Hillicon Valley: Lawmakers struggle to understand Facebook’s Libra project | EU hits Amazon with antitrust probe | New cybersecurity concerns over census | Robocall, election security bills head to House floor | Privacy questions over FaceApp
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LAWMAKERS ON LIBRA, TAKE 2:House lawmakers on Wednesday questioned how and why Facebook plans to enter the financial services industry and raised doubts about the viability and safety of the company’s proposed cryptocurrency payments system.
Members of a House panel grilled Facebook’s lead on Project Libra about concerns spanning from financial systemic risk and data privacy to core questions about what kind of product the social media giant was building with dozens of major corporations.
Above all, though, lawmakers on Wednesday appeared skeptical about how Libra would fit in the financial system and why it would be profitable for the dozens of corporations already involved in its development. {mosads}
But skeptical members of the House Financial Services Committee came away with little clarity on how the federal government could monitor and mitigate the risks of a potentially transcendent financial network.
“If Facebook’s plans come to fruition, the company and its partners will yield immense economic power,” said Rep. Maxine Waters (D-Calif.), chairwoman of the Financial Services panel.
“Ownership of government assets on such a massive scale, without proper oversight, threatens to concentrate government influence in the hands of a few elites.”
Struggling to make the case: Project Libra has been a hard sell for Facebook in Washington. The proposed payment system based on a cryptocurrency is backed by more than two dozen corporations. But lawmakers and regulators are concerned about how Facebook could use the immense reach and data of its more than 2 billion members to influence the global economy and financial system.
Congress has so far made it clear that Facebook is struggling from a dearth of trust in Washington as it works to launch its ambitious global currency project.
“What are you?” But above all, lawmakers on Wednesday appeared puzzled about how Libra would fit in the financial system and why it would be profitable for the dozens of corporations already involved in its development.
“What we’re struggling with is, what are you?” asked Rep. Ed Perlmutter (D-Colo.). “We think you’re a bank, but you’re not quite like a bank.”
“I want to support your innovation, I want to support your efficiency that people believe you’re bringing to the table,” Perlmutter continued. “But I also don’t want anybody getting hurt here.”
What’s next: More hearings on Libra are likely to follow the two held in the Senate and House this week. While Marcus said he would be willing to come in for more briefings, he declined to answer whether CEO Mark Zuckerberg would be willing to testify about the project.
The House Financial Services Committee is currently circulating a draft of a bill that would bar major social media and technology companies from providing financial services and offering digital currencies. That would effectively outlaw Libra. Waters has repeatedly asked Facebook to agree to halt the Libra project until the regulatory issues are worked out.
Facebook looks to move ahead: When asked whether Facebook would agree to the moratorium, Marcus said, “The commitment is that we will not launch until we have addressed all concerns.”
Read more on the House hearing here.
AND THEN THERE WAS THIS MOMENT: Rep. Brad Sherman (D-Calif.) on Wednesday argued that Facebook’s new cryptocurrency project could be a greater threat to Americans than Osama bin Laden.
Speaking during a House hearing on the digital currency, Sherman said Facebook CEO Mark Zuckerberg should testify before Congress about his company’s plans.
“We’re told by some that innovation is always good,” Sherman said. “The most innovative thing that happened this century is when Osama bin Laden got the innovative idea of flying two airplanes into towers.”
“That’s the most consequential innovation,” he said. “Although this may do more to endanger America than even that.”
Sherman went to refer to Facebook’s cryptocurrency, known as Libra, as the “Zuck Puck” and “Zuckerberg’s baby.”
“Someone with an understanding of the politics of this country needs to explain to Zuckerberg that if cryptocurrency is used to finance the next terrorist attacks against Americans, a hundred lawyers … are not going to protect his rear end from the wrath of the American people,” Sherman said.
IS THE CENSUS SECURE? MAYBE…: Lawmakers are raising concerns that the upcoming 2020 census, which people are expected to fill out primarily online for the first time, is opening the door to potential cyber vulnerabilities.
These vulnerabilities were in the spotlight on Capitol Hill on Tuesday as the Senate Homeland Security and Governmental Affairs Committee held a hearing to examine the security of the census, which residents will be able to complete online, over the phone or on paper.
The hearing featured testimony from top officials from the Government Accountability Office (GAO), which has added the Census Bureau to its list of “high risk programs” due to cybersecurity and information technology shortfalls.
“Although the Bureau has taken initial steps to address risk, additional actions are needed as these risks could adversely impact the cost, quality, schedule, and security of the enumeration,” Nick Marinos, the director of Information Technology and Cybersecurity at GAO, and Robert Goldenkoff, the director of Strategic Issues at GAO, said in their written testimony.
