- There is also trepidation among major economies such as India which are looking to ban cryptocurrencies altogether.
- Going by a statement released by PayPal, the company was ditching the endeavor to focus on its own financial products.
- Facebook has been facing mounting criticism from legislators about how it plans to handle Librá’s data privacy because it has, in the past, failed to uphold data privacy pledges.
MasterCard, Visa, eBay, Mercado Pago, and Stripe have pulled out of the Libra Association. The news comes barely a week after PayPal announced that it would forgo participation. The Libra panel was initially made up of 28 companies, each set to control a network node.
Increased regulatory scrutiny has dogged the Libra project since its inception and so the future of the project seems bleak at the moment. U.S. regulators, in particular, fear that Facebook will become too powerful if allowed to handle user funds across the world. There is also trepidation among major economies such as India which are looking to ban cryptocurrencies altogether. At the heart of Libra woes lie major data privacy concerns.
Going by a statement released by PayPal, the company was ditching the endeavor to focus on its own financial products. The statement read in part as follows:
“We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities.”
Why Major Companies are leaving the Libra Association
According to Libra project head David Marcus, mounting pressure is forcing major companies to drop out. On October 11, he reiterated Facebook’s commitment to launch the borderless payment network and expressed optimism about the project’s potential.
- Coming Soon.
This was via a series of tweets underlining the tumultuous regulatory landscape. He thanked Libra coalition partners Visa and MasterCard for participating in the Libra project up until the 11th hour via a note that read as follows.
“Special thanks to @Visa and @Mastercard for sticking it out until the 11th hour. The pressure has been intense (understatement), and I respect their decision to wait until there’s regulatory clarity for @Libra_ to proceed, vs. the invoked threats (by many) on their biz.”
Facebook is a Serial Offender
Facebook has been facing mounting criticism from legislators about how it plans to handle Librá’s data privacy because it has, in the past, failed to uphold data privacy pledges.
One of the firm’s most notable violations happened during its acquisition of WhatsApp in 2014. Facebook promised European regulators that it would not merge user information across its platforms. The company made a U-turn just after the buyout announcing that it was going to consolidate data on both platforms. Facebook was fined about $120 million for the violation.
The Cambridge Analytica scandal that unfolded in 2018 underscored the company’s lackluster data handling practices. Investigations revealed that the firm had allowed a collective of companies to access personal user information without user consent for advertising purposes. The watershed moment precipitated a sharp decline in the company’s valuation due to a change in public sentiment. The revelation also led to the enactment of tighter data privacy regulations.