Libra Association, so I don't think we can make that decision, but Facebook's efforts... And we're certainly an American company that is based here, and our investment will be largely here. Mr. Kostoff: (01:05:13) Thank you. Chairwoman: (01:05:13) The gentlemen from Guam, Mr. San Nicolas, who is also the vice chair for the Committee on Financial Services, is recognized for five minutes. Mr. San Nicolas: (01:05:22) Thank you Madam Chair. Good afternoon, Mr. Zuckerberg. Thank you for making the time to be with us here today. I first wanted to commend you for the amazing platform that you've built with Facebook. I think that you're very right in stating earlier that allowing for Facebook to be the kind of platform that would enable challengers to get their messages out there versus relying on traditional media, I think is very sound, and I'm an example of that. I wouldn't be sitting here today if it wasn't for Facebook. Mr. San Nicolas: (01:05:50) My community on Guam is small. We have a limited amount of local media, and so I was able to reach a vast majority of my residents just by going through Facebook, and very inexpensively relative to how much a 30 second commercial would've cost me. And so, I think that face on Facebook has brought a lot of opportunities for change and opportunities for new people to be able to take advantage of the power behind the platform. When you established Facebook, when you were first getting started, did you ever imagine it would get this big? Mark Zuckerberg: (01:06:24) Congressman, no. I was building a service for my community in college. Mr. San Nicolas: (01:06:29) Right. Mark Zuckerberg: (01:06:29) I thought someone might build something like this. I just didn't think it was going to be us. Mr. San Nicolas: (01:06:33) Yeah. I'm sure too that when you're putting Facebook together, you never imagined that you would have to be worrying about foreign election interference or human trafficking or child exploitation or privacy violations or housing discrimination on your platform. I'm sure those things were not things that you thought about when you were putting Facebook together in the beginning. Right? Mark Zuckerberg: (01:06:52) Congressman, you're right that the scale has grown quickly, and there are certainly a lot of problems that we're handling now and addressing proactively now, that before we might've addressed reactively. Well, we have... It's worth noting, we have had content policies since basically the beginning of the company. It's just that, we used to enforce them reactively. Someone in our community had to flag a piece of content to us, and then we'd handle it, which of course if you're starting in your dorm room, you can't have tens of thousands of people reviewing content. So it's the only logical way to do it. Mark Zuckerberg: (01:07:22) But at some point along the way, we became a big company that has the resources to have all these folks doing content in security review and to build the kind of AI technology that we have today. And now that we can, I feel like we have a responsibility to do that. Mr. San Nicolas: (01:07:37) And I think that you're going to do the best job that you can in order to make sure that that gets addressed, and no doubt, because your business model depends on it. I think the reason why there's a lot of concern in this room with respect to Libra, is because while Facebook started out as a communications and sharing platform, and while the idea behind it never really was imagined to grow to this scale or imagined to have these types of problems, I think that's the concern of Libra. And while Facebook is a communications and sharing platform, Libra is a currency and a payment settlement platform. Mr. San Nicolas: (01:08:10) And that takes it to a whole new level in terms of what we might not be able to foresee in the future. And that's where I'm very concerned. The key to my concern actually rests particularly in the fact that Libra is an asset backed currency, and I heard you mention earlier today that you believe that you're going to have Libra be able to convert on a one to one basis in terms of people being able to put a dollar in and being able to take a dollar out. Mr. San Nicolas: (01:08:39) But in listening to that and knowing how currency markets work and knowing that Libra is supposed to be backed by a basket of currencies, and that currencies fluctuate, it's virtually impossible to have a one to one ratio of money going in versus money going out when it's a single currency going in and a basket being invested, that's going to have to come out. Has that been something that you factored in? Mark Zuckerberg: (01:09:04) Congressman, it is. And I think economists... There's not a clear consensus on that point. I think some would argue that it is more stable to use a combination of currencies rather than to rely on any single one. Mr. San Nicolas: (01:09:17) I think what you would have is less volatility, but if you were to have for example, a basket of currencies that would include the Euro, the Yen and the Dollar, and someone would have put in a dollar today, because the Euro, the Yen and the Dollar all fluctuate differently, it's very unlikely you're going to be able to pull the exact amount out later, and that's why the currency markets use a lot of swaps, and they use a lot of leverage to be able to have arbitrage and balance in order to be able to make sure things are able to settle in those ways. Mr. San Nicolas: (01:09:42) But when it comes to Libra, there is no singular entity responsible for making sure that one to one ratio is accountable. And so, let's say for example, the association were to strive for that, they would perhaps use leverage to be able to meet that one to one demand, and things were to grow to a point where it would no longer be sustainable- Speaker 1: (01:10:03) ... demand and things were to grow to a point where it would no longer be sustainable. At the end of the day, who's going to be responsible if Libra fails? Mark Zuckerberg: (01:10:09) Well, Congressman, I think the point of the one to one reserve backing is to prevent the kind of leverage that you see in the traditional banking industry. Speaker 1: (01:10:18) But it just wouldn't be possible when you're using a basket of currencies. And so I think that the main question I really want to have answered is, if Libra fails, who's going to be responsible for that? Mark Zuckerberg: (01:10:27) Well, Congressman, the Libra Association will have the reserve, but I understand that this is an important question. And this is one of the things that we'll be working with FSOC and other regulators to make sure that we have a solution that meets their standard. Maxine Waters: (01:10:48) The gentleman from Ohio, Mr. Gonzales, is recognized for five minutes. Anthony G: (01:10:53) Thank you Madam Chair, and thank you Mr. Zuckerberg for being here for today's questions. As I've said many times in this committee, I believe distributed, permissionless blockchain technologies have the opportunity to fundamentally change the digital world in very positive ways, and I absolutely want this country to lead. I believe that is an altogether different statement, and different thing entirely, from what Libra is and what we are talking about today, which I think has a number of contradictions inherent in the project itself. Anthony G: (01:11:22) When your colleague was here last, he mentioned, and the White Paper suggests, that the goal is to transition to a permissionless blockchain. Is that still the ambition? Because it seems like it might not be anymore. Mark Zuckerberg: (01:11:35) Congressman, I think that is the aspiration over time. Anthony G: (01:11:40) So that's a yes, over time? Mark Zuckerberg: (01:11:42) It's the aspiration. In order to fulfill the financial inclusion mission, there are going to be some people who may not be able to use- Anthony G: (01:11:51) Reclaim my time. I appreciate that. So, it's a goal, but it's not necessarily written in stone. I actually, as I told him, I don't think you'll ever get there because I don't think you have any incentive to, frankly. But with that being the case, so in this current world, where it is controlled by the Libra Association, the claim has been made "We don't have to trust Facebook. We don't have to trust anybody." Similar to a claim that would be made on cryptocurrency, which I think is a valid claim. Anthony G: (01:12:19) But inherent in that is that we do because it's controlled. It's controlled by a centralized organization, which is the Libra Association. So, how can you make the claim that the Libra association, Libra, will adhere to all regulations in all places, but have one centralized organization that is going to enforce the law that way? Mark Zuckerberg: (01:12:41) Sorry, Congressman, I'm not sure I understand. Anthony G: (01:12:44) So, you have the Libra Association, correct? The Libra Association, right? That regulates Libra, correct? And that's going to be one uniform system presumably. Mark Zuckerberg: (01:12:56) Yes. Anthony G: (01:12:56) One uniform code of regulations. You also that Libra will adhere to all regulations in the countries of jurisdiction. How can you make that claim? Because surely we could have two different sets of regulations in the US versus the EU, in one central organizing structure. Mark Zuckerberg: (01:13:16) Congressman, I need to clarify the distinction between Facebook's efforts and the independent Libra Association. I am speaking for Facebook and what we're going to do. When I'm committing that we're going to comply with US regulations and we're not going to launch anything anywhere in the world until we have those regulations. Anthony G: (01:13:35) And would you disassociate from the Libra Project entirely if Libra is going on a path that goes against US regulations? Mark Zuckerberg: (01:13:44) Congressman, I've testified that we would. Anthony G: (01:13:48) Thank you. And then the next thing that's a big concern for a lot of folks that I talked to, you've mentioned you're not going to mix social and payment data. Right? And I think that's important to keep that distinction. I'm a trust but verify kind of a person. So, what regulatory oversight are you willing to sign up for to ensure that's the case? Because I don't necessarily just trust you to do that. Mark Zuckerberg: (01:14:10) Well, Congressman, my understanding is the FTC order that we just entered into means that we're going to have to certify at each level of the company. Every manager who's overseeing a team that involves people's personal data is going to have to certify on a quarterly basis that, to the best of their knowledge, their team is upholding the privacy commitments that we've made. So, we've made public privacy commitments around this and we will have to certify that. That will go throughout the company and up to me, and I will have to certify as well. Anthony G: (01:14:44) Thank you. And you're satisfied with that? Mark Zuckerberg: (01:14:48) Congressman, I think that's a pretty robust framework. Anthony G: (01:14:52) I wasn't meaning to criticize. I was sincerely asking. And so, the final point I guess I would make. So, we're painting this as sort of, "If we don't do it, China will do it." I think you'll be hard pressed to find somebody who's more of a Hawk on China in this committee. So, I agree with that. Anthony G: (01:15:09) What I don't think is the right frame is, "If Mark Zuckerberg and Facebook don't do it, then Xi Jinping will do it." Like, this isn't Mark Zuckerberg versus Xi Jinping. I think that's a totally different thing. And so, framing it that way, I believe, is somewhat misleading to me. I want us to innovate in the space and I want us to own the future of this space. Anthony G: (01:15:31) But as you rightly point out, I believe that having a centralized organization, i.e., Facebook, doing this, frankly, I don't trust it, and I don't believe the American people trust it. And