Concerns center around the security of personal data involved in the census, and around securing systems against threats from foreign nations. The anxiety echoes some of the worry surrounding cyberattacks from foreign actors during the upcoming presidential election.
Specifically, GAO identified more than 330 “corrective actions” in regard to securing the census against cyber incidents as of May, with the Census Bureau telling the GAO that 104 of these actions are “delayed” for reasons unrelated to technical issues or resources.
When questioned by committee Chairman Ron Johnson (R-Wis.) as to the overall readiness of the Census Bureau for the 2020 census, Goldenkoff said that “if the Census Bureau gets the response rate, and that there is no cybersecurity incident or IT shortfall, I think the Census Bureau will be positioned for a cost-effective headcount. I don’t think we’re looking at disaster, but I think there is a lot of work needed going forward.”
But Census Bureau Director Steven Dillingham, another witness, insisted that the agency is prepared to secure the personal data involved in the census.
“Our cybersecurity program is designed to adapt and respond to a changing threat landscape,” Dillingham said.
Dillingham acknowledged that while the Bureau has a “continuity of operations” plan in the event of a cyberattack impacting computer systems, it is still working on a plan for what to do in the event of a “catastrophic” cyberattack that takes down broad swaths of the system.
AMAZONIAN PROBE: Amazon is the target of a new antitrust probe from European Union (EU) regulators over how the e-commerce giant handles data collected from third-party sellers on its platform.
The European Commission, the EU’s enforcement arm, announced Wednesday morning that Amazon’s dual function as a platform and as a supplier of goods presents an unfair advantage against competition.
“E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don’t eliminate these benefits through anti-competitive behavior,” EU Competition Commissioner Margrethe Vestager said in a statement.
Vestager said that the investigation will examine whether Amazon’s use of marketplace data gives it an advantage over third-party sellers as well as how the site runs its “buy box,” which allows users to shop and add items to virtual shopping carts from specific merchants or retailers.
“We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow,” Amazon spokesman Conor Sweeney said in a statement to The Hill.
Amazon’s market power is also being closely scrutinized in the U.S.
On Wednesday, a company executive was forcefully questioned in a House antitrust hearing about whether it uses its power over its platform to hurt third-party vendors.
“Our algorithm such as the buy box is aimed to predict what customers want to buy, and we apply the same criteria whether you’re a third-party seller or Amazon to that because we want customers to make the right purchase regardless of whether it’s a seller or Amazon,” Nate Sutton, Amazon’s associate general counsel, told lawmakers.
In recent years, the EU has been much more aggressive in taking antitrust action against American tech companies than the U.S. government.
ROBOCALL BILL HEADS TO HOUSE FLOOR: A House panel on Wednesday voted to advance legislation aimed at protecting U.S. consumers from the billions of illegal robocalls made every year.
The Stopping Bad Robocalls Act had 152 co-sponsors and passed the House Energy and Commerce Committee, 49-0.
The bipartisan legislation takes aim at the illegal spam calls, often from scammers seeking to collect personal information on vulnerable consumers, by strengthening the Federal Communications Commission’s (FCC) ability to crack down on the problem.
It would require telephone carriers to implement technology that verifies caller identity without charging customers an extra fee.
The measure would also give the FCC more time to investigate and punish illegal robocalling operations, require the agency to pare down the list of companies that are allowed to use robocalling services, and raise the penalty for illegal robocallers to $10,000 per violation from $1,500.
A bipartisan amendment passed by the committee would establish a “hospital robocall protection group” to issue best practices for dealing with robocallers posing as hospitals, seeking to pull sensitive medical information from patients.
The act would also require the FCC to submit evidence of robocall violations to the Department of Justice (DOJ) for criminal prosecution and initiate a proceeding to protect customers from “one-ring” scams, which occur when fraudulent calls only ring once, encouraging the recipient to call back the number and potentially rack up fees.
The Senate last month voted 97-1 in favor of a similar anti-robocall bill that would also promote call authentication and blocking and help coordinate enforcement to increase prosecution of illegal robocallers.
Read more on the robocall bills here.
HOW ROBOCALLS HARM: Lawmakers on the Senate Special Committee on Aging on Wednesday held a hearing to address the impact of illegal robocalls on seniors, hearing testimony from witnesses affected by the illegal spam calls, reports The Hill’s Victoria Scott.
“To protect our nation’s seniors, we must continue not only to prosecute con artists, who steal literally billions from our seniors, but also to find new, more effective ways to block illegal spoofing and robocalls,” said committee Chairwoman Susan Collins (R-Maine). Residents of her home state, Maine, received 93 million robocalls last year.
