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Facebook's Washington strategy falters as Zuckerberg testifies in another hearing

This is despite spending US$4.8m on lobbyists to back its case. Also in the spotlight: its crypto currency

Washington

FACEBOOK Inc chief executive Mark Zuckerberg faces the House Financial Services Committee this week, with a legion of lobbyists backing him up.

Despite spending record amounts of money to influence Washington policy, the social media company's efforts to ingratiate itself so far have done little to assuage policy makers' privacy and antitrust concerns; in some cases, the firm's efforts have even made the situation worse, going by first-hand accounts.

Facebook's struggles to gain traction in Washington aren't for a lack of resources. In the third quarter, it spent a record US$4.8 million on lobbying, going by federal disclosures filed on Monday - up 70 per cent from the same period a year earlier.

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Since October 2018, Facebook has hired 12 external lobbying firms to supplement the 11 it counts among its own employees. Facebook had brought on many of the outside firms to support the launch of a new crypto currency called Libra, which has encountered sharp pushback from lawmakers and regulators.

Libra is just one item on the growing list of issues that has put the social-media company in the spotlight; others include repeated privacy lapses, allowing its platform to be exploited and questions about whether it bought rivals to quash competition.

In just the past two years, the company has acknowledged the unauthorised use of private-user information by a political data firm, shut down several state-backed disinformation campaigns, been targeted with multiple antitrust investigations and been hammered for taking money to publish false political advertising, including trading barbs with 2020 presidential candidate Elizabeth Warren.

Facebook also failed to get blessings from US regulators before unveiling a plan to launch Libra.

Amy Webb, a consultant and professor at the New York University Stern School of Business, said: "The company has made terrible strategic and tactical decisions in the past year, which have ranged from how it communicated with everyday people to decisions made about what content to allow as it relates to politics and the election. It was in a bad position to begin with, but I don't think it has managed it well."

Some congressional staffers said Facebook's hiring so many lobbyists in Libra's early days backfired as the lobbyists reached out with overlapping requests to meet with them or the lawmakers they worked for.

Facebook's internal lobbyists regularly blanketed staffers with generic emails which one staffer described as "spam" and impersonal, rather than building relationships.

In June, Facebook turned up the heat further with its Libra announcement. It said the project, which originally included 28 partners such as Visa Inc and Mastercard Inc, could launch as soon as 2020, surprising lawmakers and regulators.

While Facebook was one of the only original Libra partners willing to publicly support the project, staffers said they were sometimes confused when company executives cautioned that they couldn't make commitments on behalf of the then 28-member Libra Association.

Seven of the original members dropped out this month as the association finalised its charter and governance structure.

The Libra Association hired its own lobbyist, Skadden Arps Slate Meagher & Flom, last month, according to a federal disclosure released on Monday. Facebook's outside lobbyists in the third quarter included Harbinger Strategies and Peck Madigan Jones, among other firms.

Even as its lobbyists blanketed Capitol Hill on Libra and other issues, Facebook initially resisted calls for its senior executives to testify before congressional committees, said some staffers.

A Facebook spokesman pointed out that company executives have testified 16 times before 10 committees since October 2017.

Now, Mr Zuckerberg is taking some of the lobbying push into his own hands. Wednesday's hearing was to be his third public appearance in Washington in the past month and his first time testifying since he appeared at House and Senate committee hearings in April 2018.

At Wednesday's hearing, he plans to acknowledge some of the company's missteps and that the furore of the past two years will make projects such as Libra difficult to pull off.

"I believe this is something that needs to get built, but I understand we're not the ideal messenger right now," he said on Libra in his written testimony.

"We've faced a lot of issues over the past few years, and I'm sure people wish it was anyone but Facebook putting this idea forward." BLOOMBERG