so I would encourage you to work on ways to decentralize, so that there is no control whatsoever. With that, I yield back. Maxine Waters: (01:15:54) Thank you. The gentlewoman from Michigan, Ms. Tlaib, is recognized for five minutes. Rashida Tlaib: (01:16:00) Thank you so much, Madam chairwoman. Thank you so much for being here. I know this is going to be really hard in this setting, but try to see me beyond just a Congresswoman, but also as a mother that as raising two Muslim boys in this pretty dark time in our world as I ask you these questions as well. Rashida Tlaib: (01:16:20) For years, advocacy organizations, as you already know, have been pleading with you and your team to prohibit hate groups from using the events page, which fuel violence against African Americans, Muslims, Jews, immigrants and the LGBT community. And you claim you're very serious about addressing it. In 2018, even, before Congress, you stated, I quote, "We do not allow hate groups on Facebook. If there's a group that their primary purpose, or a large part of what they are doing is spreading hate, we will ban them from the platform overall." So, Mr. Zuckerberg, yes or no, is it still your policy to banned hate groups? Mark Zuckerberg: (01:16:58) My understanding is yes. Rashida Tlaib: (01:17:00) Okay. Face group's community standard right now, as it reads, it says, quote, "We are committed to making Facebook a safe place." Yes, very good. "Expression that threatens people has the potential to intimidate or exclude or silence others isn't going to be allowed on Facebook. I want to refer to a photo up on the monitor right now showing a man holding a rifle outside of a mosque, intimidating fellow Americans. Mr Zuckerberg, yes or no? Does this meet your community standards? Mark Zuckerberg: (01:17:29) Okay. Congresswoman, I'm not sure I'm in a position right now to evaluate any given post against all of the different standards that we have. Rashida Tlaib: (01:17:41) So, white supremacist hate groups still regularly use the events pages to organize threatening protest in front of mosques, and these protesters are often armed. The hateful rally in this picture was planned on a Facebook event page, and I do want to submit for the record, Madam Chairwoman, a press release and statement from Muslim Advocates. Muslim civil rights groups, to Zuckerberg, reported hate groups are still on Facebook, and then also a Newsweek article that says Facebook has failed to stop anti-Muslim hate groups, despite my Mark Zuckerberg's pledge. So, why haven't you stopped- Maxine Waters: (01:18:17) Without objection, such is the order. Rashida Tlaib: (01:18:19) Thank you, Madam Chair. Why haven't you stopped hate groups from using your events page, and are you endorsing these groups by leaving their events page up? Mark Zuckerberg: (01:18:28) Congresswoman, thanks for, for raising this. This is an area that I think is very important and that I take very seriously. It's very hard to police every instance of this. And a lot of the content in the stories that you're talking about, I would personally condemn, and I don't think that this is the type of thing that I want on any of our platforms. And I'm committed to making sure that we continue to invest more and do a better job here. Mark Zuckerberg: (01:18:55) We're not perfect. We make a lot of mistakes. People share across our services more than a hundred billion pieces of content a day. So, even if we make mistakes on a relatively small percent, that's still a lot of mistakes in both directions. Things that we take down that shouldn't be taken down and things that we missed that we leave up, that we should've gotten to. Mark Zuckerberg: (01:19:17) And this is a constant effort to do better, as the state of the art and the technology improves. Certainly, the state of AI today, to be able to identify different things, is so much better than it was five years ago, but this is really hard stuff. I mean, even, if you assume, for example, that the photo that you're saying would have been against the policies, even within that, we have nuances in the policies. Like you might be allowed to share it if you're condemning it, right? Which of course seems important. Mark Zuckerberg: (01:19:48) If there's some sort of racist attack, you would want people to be able to share a video condemning it, but you wouldn't want people to be able to share the video of that same attack glorifying it and trying to encourage others to copy it, and that ends up being nuanced linguistic analysis. We operate in more than 100 countries around the world. This is one of the areas that's been hard for us to execute as well as I think you and I would would like us to, but we are improving, and I think this is an area that I take very seriously. Rashida Tlaib: (01:20:18) Thank you. Recently, Facebook has taken the step further by permitting politicians to violate their community standards. Mr. Zuckerberg, why should the very politicians who lead our country be held to a lower standard for truthfulness and decency than the average American? Mark Zuckerberg: (01:20:36) Congresswoman, this isn't about helping the politicians. This is about making sure that people can see for themselves what politicians are saying. Rashida Tlaib: (01:20:47) I know, by Mr. Zuckerberg, it is hate speech. It is hate, and it's leading to violence and death threats in my office. It's untruthful and I understand that folks are working on it on your team. But if it's leading to actual, real violence towards people that are innocent, that these are untruthful statements. But also, it's a pretty dark time in our country. We need to be able to play a part in reducing that violence. Mark Zuckerberg: (01:21:17) Chairwoman, do you mind if I add some context on that question? Maxine Waters: (01:21:21) I'm sorry, the time has expired. We have people waiting. Thank you. We would like for you to answer in writing, though, any questions that you have not answered. The gentleman from Tennessee, Mr. Rose, is recognized for five minutes. John Rose: (01:21:37) Thank you, Chairwoman Waters, and Mr. Zuckerberg, thank you for being here with us today. As I've listened to the questions and testimony today, I'm reminded of a quote from one of the great entrepreneurs back in my home state of Tennessee, a guy by the name of Cal Turner, Sr., who once said, "People will forgive you for anything before they'll forgive you for being successful." John Rose: (01:21:59) And I know you face a lot of criticism because of the great platform that you've built and the success that you've had. Facebook today is still a brand that is synonymous with social media, and not necessarily known for its financial instruments. Mr. Zuckerberg, I think there are still many unanswered questions about the Libra Project, and I can appreciate how you and your team have tried to convey your intent to work with regulators before fully launching Calibra. And I applaud you for releasing the Libra White Paper back in June, but I'm trying to as a lawyer and so it does raise a bit of concern to me that White Paper still, to this day, is not dated or versioned in any way. So, before I get into my deeper comments, I wonder if that's something you all might address so that, as time goes forward, we might be able to have that as a reference point as we look back. Mark Zuckerberg: (01:22:53) Congressman, I think that's good feedback. Of course, as I've said a number of times today, I don't control the Libra Association, but I would personally agree that what you just suggested would be a good addition. John Rose: (01:23:04) Thank you. Today, Facebook carries with it some tremendous reputational risk. From your testimony here today, I know you recognize that. Between the risk Facebook carries itself and some of the distrust many Americans, and even some of my colleagues here today have in our financial services industry, how do you plan to launch Calibra and Libra in a way that consumers will trust the technology? Because although it has been documented that Calibra will be a regulated subsidiary, it is still just that, a subsidiary of Facebook, and for better or worse, even though there is a consortium of several players working to launch Libra, Facebook is still the name most people associate with this new financial instrument. So, again, how do you plan to launch Calibra and Libra in a way that consumers will trust the technology? Mark Zuckerberg: (01:24:01) Congressman, a big part of this is the regulatory framework that's in place. You know, earlier this year, I wrote an op-ed calling for clear rules for the internet. You know, outside of this area where there's already quite clear rules, but in a number of the other areas that we've talked about today, including what more guidance on electoral advertising and some of the things we have to do there, as well as privacy and data portability. Mark Zuckerberg: (01:24:29) And I just think we're in a moment where too many important decisions, I think, are being made by these big internet companies, and I certainly feel this myself. I feel like we are making too many important decisions about speech, and I think we'd be better off if we had a clearer democratic process, and clear rules around some these things. Mark Zuckerberg: (01:24:52) In the area of financial services, this scenario where there are already some quite clear regulations, and that means that people don't just need to trust what any given company is doing. They know that the government, and the clear rules that have been democratically established, are being followed. John Rose: (01:25:13) Thank you. There is tremendous work left to do from a reputational standpoint, I would say to you, and I do wonder how successful how successful Libra and Calibra can be while Facebook is still trying to regain its reputational footing. I think you have work cut out for you, frankly. Like many of my colleagues here today, I have security concerns about cryptocurrencies, especially how bad actors like terrorist groups and networks will use these products. I'd like to ask you about some cyber risks with the Libra project, and what you would do if things go wrong, and we don't have much time. But if, somehow, hackers find a way to hack the technology, who will be liable? Mark Zuckerberg: (01:25:55) Congressman, I think that depends on where exactly the security vulnerability is, and if it's within our services, then I would assume that we will be liable. If it's in another part of the independent Libra Association, then it might be someone else. Mark Zuckerberg: (01:26:09) But this is going to be something that I would imagine the regulators will review. This would create either financial stability or other types of concerns that we've talked about today. And this is part of why I'm committed to making sure that we don't ship anything, any service here, until we have clearance from all of the appropriate US regulators. John Rose: (01:26:31) Thank you, Mr. Zuckerberg. And I hope, as that process continues, you won't exclude Congress where and when it's appropriate for us to perhaps revisit some of the regulatory framework. Thank you, and I yield back. Maxine Waters: (01:26:46) The gentlelady from California, Ms. Porter, is recognized for five minutes. Mark Zuckerberg: (01:26:50) Chairwoman, could we have a break after this round? After this next five minutes, maybe. I'm just up here. I'm drinking a lot of water. Maxine Waters: (01:27:27) Thank you very much. If we will start the clock over, we are going to allow Ms. Porter to start her questioning, and then we will break right after that. I understand there is a vote, so I want know what is happening with the vote as soon as she finishes. Thank you. All right, let's go. Katie Porter: (01:27:51) Mr Zuckerberg, as you know, Facebook can be sometimes an unkind place, both toward my personal appearance and today, apparently, towards your haircut, but I just, as a mother of a teenage boy, I