The panel’s top Democrat, Sen. Bob Casey (Pa.), also discussed the harm caused by robocallers.
“They often turn a conversation into a heist – literally,” he said. “These criminals can cause terrible tragedy, [and] they should be behind bars.”
One witness, Angela Stancik, told lawmakers she lost her grandmother, who was targeted in a phone sweepstakes scam, to suicide.
“She died with $69 in her bank account,” Stancik said.
ELECTION SECURITY BILL HEADS TO HOUSE FLOOR: The House Foreign Affairs Committee advanced legislation on Wednesday intended to safeguard elections from foreign interference, sending it to the House floor for a vote following a heated debate among lawmakers over the bill.
The Safeguard Our Elections and Combat Unlawful Interference in Our Democracy Act, or the SECURE Our Democracy Act, was approved by voice vote after an hour of back-and-forth between committee members over its scope.
The legislation is meant to “expose and deter unlawful and subversive foreign interference” in elections. It would require the State Department to submit to Congress a list of persons prior to 2015 who were involved in interfering in U.S. elections. Those included on the list will be banned from entering the U.S. and from obtaining a visa, and it would revoke visas already issued for persons on the list.
A major topic of contention was whether the bill would apply to foreign actors who interfered in the 2016 presidential election, with Republicans proposing an amendment that would have applied the measures only to those who interfere in future U.S. elections. That measure was voted down by the Democratic majority.
Rep. Gerry Connolly (D-Va.), one of the sponsors of the overall bill, strongly pushed back against this proposed amendment, accusing Republican committee members of trying to “whitewash” what occurred during the 2016 presidential election.
STATE ELECTION SECURITY ISSUES: Four watchdog groups are calling on Pennsylvania to re-examine a widely used election machine, citing concerns about its security and accessibility.
Citizens for Better Elections, Free Speech for People, Protect Our Vote Philly and the National Election Defense Coalition filed a petition Tuesday requesting Acting Secretary of State Kathy Boockvar examine the ExpressVote XL electronic voting machines built by Election Systems and Software (ES&S), one of the largest election equipment manufacturers in the U.S.
The groups requested the state agency look into the potential for a manipulated or malfunctioning ExpressVote XL machine to add, modify or invalidate votes after the voter has made their choices, noting that such occurrences “could change election outcomes without detection.”
Ballot secrecy and accessibility for voters with disabilities were other issues raised by the groups.
FACEAPP MISHAP?: Legal experts are raising concerns over FaceApp’s viral photo-aging feature, claiming the Russian-based company may pose privacy concerns for users.
The photo-filtering app has gained mass attention again this week as social media platforms have been filled with celebrities sharing images of themselves with the aging filter, and the company is pushing back on warnings that users should be concerned over privacy, claiming it only has access to a single photo chosen by the user.
Critics have taken issue with FaceApp’s broad language in its privacy policy.
The policy states, “FaceApp cannot ensure the security of any information you transmit to FaceApp or guarantee that information on the Service may not be accessed, disclosed, altered, or destroyed.”
The policy also allows FaceApp to share user content with businesses affiliated in the same group of companies.
“It’s a Russian company, so once you grant access you are granting access to all of those companies,” said ABC News chief business correspondent Rebecca Jarvis.
FaceApp CEO Yaroslav Goncharov told The Guardian that data is not transferred to Russia but instead stored on U.S.-controlled cloud computing services provided by Amazon and Google.
He said FaceApp does not sell or share any user data with any third parties.
The Hill has reached out to FaceApp for comment.
THE SIMULATION: Elon Musk announced Tuesday that his new startup, Neuralink, hopes to begin implanting devices into human brains as early as next year.
“We hope to have this aspirationally in a human patient before the end of next year,” he said at a press conference. “So this is not far.”
According to Musk, the Neuralink system would include a tiny chip that would allow humans to achieve a “symbiosis with artificial intelligence.”
He explained that it would be able to treat disorders like Parkinson’s or Alzheimer’s and ultimately could “preserve and enhance” brain function.
The tech entrepreneur, who also runs Tesla and SpaceX, admitted that the system would take time to gain approval from the Food and Drug Administration.
Neuralink’s president, Max Hodak, told the press conference that the system would be completely wireless and would last “years to decades.”
AN OP-ED TO CHEW ON: We have the basis for an international AI treaty
A LIGHTER CLICK: *Borat voice* My wife!
NOTABLE LINKS FROM AROUND THE WEB:
Despite high hopes, self-driving cars are ‘way in the future.’ (The New York Times)
FaceApp is back and so are privacy concerns. (The Verge)
NRCC offers political candidates cybersecurity help (The Washington Post)
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