PayPal (PYPL.Q) announced today that they’re putting Mark Zuckerberg’s Libra project in their rear view window.
Their departure has spurred suggestions that both Visa (V.NYSE) and Mastercard (MA.NYSE) are reconsidering their participation, and that spurs the question—why does anyone stick around after Zuck got his ass handed to him by not one, but two major world governments?
“PayPal has made the decision to forgo further participation in the Libra Association at this time and to continue to focus on advancing our existing mission and business priorities as we strive to democratize access to financial services for underserved populations. We remain supportive of Libra’s aspirations and look forward to continued dialogue on ways to work together in the future. Facebook has been a longstanding and valued strategic partner to PayPal, and we will continue to partner with and support Facebook in various capacities,” the company said in statement.
Doesn’t that sound like just the sweetest Dear John letter? It’s the corporate equivalent of sitting Facebook (FB.Q) down over a coffee, maybe ordering him a crumbcake and waiting for the opportune moment to reach across the table and intone, “listen, you’re great. But we’re through. It’s not you, it’s me.” Then the letter is what you tell your friends and family when the relationship’s finally over.
“Listen, we think Libra’s really great. But we just mutually decided that it’s not the right time. You know? We hope you understand.”
But we do, PayPal. We do.
If you read between the lines, it’s never about the dumper and always about the dumpee. Maybe they were too loud, or clingy, or in Facebook’s case, too untrustworthy.
He is, after all, the guy who said this:
Except Libra isn’t taking this one lying down.
“It requires a certain boldness and fortitude to take on an endeavor as ambitious as Libra – a generational opportunity to get things right and improve financial inclusion. The journey will be long and challenging. The type of change that will reconfigure the financial system to be tilted towards people, not the institutions serving them, will be hard. Commitment to that mission is more important to us than anything else. We’re better off knowing about this lack of commitment now, rather than later,” said a spokesperson.
Something like this will require a fair amount of trust to pull off even if world governments were to be somehow on-board with this project, and Zuckerberg just hasn’t done enough to facilitate that trust.
Ultimately, it’s a smart move for PayPal to make. When a deal’s so obviously a dud there’s no point in spending more time and money waiting for something to materialize.
In Libra’s defence, it’s highly unlikely that any major world government will ever allow a global stablecoin. Something that hinges itself to a basket of world currencies that is nearly impossible to track and trace would be far too much of a threat to the established global order, as it places too much power in the hands of one or two companies.
And that would be just ridiculous. Take us out, Sterling.