just want to say, thanks for modeling the shortcut. You have said, quote, "We have a responsibility to protect our data, and if we can't, then we don't deserve to serve you," unquote. Do you remember making that statement? Mark Zuckerberg: (01:28:19) Congresswoman, yes. Katie Porter: (01:28:21) And Facebook's privacy principles say, one, we give you control your privacy, two, you own and can delete your information, and three, we are accountable. Today, can you affirm that Facebook cares about user privacy and still holds itself to the standards it articulate in its public policies? Mark Zuckerberg: (01:28:42) Congresswoman, we certainly care about privacy. It's incredibly important to people. Katie Porter: (01:28:49) Super. If that's true, that you care about privacy and you're hewing to these principles, why are you arguing Facebook in federal court that consumers can't hold you liable for any of these promises? Because quote, "As plaintiffs admit, they and every Facebook user are bound by Facebook's terms of service, which release Facebook from liability for users' contract and common law claims." Mark Zuckerberg: (01:29:13) Congresswoman, I'm not familiar with that specific legal argument. Katie Porter: (01:29:19) Well, it's right there for you. You are arguing in federal court in a consumer data privacy lawsuit, in which your own lawyers admit that users' information was stolen, that the plaintiffs failed to articulate any injury. In other words, no harm, no foul, Facebook messed up, but it doesn't matter. Is that your position? Mark Zuckerberg: (01:29:45) Congresswoman, I'm not familiar with all the context here, and I'm not a lawyer, so it's a little bit hard for me to weigh in on the specifics. Katie Porter: (01:29:52) Mr. Zuckerberg, as CEO and the tremendously proportional shareholder of Facebook, you are responsible for the legal arguments that your company makes. You hire these lawyers. Will you commit to withdrawing this argument and this pleading, and never again plead that there is no liability on Facebook when data breaches occur? Mark Zuckerberg: (01:30:14) Congresswoman, you're certainly right that I'm CEO and I'm responsible for everything that happens in the company. All that I'm saying is that I imagine that there are more pages to this document and- Katie Porter: (01:30:25) Okay, I'm going to take that as a no for right now, but I would like you to consider it. Mark Zuckerberg: (01:30:28) I will. Katie Porter: (01:30:29) I think your pleading is inconsistent with your privacy principles, and I think that American people are tired of this hypocrisy. I've been in Congress 10 months, and I have already lost count of how many people have sat in exactly that chair and said one thing to me and to this Congress, and then done another thing in federal court. Katie Porter: (01:30:44) I want to turn to a different issue. Facebook's known as a great place to work, free food, ping pong tables, great employee benefits, but Facebook doesn't use its employees for the hardest jobs in the company. You've got about 15000 contractors watching murders, stabbings, suicides, other gruesome, disgusting videos for content moderation. Correct? Mark Zuckerberg: (01:31:03) Congressman, yes, I believe that that's correct. Katie Porter: (01:31:08) You pay many of those workers under $30000 a year, and you've cut them off from mental health care when they leave the company, even if they have PTSD because of their work for your company. Is that correct? Mark Zuckerberg: (01:31:20) Congresswoman, my understanding is we pay everyone, including the contractors associated with the company, at least a $15 minimum wage, and in markets and in cities where there's a high cost of living, that's a $20 minimum wage. We go out of our way to offer a lot of mental health- Katie Porter: (01:31:35) Thank you. I take your word at the wage. Reclaiming my time. According to one report I have, and this is straight out of an episode of Black Mirror, these workers get nine, nine minutes of supervised wellness time per day. That means nine minutes to cry in the stairwell while somebody watches them. Would you be willing to commit to spending one hour a day for the next year watching these videos and acting as a content monitor, and only accessing, accessing the same benefits available to your workers? Mark Zuckerberg: (01:32:10) Congresswoman, we work hard to make sure that we give good benefits to all the folks who are doing this. Katie Porter: (01:32:15) Mr. Zuckerberg, reclaiming my time. I would appreciate a yes or a no. Would you be willing to act as a content monitor? To have that life experience? Mark Zuckerberg: (01:32:24) I'm not sure that it would best serve our community for me to spend that much time [crosstalk 01:32:29] Katie Porter: (01:32:28) Reclaiming my time. Mark Zuckerberg: (01:32:29) But I spend a lot of time looking for this content. Katie Porter: (01:32:30) Mister Zuckerberg claiming my time. Mr Zuckerberg, are you saying you're not qualified to be a content monitor? Mark Zuckerberg: (01:32:37) No. Congresswoman, that's not what I'm saying. Katie Porter: (01:32:38) Okay. Then you're saying you're not willing to do it. How many lobbyists are on your payroll? Mark Zuckerberg: (01:32:44) Congresswoman, I don't know the answer to that. Katie Porter: (01:32:45) 60. So, five dozen lobbyists, and I wanted to ask about the timing of your announcement this week to invest $1 billion into a housing charity on the day before your testimony before this committee. You may respond in writing. My time has expired. Maxine Waters: (01:33:05) The committee will recess for five minutes. Maxine Waters: (01:39:59) Members. Members. As soon as we are finished with the five minute recess, we're going to go straight to the floor. Or should they go now? Okay. Members, you may go to the floor now. They have called the vote. I understand there are two votes, and then please return back to the committee as soon as the last vote is taken. Crosstalk: (02:20:00) [crosstalk 02:20:00] [crosstalk 00:02:23:05] Chairwoman: (02:23:20) [inaudible 02:23:20] is recognized for five minutes. Speaker 2: (02:23:20) Thank you. Mr. Zuckerberg, thanks so much for being here today too. And I also want to thank the chairwoman for having this hearing. You've said a lot of things today that I don't think could have been said in the last hearing. So it was important to have you here, and your responses to questions has been very direct and very helpful. So thank you for that and thank you very much for being here. Speaker 2: (02:23:42) I just had a few quick questions about the Libra Association. On the website, one of the benefits, before Mr. Marcus appeared before our committee, was that those contributing, who joined the association could derive dividends from Libra investment tokens, and that's since been taken off. Could you elaborate on that? Mark Zuckerberg: (02:24:07) Sure Congressman. I think that there had been an idea, that in order to encourage marketing of the payment service, that there might be some investment. That other companies could make into this and some return that they could make. But I think that that idea has either morphed or been abandoned at this point. I'm not sure exactly what the current state of it is, but I think that's what you're referring to. Speaker 2: (02:24:36) Yes that is. Do you think that's a reason some of these bigger name players pulled out of the association or do you have a theory on that? Mark Zuckerberg: (02:24:44) Congressman, I don't think that, that's related to that would be my guess. I mean, those companies could have invested if they wanted to under that program, but I'm not sure that they were planning to. Speaker 2: (02:24:56) And so I kind of want to close on this line of Switzerland. I traveled with the chairwoman to Switzerland. And we found an environment there that seemed to be very pro bringing the association to Switzerland. One of the things that was troubling to me was this idea that we've got a great American company like Facebook, and a great American success story like yourself, who's pushing this idea on foreign soil. Speaker 2: (02:25:26) In your written testimony, one of the things you said is, "I believe this will extend America's financial leadership as well as our democratic values and oversight around the world. If America doesn't innovate, our financial leadership is not guaranteed." Those are your words and I agree with you. But why not bring this to the United States? Even if it means saying, "We tried this, we couldn't get our fellow Americans, we couldn't get Congress on board, but we think we'll have more success here at home." Why not give that a shot? Mark Zuckerberg: (02:25:56) Well Congressman, our subsidiary Colibra as well as a lot of the other organizations are American. A lot of the work that we're doing is happening in America. The platforms that we're building like WhatsApp and Facebook Messenger, where people might be able to use Libra if the project moves forward. Those are American products that that carry our values. It's contemplated that the reserve of the independent Libra association would be primarily American dollars. Mark Zuckerberg: (02:26:25) So we've talked at length today about some of the reasons why it might make sense to headquarter an international association in the place that a lot of other international associations are headquartered. But I wouldn't take away from that, that this isn't still going to be an American innovation that is extending America's financial leadership around the world. Speaker 2: (02:26:48) So I'll just say this. Before this hearing, I kind of had two issues. One was some of the issues Facebook has had over the last few years. A lot of them have been voiced in this hearing today. And the other was the whole issue of moving this to Switzerland. And I just would say that I think you've done a good job answering our questions today. Any company as large as yours is going to have problems and you'll continue to have problems. And so I'm not so much against the idea of Facebook pursuing an innovative idea, like perhaps I was in the past. Speaker 2: (02:27:22) But it's difficult for me to get on board with something that's so big being in another country. And I would implore you to consider bringing this home, perhaps as things move forward. You've said that you'll pull out of the association if it goes a direction you don't want to go. I would argue that you have enough influence to bring this home and keep this American, and I would ask that you consider that. I yield back. Chairwoman: (02:27:55) The gentlewoman from Iowa, Ms. Axne is recognized for five minutes. Axne: (02:28:02) Thank you chairwoman. And thank you for being here Mr. Zuckerberg. I asked my constituents what they would like to ask you. And chairwoman, I'd like to enter those into the record. Chairwoman: (02:28:14) Without objection, such as the order. Axne: (02:28:16) Thank you. I'm going to talk about privacy in a second, but I want to start by reminding everybody here of Facebook's mission. It says your mission, "Is to give people the power to build community and bring the world closer together." If your goal is to bring the world closer together, I believe that requires you taking your responsibility for our elections very seriously. Axne: (02:28:37) I know yesterday you revealed new attacks from Russia and Iran, many of them targeting swing States. And I take those very personally because those are my constituents. And I would like you to keep that in mind when you're thinking about the people who are being targeted. I don't want to spend too long on this, but Facebook's size makes it a target for those kinds of attacks. And if Facebook is going to remain essential to how Americans communicate, I need you to work harder to prevent these kinds of attacks. But moving on, let's start with a couple of basics. How many American adults have a Facebook account? Mark