Opinion Facebook Libra Third-Party Support is Crashing out

Facebook Libra Third-Party Support is Crashing out

October 12, 2019

Libra has had a rough ride in the past several weeks, including getting some heavyweight opponents like the government of France. At the same time, media attention to this has been as ruthless as ever, apparently showcasing all of that with a precise dedication of someone who smells loads of traffic and massive viewership coming their way.

So far, the mass media have not been wrong. The tale of Facebook Libra has been quickly wearing off into a tragic one and apparently the bad news is not stopping. In fact, the recent string of those came with the frequency and mass that even the now-weary professionals working on the Libra project are not expecting. This time, a series of big third-party supporters of Libra have decided to bail out from the entire project. Now, completely expectedly and for all the good reasons, many analysts are wondering is Libra dead on arrival before it even got a chance to ship out?

Bad Couple of Hours

In just a span of several hours, the Libra project got some of its toughest news since it was announced several months ago. On Friday morning, a report in the Financial Times showed that both eBay and Stripe dropped out. The first one is the major e-commerce marketplace, while the other is a huge fintech company. An eBay spokesperson stated that the company very much respects the vision of the Libra project, but that it will not be moving ahead with its participation in the Libra Association.

The reason that was stated was the desire to work on its internal system of payment management for eBay customers. Stripe, on the other hand, made comments that were very much similar, saying to the Financial Times journalists that it is supportive of the entire project and want to make online commerce more flexible and accessible for everyone. However, it, just like eBay will not move forward with the Facebook-based gigantic cryptocurrency project at this particular time.

Following with Worse

If these two pulling out had not been enough, the Libra Association was further falling apart on that day. Several hours after the report hit, both Visa and Mastercard dropped out. For good reason, most saw these as an integral part of the Libra support, especially in the Association membership. Here, Visa was the bluntest party and it said what certainly all other members were thinking for some weeks now – Libra failed to fully satisfy many requisite regulatory issues and expectations.

In that short idea, the likely stake in the Libra’s heart, at least in this shape and form, is slowly being pounded in. While this was always a big concern, last weeks have been punishing to the Association in particular. Now, it seems that most major players in the organization see the writing on the way crystal clear – Libra is a sinking ship and it is a good time to launch those rescue craft and move away from it.

Band-Aid Solutions

Right now, it appears that the deluge which took out so many previous participants in Libra Association has stopped. However, it looks like the cracks that have formed run deep and the entire setup as it currently stands is in jeopardy. Facebook is going for some band-aid solutions, like trying to frame the whole departure from the Libra Association as a potentially good thing. One of the key participants in the Libra project, David Marcus, who is the Facebook executive running the project, said that it was a liberating feeling to watch these business juggernauts leave the project.

Here, the narrative Facebook is gunning for is the idea that with less influence from the big shots, Libra will have a better chance to develop into something new and unique. While this does have a nice ring to it in the libertarian sense, the sad truth for Facebook is that the company is anything but a high-concept/low-yield project. Unlike Google, which could be labeled as a more risk-prone and which already had and took out numerous once-promising projects, Facebook in general plays it safe.

Unlike many other big companies working in contemporary IT, it never tried out bold projects in esports, online commerce, or anything similar. The company was mostly about following the path of the proven money-making setup, which lies in Facebook and Instagram platforms. While there is little doubt that the Libra project will keep being developed, it is hard to imagine Mark Zuckerberg having any dilemma whether or not this can quickly earn money.

Big Ambitions, Lacking Track Record

The ultimate problem that Libra has is not the fact that its main business contributors are falling out or even that it has potential serious hurdles in the regulatory domain. Instead, the entire setup has been too ambitious for a company that simply does not have anywhere near that level of credit when it comes to public support and trust. Ever since the 2016 US elections, the lid has blown off on the internal workings of Facebook and it showed nothing good there.

Instead, the picture that can be comprised is one of the ruthless money-grabbing corporations where any ethical norms of the IT industry quickly give way to potential profits. While bitcoin and its BTC token come with a number of issues and problems, they are truly completely decentralized entities. Facebook Libra, on the other hand, would be a completely centralized venture that had the backing of a huge corporation. The same corporation, in turn, would be wielding over two billion customers globally, making it a competitor to not just online payment platforms, but actual fiat currencies.

The potential for something like that borders cyberpunk fiction so it is clear that the opposition was bound to quickly form. From there, the lack of track record hit hard and the backing from the other parts of the business world lost its will to see where Libra could go. While the project is not dead in the water, it can be argued with a lot of certainties that Libra will not go about changing the world in 2020.