It has been an interesting few months for Facebook. Since releasing its Libra white paper back in June 2019, there has been a constant stream of speculation as to what the Libra cryptocurrency might look like when it finally debuts. Anyone trying to make sense of it from the limited amount of information that has since come forth has been left wanting. However, new details are slowly emerging.

For example, Facebook made it clear in its most recent filing with the U.S. Securities and Exchange Commission (SEC) that Libra might never get off the ground. They admitted in that filing that cryptocurrency was uncharted territory for them. They admitted to not knowing what they were doing or how they would actually make Libra work.

Now we have learned of several new developments that look like they could hinder Libra from launching. In light of these new details, the question is this: do the chances of Libra's launch look any better today than they did in June? That depends on how you interpret the data.

EU antitrust investigation

The EU, through its European Commission (EC) administrative arm, has already launched an antitrust investigation into Facebook and Libra. On the positive side, this is normal for the EC. They launch these kinds of investigations as a matter of routine. It doesn't necessarily mean Facebook has done something wrong.

On the negative side, the fact that the EC is looking into Libra before it is even available signals that European regulators do not necessarily trust Facebook's plans. They have submitted a list of questions they expect the company to answer as the Commission investigates "potential anti-competitive behavior" and "possible competition restrictions".

According to a number of reports, the EC is primarily concerned with two things. First is the Libra Association and how it may attempt to stifle competition. We already know from the white paper that the Libra Association will be made up of dozens of business partners along with network maintainers and others. However, the Association will not be truly independent for years. Between now and then, it will be directly answerable to Facebook's top brass.

The structure and control of the Libra Association automatically raises concerns of centralization. As long as the Association is influenced by Facebook - whether directly or indirectly - it can be said that the cryptocurrency is not truly decentralized. Facebook has admitted as much.

EC regulators are also concerned about Facebook attempting to beat the competition by excluding other payment systems from its apps. It is reasonable to assume that Libra will be integrated with every other Facebook property, but will Facebook exclude non-partner payment systems in order to boost Libra?

This particular question is reminiscent of the anti-competition accusations Microsoft faced way back when the browser wars were still on. As you might remember in that case, European regulators found Microsoft guilty of antitrust violations and ordered that future copies of its Windows software not force customers to use Microsoft's default web browser.

Partnerships are not cfficial

While the European Commission works through its antitrust investigation, a number of the Association's members have come clean about their partnerships with Facebook. It turns out that those announced partnerships might not actually be official.

For example, Visa Chairman Alfred Kelly was asked in July 2019 about his company's position as a financial backer and partner of the Libra project. He claims that 27 or 28 companies have already signed loose agreements to back Libra financially. All could eventually become members in the Libra Association.

However, Kelly maintains that the loose agreements his company and others have signed do not make them official members of the Association just yet. His position seems to be that the companies have essentially signed memos of understanding. Such agreements do not become legally binding partnerships until contracts are actually signed.

Different deals for different partners

The importance of Kelly's assertion becomes clear when you understand that different partners might be trying to work out different deals for themselves. For example, partnership deals with Visa and MasterCard would ostensibly include language that guarantees Libra would be accepted anywhere the branded credit and debit cards are accepted.

Assuming Libra is tied to Visa and MasterCard in this way, could it be that Facebook will rely on the two credit card giants to process transactions on their networks? If they did, Libra transaction speeds would rival MasterCard and Visa speeds. That would instantly give Libra a huge advantage over any other cryptocurrency.

Other potential partners include companies like PayPal, Uber, Lyft, and Coinbase. Uber and Lyft would both be logical partners in that they could accept Libra as payment for their services without having to provide anything more than financial backing in return. They would still have some measure of influence over Libra's direction as members of the Association.

When you start talking companies like PayPal and Coinbase though, you have some of the same issues that come with Visa and MasterCard relationships. PayPal and Coinbase are already fully entrenched in financial services. How could they contribute to the Association and work out a deal that would benefit them at the same time? More importantly, would their deals represent some sort of conflict of interest?

It may be true that none of that potential financial backers are yet an official member of the Libra Association. But the fact that they have all loosely committed to financially backing the project suggests they stand to get something out of it. That is exactly what the EC is concerned about. Regulators are worried that Facebook and its Association partners will find a way to monopolize the cryptocurrency space and exert undue influence over non-crypto payment systems.

Data protection regulations

Yet a third detail has recently emerged regarding Facebook's privacy policies. The Libra Association itself is incorporated in Switzerland. This leads Facebook to believe that the Swiss Federal Data Protection and Information Commissioner will have regulatory authority over its data privacy policies and actions. But that's not a given.

Information Commissioner Adrian Lobsiger has said that no one from Facebook has been in contact with his office regarding the project thus far. He has called on Facebook to release more project information as soon as possible. Meanwhile, Lobsiger will be discussing Libra and the Libra Association with members of the U.S. Congress in an upcoming visit.

As you know, Facebook has spent the better part of the last several years defending its data privacy policies and activities. Regulators from the U.S., Europe, and elsewhere have demonstrated they have little faith in Facebook's willingness or ability to keep private data secure. None of them are as yet convinced that things will change with Libra.

Some members of the U.S. Congress have already called for the federal government to put the brakes on Libra until they have had time to fully investigate the project and its inner workings. Whether or not they are able to do so seems to hinge on control of the Libra Association.

A question of federal authority

As previously mentioned, the Libra Association is incorporated in Switzerland. That puts it outside the jurisdiction of U.S. regulators. However, if Facebook spins off the Libra Association and makes it fully independent prior to launching the cryptocurrency in the U.S., they could theoretically release their stablecoin to the rest of the world and leave the U.S. out of the equation until regulators are satisfied.

That seems unlikely given that so many of the project's backers are either based in the U.S. or fully entrenched there. So it would seem that Facebook has to satisfy U.S. regulators first. That may be a harder task than defending itself against data privacy accusations related to the 2016 U.S. presidential election.

Let's say for one minute that Facebook does manage to satisfy U.S. regulators. What next? They still face EC scrutiny. And if history repeats itself, Facebook will probably have a harder time with European antitrust regulators than American and Asian regulators. The EC seems to have a penchant for going after perceived antitrust violations.

A long way off

The more we learn about Libra the more it is looking like the actual launch of the cryptocurrency is a long way off. Facebook's white paper introduced the Libra project to the world as though it were just like any other cryptocurrency project. What we have learned since reveals that Libra is anything but an ordinary cryptocurrency.

Will Libra ever get off the ground? That is looking less certain every day. And if it does, it doesn't look as though it will be ready to compete with Bitcoin and Ethereum right from the start. It may take a while for Libra to pick up speed.

It could be that Libra is an all or nothing proposition. Either it launches and meets or exceeds all Facebook expectations, or it falls flat from the get-go and never recovers. Right now there does not seem to be any way for there to be a middle ground. But again, all of this is speculation. No one really knows what will happen. We can only wait for Libra's launch and then sit back to watch what happens.