Zuckerberg: (02:29:11) Congresswoman, I actually, I don't know the exact breakdown off the top of my head. I can get back to you on that. Axne: (02:29:16) I believe U.S. and Canada combined is about 240 million or 85% of the adults. And the second question would be, I know substantially all of Facebook's $55 billion dollars in revenue last year came from advertising. Is that correct? Mark Zuckerberg: (02:29:32) Congresswoman? The vast majority comes from advertising. That's right. Axne: (02:29:35) Okay. So $50 billion at least, do you think comes from advertising? Mark Zuckerberg: (02:29:39) Yes. Axne: (02:29:39) Okay. And I believe this year you said, "You want to make sure that folks have an opportunity to control their data privacy." I believe you said this last year, "That you're going to make sure that folks have that opportunity even when they're not logged into Facebook." Is that correct? Mark Zuckerberg: (02:30:01) Congresswoman, I'm not sure what you're referring to. But in general, yes. I think people should have control over all of their information in all forms. Axne: (02:30:11) So do you collect data on people who don't even have an account with Facebook? Mark Zuckerberg: (02:30:16) Congresswoman, there are a number of cases where a website or app might send us signals from things that they're seeing. And we might match that to someone who's on our services. But someone might also send us information about someone who's not on our services, in which case we likely wouldn't use that. Axne: (02:30:33) So you collect data on people who don't even have an account? Correct? Mark Zuckerberg: (02:30:37) Congressman, I'm not sure that's what I just said. But- Axne: (02:30:39) If you are loading up somebody contacts and you're able to access that information. That's information about somebody who might not have a Facebook account? Is that correct? Mark Zuckerberg: (02:30:49) Congresswoman, if you're referring to a person uploading their own contact list and saying that the information on their contact list might include people who are not on Facebook, then sure. Yes, in that case they're [crosstalk 02:31:01] Axne: (02:31:01) So Facebook then has a profile of virtually every American. And your business model is to sell ads based on harvesting as much data as possible from as many people as possible. So you said last year. "That you believed it was a reasonable principle that consumers should be able to easily place limits on the personal data that companies collect and retain." I know Facebook users have a setting to opt out of data collection and that they can download their information. Axne: (02:31:28) But I want to remind you of what you said in your testimony. " Facebook is about putting power in people's hands." If one of my constituents doesn't have a Facebook account, how are they supposed to place limits on what information your company has about them? When they collect information about them, but they don't have the opportunity to opt out because they're not in Facebook? Mark Zuckerberg: (02:31:46) Congresswoman, respectfully, I think you ... I don't agree with the characterization saying that if someone uploads their contacts- Axne: (02:31:54) That's just one example. I know that there's multiple ways that you're able to collect data for individuals. So I'm asking you, for those folks who don't have a Facebook account, what are you doing to help them place limits on the information that your company has about them? Mark Zuckerberg: (02:32:09) Congresswoman, my understanding is not that we build profiles for people who are not on our service. There may be signals that apps and other things send us. That might include people who aren't in our community. But I don't think we include those in any kind of understanding of who a person is, if the person isn't on our services. Axne: (02:32:29) So I appreciate that. What actions do you know specifically are being taken or are you willing to take to ensure that people who don't have a Facebook account have that power to limit the data that your company is collecting? Mark Zuckerberg: (02:32:41) Congresswoman, what I'm trying to communicate is that I believe that, that's the case today. I can get back to you on all of the different things that we do in terms of controls of services. Axne: (02:32:57) That would be great. Because, we absolutely need some specifics around that to make sure that people can protect their data privacy. Mr. Zuckerberg, to conclude, Facebook is now tracking people's behavior in numerous ways, whether they're using it or not. It's been used to undermine our elections. And of course, I know you're aware Facebook isn't the most trusted name. So I'm asking you to think about what needs to be fixed before you bring a currency to market. Thank you. Chairwoman: (02:33:22) The gentleman from Virginia, Mr.Riggleman is recognized for five minutes. Riggleman: (02:33:27) Thank you Madam Chairwoman. And thank you Mr. Zuckerberg for appearing today. It seems as though Facebook is somewhat of a regular fixture at the committee these days. So Mr. Zuckerberg, my first question is simple but very thought provoking. How realistic of a betrayal was the Social Network? Riggleman: (02:33:45) So by the way, and the reason I asked that question, I think we're getting to the beginning of Social Network Two and I just want to be in charge of my own casting. I wanted that on the record right now, so as we go forward. But I think your life story is impressive. I think ingenuity and hard work, I think you can aspire to dream and have the American dream. Riggleman: (02:34:02) However, I was part of the R and D infrastructure at the Office of Secretary of Defense. I had to do a lot of rapid reaction or quick reaction capability development. So I know the difficulty of trying to do something like this, especially in an agile process like you're doing. So I have some real questions. You know, when I was in the DOD they played this thing called, Stump The Dummy for me, when I was trying to give a technical briefing. I will not do that today, I promise you that. Riggleman: (02:34:25) So I'm going to ask some real questions here. The first thing, you talked about the many countries. I think, and I've got a question. Thanks, I looked it up. You know that the power of Google, 170 million or so U.S. users, 2.32 billion worldwide for Facebook. My first question is if this happens, and I know that Colibra is sort of an instantiation of Facebook, and a wallet to hold an independent currency like Libra. Right? Is how I understand it. If you're in all these separate countries, and this is a technical question. Riggleman: (02:34:54) Do you believe it's possible to build a rule set, or an algorithmic rule set, some kind of rule based machine learning thing. Where you can comport or have the AML, BSA, the Anti-Money Laundering or Bank Security Acts of each country sort of rolled into the algorithm when you buy Libra in that specific geographic entity, or from that portion? So I was wondering if that's something that is possible, that those rule sets could be built in automatically when you're actually logging in or building your Libra account through Colibra or through a wallet that might not be Colibra? Mark Zuckerberg: (02:35:24) Congressman, I think this is a good question. We're certainly looking at whether there are elements of the AML or KYC regulations that can be encoded at the network level. And not just at the level of the individual wallets or payment companies involved. In terms of how this works in different countries around the world. What we find is that the American standard in regulations tend to be pretty strict. Mark Zuckerberg: (02:35:57) We can build similar tools for verifying people's government ideas across the world in different places. And you can make a centralized investment in that and then have it apply in a number of places. And I think that if we comply with America's laws on this, then we will largely be in compliance with most of what needs to happen around the world. There may be some specific things that need to be done differently in some places, but I think the technical complexity would probably be relatively similar. Riggleman: (02:36:26) And then, because I got the idea, you know, we have usually prepared questions. So now I'm just riffing right now, because talked about the renminbi, right? Digitizing the renminbi. And we talked a little bit about the digital dollars. So my question is this, when it comes to sort of anti-money laundering or elicit trafficking, my background was in follow the money. Do you believe ... And again, this is a technical question, not a, you know how far we can go into this. Riggleman: (02:36:47) Do you believe it's possible on the AML side that you can tag the attributes of the transaction on those attributes rather than the entity itself. To see if there's any nefarious activity with that specific token? In other words, by not going into the privacy portions of this, can we actually track what's happening with that token? And at that point, maybe look at if that token is doing something wrong without sort of identifying what the user is or the owner of Libra is for that transaction? Mark Zuckerberg: (02:37:13) Congressman, I think we likely will explore security measures like that. Just to analogize to another area of our work in kind of preventing nation States from trying to interfere in the democratic process. So that type of thing, of just looking at patterns of activity that kind of clusters of accounts are making. So we can build these AI systems that can find, amongst the billions of people who are using our services, when a group isn't behaving in the way that a human would. And then we can pass that along to the FBI or the relevant law enforcement to help figure out what the right action to take is. That's certainly been one of the effective enforcement measures that you would be able to take. So I would imagine that we will explore that here as well. Riggleman: (02:38:02) So possible to tag maybe a portion of the attributes or the transaction attributes rather than the people that actually bought the Libra currency token itself? Or there's basket group currencies. And that's ... You know, I have 15 seconds left, so next week we'll keep talking about IP geolocation. No, I'm excited about seeing how this goes along. But we are concerned, based on AML. Right? And BSA and where you're going to go with this. But I thank you. And by the way, I just one end with Tom cruise. He will be playing me in Social Network Two. I yield my time. Chairwoman: (02:38:32) The gentleman from Illinois, Mr. Casten is recognized for five minutes. Casten: (02:38:37) It's always a privilege to follow you Mr. Cruz. Thank you Madam Chair. Thank you Mr. Zuckerberg. I understand about a month ago you had a meeting in the Oval Office with the President and several Senators from both parties. Is that correct? Mark Zuckerberg: (02:38:52) That's correct. Casten: (02:38:53) Was there a note taker president at that meeting? Mark Zuckerberg: (02:38:57) Congressman, I don't think that there were note takers at any of these meetings. Casten: (02:39:01) Okay. So you're not aware that there's any record of what was discussed at that meeting? Mark Zuckerberg: (02:39:05) Congressman, I'm not aware of any formal record. Casten: (02:39:07) Okay. Did you or did the president of that meeting raise or discuss the antitrust investigations that are underway? Department of justice, Federal Trade Commission or the various states Attorney General? Riggleman: (02:39:19) Congressman, I don't think so, but the meeting was private overall. Casten: (02:39:23) Yeah. I understand there was no record. I'm asking whether the subject came up? Mark Zuckerberg: (02:39:28) Congressman, those subjects didn't come up. But in general, I mean, I'm not ... I don't feel like it's appropriate for me to comment in too much detail on private conversations. Casten: (02:39:39) We're in a public office. Did anyone discuss the policy change allowing the exemption of political figures and parties from misinformation, that prohibition on Facebook, in the course of the meeting? Mark Zuckerberg: (02:39:49) Congressman, no, that did not come up. Casten: (02:39:52) I want to dive into that in a little bit more detail. Not in the context of your meeting. If I understand your testimony here today, you have an aggressive posture against essentially allowing free speech, but blocking the speaker. So for example, if Jenny McCarthy were to post something saying, "Don't get your kids vaccinated." Would you take that down? Mark Zuckerberg: (02:40:16) Congressman, I think we probably would not take that down. But it's hard for me to comment on a hypothetical without looking at the actual post and looking at all the- Casten: (02:40:23) So, someone with a large platform who is spreading misinformation on your platform, you're saying you wouldn't take it down or you would? I thought you had earlier said that it was only politicians you'd limit that speech for? Mark Zuckerberg: (02:40:33) Congressmen, in general, our policy is not to ban people from posting things that are false. It is to ... You can say something on your page if you want. If an independent fact checker marks it is false, we will put a label on it that says that an independent fact checker has marked it as false. And we will reduce the distribution and spread of it through the network. Casten: (02:40:55) So let me follow on my colleague, Miss {inaudible] comment. You said that you were trying to police and block hate crimes and hate speech. If somebody posted, If a member of the American Nazi party posted horrible antisemitic messaging on Facebook, would you block that? Mark Zuckerberg: (02:41:09) Congressman, our policies against hate speech do lead to us taking down content completely. Misinformation- Casten: (02:41:18) Okay. Okay, so now let me follow. In the last election, Art Jones ran against Dan Lapinski in Illinois, a neighboring district to mine. He was a member of the American Nazi party. Would he be allowed to speak on your platform in a different fashion than a member of the Nazi party who was not running for elected office? Mark Zuckerberg: (02:41:34) Congressman, I'm not familiar with who this person is. Casten: (02:41:37) I'm asking the question whether you can spread hate speech if you are an elected official or trying to be an elected official? That you would not be allowed to if you are not in that capacity? Mark Zuckerberg: (02:41:46) Congressman, I think that that depends on a bunch of specifics that I'm not familiar with this case and can't answer to. Casten: (02:41:54) Well, that's rather shocking. Mark Zuckerberg: (02:41:57) I can follow up. Casten: (02:41:59) I don't think that's a hard question, but fair enough. Look, it strikes me. Let me just ask you some totally hypothetical questions. You don't have to answer any of these, and frankly, I don't think you want to answer any of them. Whether or not the first amendment allows you to scream fire in a crowded theater as an open question that we struggle with all, and what how you define that. Whether or not the Libra is a bank or a credit card or a credit rating system and what regulatory environment it sits under is a hard question. Casten: (02:42:35) You have the luxury and the privilege not to have to ask those questions and not to have to answer those questions. None of us on this side of the Dias have that luxury. We have to figure that out. We have to sort that through. And you're a smart guy. You're a well-meaning guy. I have tremendous admiration for what you've built. But I would remind you of the wisdom of one of our great Supreme Court Justices, Louis Brandeis, who said. "The greatest dangers to Liberty lurk in insidious encroachment by men of zeal, well meaning, but without understanding." Casten: (02:43:10) Justice Brandeis of course also described ... One of my colleagues likes to ask everybody if they are a capitalist or a socialist. Justice Brandeis pointed out that when we have tremendous concentrations of power in our country, we only have three choices. We can allow that concentration of power to take over government, which is to embrace fascism. We can allow government to take over that concentration of power, which is to embrace communism. Or we can embrace competition. Your luxury, sir, your privilege comes from the fact that as a country, those of us on this side of the dais have always chosen door three. And I hope you have the wisdom to appreciate that. Thank you. I yield back. Chairwoman: (02:43:49) The gentleman from Minnesota, Mr. Emmer is recognized for five minutes. Emmer: (02:43:53) Thank you, Madam Chairwoman. Thank you Mr.Zuckerberg for being here and staying here throughout this entire process. Since I have the opportunity to help close out this hearing, I think I can safely say that this is at least the second time you've testified before Congress. Where members end up looking like they have invested absolutely no time learning about new technologies in order to responsibly question tech companies. I think that's a fair takeaway from this hearing. Emmer: (02:44:24) Congress is nowhere close to catching up with some of the most basic changes happening in our society. Now I'd like to thank the Republican leader, the Financial Services Committee for the recent opportunity to serve as a ranking member of the financial technology text task force. In this new role, I look forward to working with my colleague, Representative Lynch to foster a competitive environment in which American innovation can flourish. This includes cryptocurrency, blockchain networks, and every area of FinTech. Emmer: (02:44:53) Mr Zuckerberg, I have serious concerns about the structure of Libra and its establishment outside the U.S. I also think it's incredibly important to distinguish Libra from cryptocurrency and truly decentralized open public networks. But what I'm most concerned about is Congress and American regulators. Unfortunately, my colleagues have offered several proposals in conjunction with this hearing that could have a tremendously harmful impact on innovation in the United States. Emmer: (02:45:22) A few of these provisions appear to apply securities regulation beyond actual securities. As co-chair of the blockchain caucus, I frequently meet with entrepreneurs who try to follow the rules and never receive a clear answer from regulators that what they're doing is legal. It has not been clear whether innovators who play by the rules of the road will ever receive the assurances that the U S government will not come after them. Emmer: (02:45:45) Clarity is incredibly necessary in securities law. We can support open public networks and we can do so in a nonpartisan fashion. That's why I intend to introduce a bill that will make it clear that as long as you register as a security or comply with an exemption under existing law, you will not continue to have prosecution from a regulator hang over your head, when that asset is publicly distributed and in fact a commodity is a commodity. As law makers, it's our responsibility to explore all aspects of a platform like Libra. That has the potential to impact so many and determine what, if any laws should be passed to protect consumers, while enabling businesses in the American economy to grow. Emmer: (02:46:25) If we don't lead in this area, others, most certainly will. I'm encouraged by new opportunities to address this issue and approach these types of innovations with a curious and open mind. It presents an exciting opportunity for commerce and remittances here in the United States and globally. We all understand that any new innovation presents risks. The Financial Stability Board just last week issued a detailed report of the various risks that should be considered when we look at something like Libra. The Libra platform that can be viewed as what is called a global stable coin or a potential global method of payment. Emmer: (02:46:57) These are serious risks that we as law makers and as a committee need to work through, but let me repeat that. We need to work through them. We should look at these issues, these opportunities, and these risks intelligently with input from experts in each of these areas. But what we should not do is immediately assume we need to ban them. The legislation identified for discussion during today's hearing would do just that. In your testimony, you present serious concerns with China's actions. I share this concern, but it should not come at the cost of even one single right of Americans. Especially freedom of speech, assembly, and the right to due process. Emmer: (02:47:31) We can compete and excel beyond China, not despite our freedoms, but because of them. Mr Zuckerberg, apart from private closed door meetings and being called to testify, what has Facebook done to engage the entire crypto community to help Congress and regulators understand all the innovations in this space and why it should be supported domestically? Mark Zuckerberg: (02:47:52) Thank you, Congressman. You're raising a number of important questions in here. This is part of the reason why we're organizing, why we helped start the independent Libra association. This is clearly an area where it can't just be one company operating by itself and trying to stand up a system like this. And a number of the other companies and organizations that are part of the Libra association are companies that have been involved in the crypto community and building great crypto companies and products for many years, before we got into the space. Mark Zuckerberg: (02:48:33) So I think that some of them have come up here and talked to all of you about the work that they're doing, given a diverse opinion. I'm representing my views on how I think that this can advance our economy and help lead to more financial inclusion and build good services for people. But I think over time we'll want more members of the Libra association to ... Or whether we want them to or not, I think that they will be involved in helping to educate more folks as well. Emmer: (02:49:07) Thank you. I appreciate it and I look forward to continuing the discussion. Chairwoman: (02:49:13) The gentlewoman from Massachusetts, Ms. Pressley is recognized for five minutes. Pressley: (02:49:20) Thank you Madam Chair. I've always maintained that those closest to the pain should be closest to the power, driving and informing the policymaking. Now, one thing is abundantly clear to me, Mr. Zuckerberg. You are very close to the power. That power is only growing. Although there is disagreement about who really created Facebook, you ultimately secured near unilateral control of the company. In fact, because of your control of 90% of Facebook's class B shares, even if all other shareholders were to vote the same way, any proposal you don't support would still fail. Pressley: (02:49:58) All of that to say, Mr. Zuckerberg, Libra is Facebook and Facebook is you. I know you understand the technological and business case for Libra. You have the stats, but I'm not certain you know the stories. That you understand the source of the pain that millions are experiencing, that are experiencing under-banking and credit invisibility. So Mr. Zuckerberg, yes or no? In your adult life, have you ever been under-banked? Yes or no? Mark Zuckerberg: (02:50:32) I'm going to go with no. Pressley: (02:50:34) When I asked the head of Colibra about why people lacked bank accounts, he said he believed that, "Identity is a big problem." Yes or no? Do you agree that authentication is the major hurdle to accessing the financial system? Mark Zuckerberg: (02:50:51) Congresswoman, I'm not sure. I think it's probably different in different places around the world. Pressley: (02:50:58) The same world bank reports cited in near Libra white paper finds that almost two thirds of 1.7 billion people