Facebook's Libra Mystery

May 29, 2020 10:29 AM
Libra was part of Facebook's shareholder meeting agenda
A payments channel in a crypto wrapper
Crypto and Bitcoin Market Cap Story of Day






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Facebook this week held their first annual general meeting since they formally announced the Libra and  Calibra projects in June 2019. Conspicuously absent from the meetings was any mention of the projects at all barring a confusing answer to a shareholder question from Zuckerberg. The episode caps what will, for now, likely be categorized as a high-profile failure for the company.

Facebook released the Libra white paper in mid-June 2019. The announcement kicked off one of the most significant periods in crypto interest since the run-up of 2017-2018. The news sparked backlash from regulators who were immediately against the concept of a private entity, already under fire for privacy breaches, launching their own private currency.

Facebook initially pushed back, going as far as agreeing that David Marcus, the head of Calibra, and then Zuckerberg himself would testify in the Capitol. After those efforts did little to change tone around the project, the company has spent the better part of the last year walking back plans and this week also announced that Calibra — the company's prospective wallet solution — would be rebranded as Novi. A search of the transcript of the formal shareholders meeting doesn’t have one single mention of Libra, Calibra, crypto[currency], bitcoin, or blockchain. The only time in the entire meeting any of those terms appear was when a shareholder asked, “I am very supportive of Libra, but I would like to know how does this benefit Facebook financially? How is Libra going to make money for Facebook?”

Takeaway: Zuckerberg's answer to the Libra revenue question was extremely convoluted. In identifying Libra revenue as ad-related he noted, “there's a really important property of the ads business, which is that it's an auction, which - the fact that it's an auction means it has a lot of nice properties.”

This is the first time we can recall Zuckerberg linking the 2 business lines together and the explanation, which seemed to describe the ad-buying market more than anything, was convoluted. We had always questioned Facebook's decision to wrap Libra, what we viewed more as a payment channel, in a crypto wrapper. The move was even more questionable given the scrutiny that  Facebook was already under on the privacy and content side. Ultimately, it seems quite clear that Facebook wants to turn the page on Libra. We'll view this episode as, for now, a missed opportunity to create a formidable payments brand.


About the Author

FRNT Financial is a technology and sales layer that offers institutional and accredited investors access to various forms of exposure to crypto-assets. You can subscribe to FRNT Financial Morning Note at https://www.frnt.io/morningnote