Congress Must Keep Big Tech Out Of Finance
By Rep. Chuy García
When Facebook CEO Mark Zuckerberg appeared before the House Financial Services Committee last month to testify about Facebook’s controversial venture into banking, the overwhelming reaction from my colleagues on the committee was distrust. Through numerous apology tours and record-breaking fines over the years, Zuckerberg has shown again and again that Facebook cannot be trusted. Zuckerberg refused to commit to a specific regulator or answer essential questions about whether the Libra project, a blockchain digital currency, is the shadow banking system it appears to be, which is why I introduced the Keep Big Tech Out of Finance Act to block Libra from moving forward.
Throughout his testimony, Zuckerberg failed to explain why his worthy goals of making payments easier and expanding access to the unbanked could not instead be met by the Federal Reserve. But the public shares Congress’ skepticism that Facebook can be relied on to deliver on those goals. Data for Progress asked voters whether they “prefer to use currency devised by a private company like Facebook or currency devised by a public source like the federal government.” Fifty-three percent of voters told Data for Progress that they would prefer a public source, while only 6 percent of respondents said they would prefer Facebook—an understandable result, since Facebook has a clear profit motive to develop Libra. The Fed is reportedly considering creating its own digital currency, which has huge potential to help the unbanked. And if the Fed expedites development of its own real-time payments system, as mandated by my bill with Rep. Ayanna Pressley, millions of Americans living paycheck to paycheck will benefit.
It isn’t just Facebook we need to worry about. Big tech has been moving into finance in all sorts of ways, with Apple, Uber, and Amazon all rolling out new financial services initiatives in the past year. On the day after I announced a package of bills aimed at keeping tech away from banking, Google also unveiled plans to offer checking accounts.
We know we can’t trust big monopolies with our financial information. The potential for collusion and exploitation is just too great. As antitrust scholar Matt Stoller wrote after Libra was first announced, “Imagine Facebook’s subsidiary Calibra knowing your account balance and your spending, and offering to sell a retailer an algorithm that will maximize the price for what you can afford to pay for a product.” Tech giants have repeatedly used their enormous size and virtually limitless access to consumer data to concentrate more power and wealth in fewer and fewer hands. In one well-known example, the startup Diapers.com refused to sell to Amazon, so Amazon used its size to flood the market with cheap diapers, selling the product at a loss until Diapers.com buckled. And until privacy concerns forced them to stop earlier this year, Facebook was utilizing an app called Onavo that gathered user data, giving Facebook insight into which popular start-ups they should acquire and run out of business.
When the lines between banking and commerce are blurred, monopolization and market concentration follow. Working people suffer the consequences, whether it’s big tech undermining small businesses or big banks gouging consumers by manipulating the price of oil, aluminum, and electricity. We must protect consumers by strengthening the separation between banking and commerce. The data shows the public is with us on this. But the question now is whether we can build the political will to stand up to big banks and big tech.
For more information read our memo showing that voters support more regulation of social media companies.
Congressman Chuy García (@RepChuyGarcia) represents Illinois’ 4th Congressional District.