who don't have bank accounts say, "It's because they lack enough money to open one." So this is not about authentication. This is not about banking costs. This is about a tsunami of hurt that millions are experiencing because of a $1.6 trillion dollar student debt crisis. Because of rising healthcare costs and people having to use Go Fund Me pages to pay medical bills. This is because of the racial and gender wealth gap. Pressley: (02:51:34) So again, you represent the power, but I don't think you understand the pain. There's under-banking because people are broke. And so let me just ask you this question. Yes or no? Is it free to use the Colibra wallet? Mark Zuckerberg: (02:51:52) Congresswoman, the Colibra wallet isn't a service that is available today. Assuming we were able to launch it, it will be free. Pressley: (02:52:01) So there is no fee? Mark Zuckerberg: (02:52:03) Congresswoman, that's the goal is to make it so that- Pressley: (02:52:07) So there is no fee? Mark Zuckerberg: (02:52:09) Congresswoman, the goal is to make it- Pressley: (02:52:10) Okay, moving on. So if it costs money to buy Libra and costs money to use the Colibra wallet, I fail to see how this helps people with virtually no money. You are attempting to use technology to solve what is inherently an issue of wealth. At the end of the day, you are a business. So what is in the business interests for you here? And do you believe in what you are building? Do you believe in what you are building? Mark Zuckerberg: (02:52:39) Congresswoman, yes. Pressley: (02:52:42) So yes or no? Would you leave behind your children's inheritance in Libra? Mark Zuckerberg: (02:52:48) Congresswoman- Pressley: (02:52:49) Do you believe in what you're building? Mark Zuckerberg: (02:52:50) Yes I do. And it's- Pressley: (02:52:52) Would you leave behind your children's inheritance in Libra? I think is a fair question. Because you've proven that we can not trust you with our emails, with our phone numbers. So why should we trust you with our hard earned money? Mark Zuckerberg: (02:53:08) Well, Congresswoman- Pressley: (02:53:09) Reclaiming my time. If you can, answer yes or no. Would you leave behind your children's inheritance in Libra? Mark Zuckerberg: (02:53:17) Congresswoman, I would because it'll be backed one-to-one by other sovereign currencies. Pressley: (02:53:21) All right, moving on, I'm running out of time here. Mr Zuckerberg, your recent speech at Georgetown touched upon how you were affected by the start of the Iraq War when you were in college. And how, "If more people had a voice to share their experiences, maybe things would have gone differently." Earlier this year you announced that Jennifer Newstead would join Facebook as General Counsel. Pressley: (02:53:39) Miss Newstead was the Chief Deputy in the Office of Legal Policy at The Department of Justice. And in the fall of 2001, then was the day to day manager of the Patriot Act in Congress, according to John U, author of the Torture Memos. Miss Newstead helped sell Congress on mass surveillance once already, and now she is advising you how to do it again. So yes or no? Is the Patriot Act reflective of your views on privacy and free speech? Mark Zuckerberg: (02:54:05) Congresswoman- Pressley: (02:54:06) 10 seconds left. It's an easy, straight forward question. Is the Patriot Act reflective of your views on privacy and free speech? Mark Zuckerberg: (02:54:13) Congresswoman, there's a lot in there. And no, I do not agree with all of it. Pressley: (02:54:17) Mr. Zuckerberg, that is not what your hiring choices indicate. Maya Angelou told us a long time ago, "When people reveal to you who they are, believe them." I yield. Chairwoman: (02:54:35) The gentleman from Indiana, Mr. Hollingsworth is recognized for five minutes. Hollingsworth: (02:54:41) Well, good afternoon, Mr. Zuckerberg. I appreciate you being here and I appreciate your thoughtful answers to many of the questions that have been posed, and the effort that you've undertaken. I actually do think you are really sympathetic to a lot of the plights around the world. Including access to the financial system, and some of the transaction costs associated with remitting money to individuals who may be far flung around. Speaker 3: (02:55:03) ... with remitting money to individuals who may be far-flung around the world. And I actually really do think that you care a lot about that. And I think your zeal and passion for mobilizing, harnessing technology to deliver better outcomes for a vast number of people, is truly inspirational. And I appreciate the effort that you and many other people at Facebook and other technologies undertake every single day to empower people to live better lives. Speaker 3: (02:55:27) And so, I wanted to ask, in concert with that, I assume you and the others with you and with Facebook and the Libra Association, have made conscientious choices about the architecture of the technology to reflect what you're trying to do, and lower those transaction costs and help intermediation across financial services. I wonder if you might talk about the technology a little bit. And talk about the choices that you've made and how that reflects your genuine desire for this to be a tool of empowerment, a tool of connection, not an investment or a security or something like that. So I wonder if you might talk about that for a second. Mark Zuckerberg: (02:56:02) Thank you, Congressman. You're right that I think that there's an opportunity to build a new financial infrastructure, maybe not completely from the ground up, but rebuild a lot of the cruft that has been, and take out a lot of the cruft that's been built up over the years. Having something that- Speaker 3: (02:56:23) Not that that's bad necessarily, what existed today, but it arose in an environment far different than what we have today. Mark Zuckerberg: (02:56:32) That's right. I agree with that. I mean, and this is the way that all systems work. Speaker 3: (02:56:36) Agreed. Mark Zuckerberg: (02:56:37) I mean, you build something up, and then more requirements get placed on it over time. You build more things, and- Speaker 3: (02:56:41) And technology advances and enables us to jump over that, right? Mark Zuckerberg: (02:56:44) Absolutely. Speaker 3: (02:56:44) Right. Mark Zuckerberg: (02:56:45) So I just think that we're in a different state of technology today, where some of the advancements in blockchain and some of the things that can be done decentralized, and in some cases, the combination of decentralized and centralized systems which we're able to try to help facilitate here with Calibra and as part of the Libra Association, I think just allow a lot of the costs and inefficiency to be taken out of the system. I just think, if you look at it today, you have your mobile phone, you have WhatsApp. You can text someone around the world. It's end-to-end encrypted. It gets there in less than a second, a lot less than a second. It's easy to use. Mark Zuckerberg: (02:57:29) I just don't see why you shouldn't be able to send money in the same way. It should be able to get there quickly. It shouldn't take days to get there. Current remittances do. It should be free or extremely affordable. It may not be able to be completely free because we'll have to comply with a lot of these regulations, and that will require people and work. But just like the cost of text messages used to be very high before there was competition in that space, I think that the cost of money transfers should come down dramatically too. And enabling that kind of competition and kind of a new way of thinking about the space, is fundamentally what we're trying to go for. Speaker 3: (02:58:04) And I think that's right. And at least what I've read about some of the choices that have been made in the architecture behind the technology reflects that desire, right? As you've articulated, pegged to a basket of currencies, to be stable, not to be volatile, right? It is not truly a decentralized technology, it requires a central purpose, right? And I think that you've kind of built that architecture so that you can empower these individuals. Speaker 3: (02:58:27) And I think, look, it's really easy to talk about, perhaps some of the demons that have been unleashed by technology. And it's really easy to forget the amazing advancements that we've been able to make, as people, as humans, because of this technology. And I want this to reach more people around the world. You already have a tremendous network with, I don't know, two and a half billion people connected to that network, right? The question is, what else can we connect to that network to make it, not only more valuable for Facebook, not only more valuable for the association, but more valuable for each of those people. Right? And to Ms. Pressley's point, each of those people that have felt for a long time disempowered, feel like they operate in a separate global economy than perhaps the developed world, they operate in a separate financial services system than the developed world. Speaker 3: (02:59:12) I believe in what you were trying to do. And I also believe you at your word in saying that the goal is to comply, the goal is to get to the right outcome, the goal is to make a difference in people's lives. Facebook has already done that. And that it reflects some of society's ills is not necessarily Facebook's fault. And I think that we should reflect really carefully on ensuring we have the right crucible for developing this technology over time. And I appreciate the effort that you've undertaken with regard to that already. So thank you for being here. Mark Zuckerberg: (02:59:41) Thank you. Speaker 4: (02:59:42) The gentleman from Utah, Mr. McAdams, is recognized for five minutes. B. McAdams: (02:59:46) Thank you, Madam Chair. Mr. Zuckerberg, in addition to my job as a member of Congress, I hold the title, like you, of Dad. I have four children, ages eight, 11, and 14-year-old twins. And keeping them safe, not just for them but for the thousands of kids that live in my district, is what I want to talk to you about today. Because the role online social networks play in the lives of our teenagers certainly causes me much stress and keeps me up at night, questions such as, who are my kids talking to online? Are they being groomed or exposed to illicit content? What does the exposure to what they see online mean for their physical and mental health development and their well-being? And I'm sure these are questions and concerns that most parents have. So I want to discuss the role that Facebook and other online social networks can play in keeping our kids safe. And I echo the points made earlier by my Republican colleague, Ms. Wagner. So a few weeks ago, The New York Times published a deeply troubling article on child sexual exploitation. The Times reported that technology companies, including Facebook, reported a record 45 million online photos and videos of child sexual abuse content last year. And Facebook, specifically, was responsible for the vast majority of reports of online sexual abuse materials. And thank you for your efforts to crack down on that. But Facebook Messenger alone was responsible for 65% of the reports, with roughly 12 million out of 18.4 million worldwide reports. I know you're aware of that report. B. McAdams: (03:01:23) The report also noted that, only halfway through the year, a specialized law enforcement team had conducted 150 raids across my state of Utah in response to internet crimes against children, and that they expect to arrest twice as many people this year compared to last year for crimes related to child sexual abuse material. So this is clearly a problem in Utah, a problem across our nation, and it isn't getting better. It's getting worse. So Mr. Zuckerberg, yes or no, do you believe that online social media platforms such as Facebook have a role to play, even an obligation, to ensure that their platforms are safe for our