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Washington is pledging to step up oversight of cryptocurrency now that Facebook is getting in the game. But that would be an extremely steep challenge for lawmakers and regulators who have already struggled to keep pace with Silicon Valley on far less technically complex issues.
Lawmakers immediately raised concerns about the potential privacy and competition problems posed by Facebook’s announcement it would launch its Libra cryptocurrency. But Congress has so far paid limited attention to the incredibly thorny issue of digital currencies -- and in the past have struggled to grasp even basic concepts about more mainstream technology, such as how Facebook makes money or how social media works.
The Libra announcement "forces policymakers — particularly congressional lawmakers and their staffs — to learn more about the technology and the issues that are related to it,” said Kristin Smith, the director of external affairs at the Blockchain Association, noting lawmakers’ interest in cryptocurrency “completely spiked” in the past week.
“The rank-and-file members of Congress have not really had a reason to get deep in the weeds until now," she added.
Facebook’s entry into cryptocurrencies could also pressure Washington lawmakers to determine how digital tokens should be regulated more broadly. Although the issue has been debated for several years, it's still largely a gray area because it's not always clear how existing financial regulations apply to these new types of cryptocurrencies.
Lawmakers such as Sen. Sherrod Brown (D-Ohio) want to make sure regulators are looking into Facebook’s work on Libra -- but right now, Brown is not even sure which agencies have jurisdiction. “We need to figure out who should be involved in the regulatory side of this,” Brown said in an interview. He is the ranking member on the Senate Banking Committee, which announced it will hold a hearing next month on Project Libra.
Still, Brown is quick to accuse regulators of not doing enough oversight of cryptocurrency, especially at a time when, he says, the Trump administration has pushed for deregulation and a more hands-off approach to oversight of corporate power and financial institutions.
“I don’t think regulators in this administration have been active enough on this issue or any other issue,” he told me.
At least six federal agencies could have some oversight of cryptocurrency, according to Bloomberg's Robert Schmidt and Benjamin Bain. Already, Fed Chairman Jerome Powell told reporters that Facebook consulted with the agency before unveiling its Libra plans.
“Facebook, I believe, has made quite broad rounds around the world with regulators, supervisors and lots of people to discuss their plans and that certainly includes us,” Powell said, according to CNBC.
Facebook's proactive approach shows the company knows it has its work cut out for it as a broad range of regulators and lawmakers express concerns about the project. Following mutliple privacy debacles and evidence that Russia interfered on its platform ahead of the 2016 election, the company is already in a bruised position in Washington.
"Facebook has earned this skepticism of the public," Brown told me in an interview. "This is not something people are not going to rush to embrace."
Despite the criticism, Facebook says it's eager to work with lawmakers. "We look forward to responding to lawmakers’ questions as this process moves forward," Facebook spokesman Andy Stone said.
BITS: Google Maps searches are littered with “millions of false business addresses and fake names,” Rob Copeland and Katherine Bindley at the Wall Street Journal report. The listings are resulting in consumer fraud, highlighting that Silicon Valley's high-stakes battle against disinformation extends far beyond social media.
“The scams are profitable for nearly everyone involved, Google included,” the Journal reports. “Consumers and legitimate businesses end up the losers.”
Eleven of the 12 personal-injury attorney offices surfaced in a Google Maps search for Mountain View were faked, Rob and Katherine found. A similar search for plumbers in New York turned up 12 fake businesses and another six that weren't located at the addresses listed by Google. The issue is that consumers seek out their business believing they are real and then get swindled or receive shoddy services.
Hundreds of thousands of bogus listings appear on Google Maps each month, experts tell the Journal. Google Maps Director Ethan Russell said the company removed more than 3 million false business listings last year, and the company added “new defenses” in certain categories such as water-damage repair after the Journal reached out.
NIBBLES: Facebook has been building out a new “Strategic Response” team to avoid content on the platform leading to state violence and genocide, NBC News's David Ingram reports.
The team, backed by Chief Operating Officer Sheryl Sandberg, is responsible for identifying potential humanitarian crises on the platform, advising engineers for tools to flag them, and even figuring out for which languages Facebook needs content moderators.
“When there’s something happening on the ground and we have concern about tensions on the ground that could be bubbling up, then we can more aggressively downrank content that we may not otherwise,” Rosa Birch, who will lead the team, told David.
Human rights advocates have heavily criticized Facebook for its role in allowing state-sponsored posts that led to violence in Myanmar and other countries. But even with new tools and a dedicated team, some fear Facebook still won’t go far enough in removing content that could incite violence.
“The issue is getting Facebook and other companies to engage with human rights law in a way that puts human rights law at the center of speech restrictions,” said Amos Toh, a senior researcher at Human Rights Watch, tells NBC.
BYTES: Apple is looking at shifting up to a third of the production for some of its devices out of China and possibly into Southeast Asia, according to the Wall Street Journal’s Yoko Kubota and Tripp Mickle. The potential move shows growing fear from the tech sector over the potential impact of a China-U.S. trade on their supply chains and bottom lines.
Any change is unlikely to significantly affect the company’s flagship iPhone in the short term because the device requires a network of suppliers Apple has established in China, as well as hundreds of thousands of workers. The Journal noted that any changes would take months to years to put in place.
“There is some flexibility to move Mac and other products, but it won’t be easy,” technology supply chain analyst Mehdi Hosseini tells the Journal. “You have to have relatively skilled labor. You have to create an inventory hub. It would take time.”
The company wrote to the United States Trade Representative this week to oppose the 25 percent tariff on Chinese imports over $300 billion proposed by the Trump administration.
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