vulnerable populations, especially our children? Mark Zuckerberg: (03:02:09) Congressman, absolutely. And we do a lot of work on this, as you've pointed out. I think the reason why the vast majority of reports came from Facebook is because we're doing work to- B. McAdams: (03:02:17) Yeah, I saw your comments earlier to Ms. Wagner to that effect. Thank you. Mark Zuckerberg: (03:02:20) ... find this stuff. B. McAdams: (03:02:21) And that's good to hear. So let's dig into the challenges on that and steps that Facebook is taking to ensure that our children remain protected. B. McAdams: (03:02:29) Mr. Zuckerberg, according to reports, WhatsApp has more average monthly users than Facebook messenger, 1.6 billion to 1.3 billion, respectively. But according to The New York Times report, Facebook Messenger reports roughly 65% of all sexual abuse reports, whereas, "The data shows that WhatsApp, the company's encrypted messaging app, submits only a small fraction of the reports that Messenger does." I'm curious as to why WhatsApp, your more popular messaging app, reports only a fraction of the incidents that Facebook Messenger does. Yes or no, is it in part because WhatsApp is encrypted end to end, whereas Facebook Messenger is currently not? Mark Zuckerberg: (03:03:10) Congressman, that's right. When the content is encrypted end to end, we can't actually see the content itself, so we have to do other measures to prevent [crosstalk 03:03:19]- B. McAdams: (03:03:19) Thank you, yeah. Mark Zuckerberg: (03:03:20) ... connections between adults and minors who might be [crosstalk 03:03:22]- B. McAdams: (03:03:22) That makes sense. Thank you. So Mr. Zuckerberg, earlier this year, you announced plans to move your messenger app in the direction of WhatsApp by encrypting all communications sent over that app, end to end. And I know, of course, there's a delicate balance between privacy and child safety, but I don't think this is an either/or proposition. Facebook and other tech companies were founded with innovation at their core. I think we can have encryption and more secure messaging while still ensuring that we protect our children. That technology can play a role in keeping our children safe, even if the app is encrypted. I see great value in encryption technology and more secure data transmission, but I know that it comes with some risks. So I'm concerned about the move, Facebook Messenger to end-to-end encryption, with the cryptocurrency rocket fuel, if we don't get it right, and the repercussions that it may have on our ability to stop predators who take advantage of our children. B. McAdams: (03:04:14) So seeing that my time is short, Mr. Zuckerberg, while I know that you are using some of your technologies to detect and delete explicit content, like AI, Facebook needs to be doing much more to protect our children. A move to encryption for Facebook Messenger will only proliferate the danger if not done correctly, all while giving you plausible deniability on what goes on, on your platform. You can and should prioritize child safety as you move forward with privacy safeguards. And I urge you to work with child safety experts before taking any steps that could put our children in danger. 45 million photos and videos last year of child sexual abuse material. We must do better. Our children deserve nothing less. Thank you. Speaker 4: (03:04:59) The gentlewoman from New York, Ms. Ocasio-Cortez, is recognized for five minutes. A. O.-Cortez: (03:05:06) It's good to see you, Mr. Zuckerberg. I think you, of all people, can appreciate using a person's past behavior in order to determine, predict, or make decisions about future behavior. And in order for us to make decisions about Libra, I think we need to kind of dig into your past behavior and Facebook's past behavior with respect to our democracy. Mr. Zuckerberg, what year and month did you personally first become aware of Cambridge Analytica? Mark Zuckerberg: (03:05:38) I'm not sure of the exact time, but it was probably around the time when it became public. I think it was around March of 2018. I could be wrong though. A. O.-Cortez: (03:05:49) When did Facebook COO, Sheryl Sandberg, become aware of Cambridge Analytica? Mark Zuckerberg: (03:05:54) I don't know off the top of my head. A. O.-Cortez: (03:05:56) You don't know? Did anyone on your leadership team know about Cambridge Analytica prior to the initial report by The Guardian on December 11, 2015? Mark Zuckerberg: (03:06:07) Congresswoman, I believe so, and that some folks were tracking it internally. A. O.-Cortez: (03:06:14) And- Mark Zuckerberg: (03:06:14) Actually, as you're asking this, I do think I was aware of Cambridge Analytica as an entity earlier. I just, I don't know if I was tracking how they were using Facebook specifically [crosstalk 03:06:25]- A. O.-Cortez: (03:06:24) When was the issue discussed with your board member, Peter Thiel? Mark Zuckerberg: (03:06:30) Congresswoman, I don't know that off the top of my head. A. O.-Cortez: (03:06:32) You don't know. This was the largest data scandal with respect to your company, that had catastrophic impacts on the 2016 election. You don't know? Mark Zuckerberg: (03:06:39) Well, Congresswoman, I'm sure we discussed it after we were aware of what happened. A. O.-Cortez: (03:06:45) Okay. You announced recently that the official policy of Facebook now allows politicians to pay to spread disinformation in 2020 elections and in the future. So I just want to know how far I can push this in the next year. Under your policy, using census data as well, could I pay to target predominantly black zip codes and advertise them the incorrect election date? Mark Zuckerberg: (03:07:12) No, Congresswoman, you couldn't. We have ... Even for these policies around the newsworthiness of content that politicians say, and the general principle that I believe that, in a democracy- A. O.-Cortez: (03:07:24) But you said you're not going to fact-check my ads. Mark Zuckerberg: (03:07:26) But we have ... If anyone, including the politician, is saying things that can cause ... that is calling for violence or could risk imminent physical harm, or voter or census suppression when we roll out the census suppression policy, we will take that content down [crosstalk 03:07:44]- A. O.-Cortez: (03:07:45) So there is some threshold where you will fact-check political advertisements. Is that what you're telling me? Mark Zuckerberg: (03:07:52) Well, Congresswoman, yes, for specific things like that where there's imminent risk of harm, but also- A. O.-Cortez: (03:07:58) Could I run ads targeting Republicans in primaries saying that they voted for the Green New Deal? Mark Zuckerberg: (03:08:05) Sorry. Can you repeat that? A. O.-Cortez: (03:08:07) Would I be able to run advertisements on Facebook targeting Republicans in primaries saying that they voted for the Green New Deal? I mean, if you're not fact-checking political advertisements, I'm just trying to understand the bounds here. What's fair game? Mark Zuckerberg: (03:08:20) Congresswoman, I don't know the answer to that off the top of my head. I think probably? A. O.-Cortez: (03:08:24) So you don't know if I'll be able to do that? Mark Zuckerberg: (03:08:25) I think probably. A. O.-Cortez: (03:08:29) Do you see a potential problem here with a complete lack of fact-checking on political advertisements? Mark Zuckerberg: (03:08:34) Well, Congresswoman, I think lying is bad. And I think if you were to run an ad that had a lie, that would be bad. Mark Zuckerberg: (03:08:40) That's different from it being, from it, from ... in our position, the right thing to do to prevent your constituents or people in an election from seeing that you had lied. A. O.-Cortez: (03:08:55) So you won't take down lies, or you will take down lies? I think this is just a pretty simple yes or no. Mark Zuckerberg: (03:09:00) Congresswoman, in- A. O.-Cortez: (03:09:02) I'm not talking about spin, I'm talking about actual disinformation. Mark Zuckerberg: (03:09:06) Yes, in most cases, in a democracy, I believe that people should be able to see for themselves what politicians, that they may or may not vote for, are saying [crosstalk 00:14:12]- A. O.-Cortez: (03:09:12) So you won't take them down? Mark Zuckerberg: (03:09:13) ... they can judge their character for themselves. A. O.-Cortez: (03:09:15) You may flag that it's wrong, but you won't take it down? Mark Zuckerberg: (03:09:18) Congresswoman, it depends on the context that it shows up. Organic post ads, the treatment is a little different. A. O.-Cortez: (03:09:26) One more question. In your ongoing dinner parties with far-right figures, some of who advanced the conspiracy theory that white supremacy is a hoax, did you discuss so-called social media bias against conservatives? And do you believe there is a bias? Mark Zuckerberg: (03:09:41) Congresswoman ... Sorry, I don't remember everything that was in the questions [crosstalk 03:09:46]- A. O.-Cortez: (03:09:47) That's all right. I'll move on. Can you explain why you've named The Daily Caller, a publication well-documented with ties to white supremacists, as an official fact-checker for Facebook? Mark Zuckerberg: (03:09:57) Congresswoman, sure. We actually don't appoint the independent fact-checkers. They go through an independent organization called the Independent Fact-Checking Network that has a rigorous standard for who they allow to serve as a fact-checker. A. O.-Cortez: (03:10:11) So you would say that white supremacist-tied publications meet a rigorous standard for fact-checking? Thank you. Mark Zuckerberg: (03:10:24) Congresswoman, I would say that we're not the one assessing that standard. The International Fact-Checking Network is the one who is setting that standard. Speaker 4: (03:10:34) Thank you. The gentlewoman from Virginia, Ms. Wexton, is recognized for five minutes. J. Wexton: (03:10:40) Thank you, Madam Chair. And thank you, Mr. Zuckerberg, for sticking around and answering all of our questions today. I know it's been a long day. Just so I'm clear on the difference between Libra and Calibra. Libra is a global coin or currency, or a "global payment system," as you called it in your earlier testimony. Is that correct? Mark Zuckerberg: (03:11:02) Congresswoman, that is correct. J. Wexton: (03:11:03) And it's going to be tied to a basket of commodities or currencies, and it's going to be backed by assets of the members of the Libra Association. Is that correct? Mark Zuckerberg: (03:11:14) Congresswoman, that is the current thinking. Although, as we've discussed in testimony today- J. Wexton: (03:11:18) Current plan? Mark Zuckerberg: (03:11:18) ... there are other ways that that could [crosstalk 03:11:19]- J. Wexton: (03:11:19) Right, it's still fluid. It's still a fluid thing. And it's going to be monitored and handled by the Libra Association, which is a not-for-profit entity. Correct? Mark Zuckerberg: (03:11:31) Congresswoman, the reserve for the Libra payment system will be handled by the independent Libra Association, that is correct. J. Wexton: (03:11:38) And that's a not-for-profit, right? Mark Zuckerberg: (03:11:40) That is correct. J. Wexton: (03:11:40) You mentioned that several times in your testimony. Mark Zuckerberg: (03:11:42) Yes. J. Wexton: (03:11:42) Calibra is the digital wallet. It's where somebody's going to put their Libra, correct? Mark Zuckerberg: (03:11:48) Yes, Congresswoman, Calibra is our subsidiary- J. Wexton: (03:11:51) And that's a wholly-owned subsidiary of Facebook, correct? Mark Zuckerberg: (03:11:53) That is correct. J. Wexton: (03:11:54) Okay. And Calibra is a for-profit entity, right? Mark Zuckerberg: (03:11:58) That is correct. J. Wexton: (03:11:59) Okay, so I guess I'm just kind of a little bit curious about how you're going to make your money, what the business model is. Do you anticipate that you're going to collect fees from vendors, much like a credit card processor, or are you going to mine data and use that to monetize the data that you get from people's purchases, or all of the above? Mark Zuckerberg: (03:12:21) Congresswoman, we're not going to share payment information from Calibra to the rest of Facebook for personalizing services. So there are just a small number of limited cases where we might have to share data if ... for overall security, or if tax law- J. Wexton: (03:12:39) So how are you going to make money? Mark Zuckerberg: (03:12:40) ... requires it. Sorry? J. Wexton: (03:12:41) So how are you going to make money? Mark Zuckerberg: (03:12:44) The basic method here is through advertising overall. And the way that this is going to work is- J. Wexton: (03:12:51) So you will still use that data for advertising purposes? Mark Zuckerberg: (03:12:55) Congresswoman, no. Sorry, if you'll give me a moment. J. Wexton: (03:13:01) Actually, I'm going to reclaim my time, because my time's about halfway up. A couple days ago, Facebook released its plan to protect the 2020 elections. I assume you're familiar with this document, right? Mark Zuckerberg: (03:13:14) Congressman, I can't- J. Wexton: (03:13:15) Helping to protect the 2020 US elections. Mark Zuckerberg: (03:13:18) Okay. Yes. J. Wexton: (03:13:19) Okay. And now, the plan doesn't mention deep fakes, but it does talk about misinformation. So I assume, would deep fakes fall under this umbrella of misinformation, according to your plan here? Mark Zuckerberg: (03:13:35) Congresswoman, they could. And we're also working on a separate deep-fakes policy as well for when it would be appropriate to [crosstalk 03:13:42]- J. Wexton: (03:13:42) Okay. Yes. And I know you talked about that a little bit earlier. Mark Zuckerberg: (03:13:44) Yeah. J. Wexton: (03:13:44) So do you understand there's a difference between misinformation and disinformation? Are you aware of that, that there's a difference between those two concepts? Misinformation is false information that is spread regardless of whether there is intent to mislead. Disinformation is deliberately misleading information, manipulated narrative or propaganda. Are you aware that there's a difference between those two concepts? Mark Zuckerberg: (03:14:06) Congresswoman, yes. J. Wexton: (03:14:07) Okay. But do you believe it's not your position to get into what the intent of any kind of poster is in putting that information out there? Mark Zuckerberg: (03:14:17) Congresswoman, it's not that it's not our responsibility or that it's not good to take that into account, it's just that it's much harder to determine intent at scale. I mean, I gave this example- J. Wexton: (03:14:29) Okay. And so, I have an example, actually. So we all saw the manipulated video of Speaker Pelosi, right? That was posted on Facebook, and re-posted by a number of other folks. That was obviously digitally manipulated content. Now, that came out before this policy started. So did it have a third party independent review to determine whether it was manipulated or not? Mark Zuckerberg: (03:14:57) Congresswoman, it did have a third party fact-checker review it- J. Wexton: (03:15:00) And how long did that fact-checking review take? Mark Zuckerberg: (03:15:03) I don't know how long the review took, but there was an operational mistake on our side which took too long for us to flag it for a fact-checker to look at. So once we'd flagged it for the check [crosstalk 03:15:15]- J. Wexton: (03:15:15) Okay. And then once the information came out that that was an altered video and it was essentially a fake video, who made the decision to leave it up? Mark Zuckerberg: (03:15:24) Well, Congresswoman, our policy is that, for misinformation, we don't- J. Wexton: (03:15:29) I understand that that's the policy, but was there a recommendation that the video be taken down at any point in that process? Mark Zuckerberg: (03:15:36) Well, Congresswoman, the policy is fairly clear on how we should act with that- J. Wexton: (03:15:42) Were you involved in making a decision about whether that video came down or whether it remained up? Mark Zuckerberg: (03:15:54) Congresswoman, yes. And part of this was, "Okay, this is what our policy is now," and recognizing that this example, among others, highlighted for us that we need a separate deep fake policy that may be different from how we treat ordinary misinformation. And that's what we're working on now. We've started by implementing this deep fake challenge to work on technical solutions for identifying deep fakes and figuring out what they are. And that's how we're proceeding on this. J. Wexton: (03:16:25) You had me at "yes," Mr. Zuckerberg. Thanks. Speaker 5: (03:16:29) The gentlewoman from Pennsylvania, Ms. Dean, is recognized for five minutes. M. Dean: (03:16:33) Thank you, Mr. Chair. Thank you, Mr. Zuckerberg, for being here before our committee. Mr Zuckerberg, does Facebook do any business with Trump International Hotel here in Washington, DC? Mark Zuckerberg: (03:16:46) Congresswoman, I do not know the answer to that. M. Dean: (03:16:51) There have been public reports of enterprises and even governments doing business with Trump Hotels to curry favor with the administration. Do you think you could get us the answer to whether or not you have been doing any business, Facebook, your company, has been doing any business with the hotel? Mark Zuckerberg: (03:17:07) Congresswoman, I will look into it with my team. M. Dean: (03:17:10) And you'll be able to get us data and information? Mark Zuckerberg: (03:17:13) My team will follow up with you. M. Dean: (03:17:14) Is there any chance that Facebook actually books blocks of rooms at Trump International Hotel and does not use them? Mark Zuckerberg: (03:17:23) Congresswoman, I would be very surprised to hear if that were the case. M. Dean: (03:17:27) Who in your company would be in charge of the people who would do such bookings? Mark Zuckerberg: (03:17:34) Congresswoman, I'm not even sure because I would be very surprised if that were a thing that we would do. So I'm not sure what team would be in charge of a thing that I don't think we are doing. M. Dean: (03:17:43) But you don't know. You have no idea. Mark Zuckerberg: (03:17:46) Congresswoman, I've certainly never heard of anything like that happening. I'll confirm it after this. M. Dean: (03:17:52) But you don't know if Facebook has booked, for any occasion, a room or a block of rooms at Trump International Hotel? Mark Zuckerberg: (03:18:02) Congresswoman, what I'm saying is I'm not aware of that. It's hard for me to sit here and know all of the things that our organization hasn't done. M. Dean: (03:18:10) So to be clear, you don't have any knowledge of that? Mark Zuckerberg: (03:18:12) That is correct. M. Dean: (03:18:14) Even though what you are proposing here, Libra, will most likely be regulated by Congress and by this Trump administration. Is that correct? Mark Zuckerberg: (03:18:23) Congresswoman, that's correct. M. Dean: (03:18:25) And we do know that enterprises and even foreign governments have booked rooms at Trump Hotel and there's a real concern about currying favor with the administration by doing business there. Do you worry about that too? Mark Zuckerberg: (03:18:37) Congresswoman, I've seen the stories, and I understand the concern. M. Dean: (03:18:40) Do you worry about that too? Mark Zuckerberg: (03:18:41) I understand the concern, yes. M. Dean: (03:18:42) Do you share the concern? Mark Zuckerberg: (03:18:45) Congresswoman, yes. If someone is trying to inappropriately curry favor, that's bad. M. Dean: (03:18:52) I look forward to your sharing that information with this committee. Let's move on to the role of trust. Federal Reserve Board chairman, Jerome Powell, said, "Libra faces many serious concerns regarding privacy, money laundering, consumer protection, and financial security, trust." M. Dean: (03:19:09) So before we move forward to Libra, why don't we look back on the issue of trust, and you, and Facebook. As you know, from 2009 until 2011, there were many complaints against Facebook. And in 2011, you, Facebook, agreed to settle with the FTC regarding deceptive practices, at least eight counts of wrongdoing, breaches of privacy. In 2012, the FTC accepted a final settlement with you, Facebook, because Facebook said you could keep your customers' information private and that you would agree to accept or require their express consent before sharing information. Is that correct? That was your 2012 agreement? Mark Zuckerberg: (03:19:49) Congresswoman, that sounds roughly correct. M. Dean: (03:19:52) That was a consent decree with the federal government. You think that's roughly correct? Mark Zuckerberg: (03:19:56) That sounds roughly correct. M. Dean: (03:19:57) Did you live up to that? Mark Zuckerberg: (03:20:00) Congresswoman, I think that that's up for a regulator to decide. I think we've certainly made a number of mistakes [crosstalk 03:20:06] privacy. M. Dean: (03:20:06) Are you aware of your July settlement for a fine of $5 billion? Mark Zuckerberg: (03:20:11) Of course. M. Dean: (03:20:12) You are aware? Mark Zuckerberg: (03:20:13) Of course. M. Dean: (03:20:13) So over the course, from 2009 until this very year, while under a consent decree to clean up your credibility, your credibility with your customers, to protect their privacy, to protect them from deceptive practices, you failed to do that for 10 years. Am I correct? Mark Zuckerberg: (03:20:32) Congresswoman, I wouldn't agree with that characterization. M. Dean: (03:20:36) But you settled for $5 billion in recognition of that failure. I'll move on. M. Dean: (03:20:44) Given your history, why should Congress, regulators, and the public trust you to create what amounts to the world's largest bank, what really amounts to a shadow sovereign government? Why would we want you to do that? Mark Zuckerberg: (03:20:58) Well, Congresswoman, we're not creating a bank. We're helping an organization create a payment system. And I don't think that regulators- M. Dean: (03:21:06) A payment system of shadow currency that really would operate more like a government. And I want to quote you, "In a lot of ways, Facebook is more like a government than a traditional company. We have this large community of people, and more than other technology companies, we're really setting policies." More like a government, right? That's Facebook. M. Dean: (03:21:25) I see I have very little time left. I'm going to end with an expression that my son taught me recently, that we earn credibility drop by drop, but we pour it away in buckets. I suggest, and my hope is that Facebook will go back to earning credibility drop by drop from those very customers you profit from. Thank you very much. Speaker 5: (03:21:47) The gentlewoman from North Carolina, Ms. Adams, is recognized for five minutes. A. Adams: (03:21:53) Thank you very much, Mr. Chair. And thank you, Mr. Zuckerberg. Today my colleagues and I have asked a lot of questions about trust. You just heard one. Facebook is playing a game of catch-up to build user trust, especially among the African-American community in the United States. And according to a report produced for the Senate Intelligence Committee, the Russian influence campaign on social media in 2016, in that election, made an extraordinary effort to target African-Americans. They used an array of tactics to try to suppress turnout among Democratic voters and unleashed a blizzard of activity on Instagram, which you also own, that rivaled or exceeded its posts on Facebook. A. Adams: (03:22:36) And so, the report states that no single group of Americans was targeted by [inaudible 03:22:42] information operatives more than African-Americans. As a black woman who has fought my entire life against voter suppression efforts and tactics, I implore you to ensure your platform does not become a dark place for fringe elements to amplify hate, racism, and bigotry, or otherwise allow those that would wish to do harm to exploit the very real racial tensions that still exist in America today. A.