Facebook name-change alone would miss the point

3 minute read

Facebook Chairman and CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington, October 23, 2019. REUTERS/Erin Scott/File Photo

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WASHINGTON, Oct 20 (Reuters Breakingviews) - Facebook (FB.O) may change its name. But will it change anything else? The idea of a new moniker for the $959 billion firm, akin to the invention of Alphabet (GOOGL.O) in place of Google, was reported by the Verge on Tuesday. It might make sense for Facebook, as its eponymous brand is both sullied and slow-growing. But it's about more than what Mark Zuckerberg's company is called.

Facebook’s baggage has piled up . Most recently, a whistleblower told Congress earlier this month that the company puts profit over reining in hate speech on its social networks and produced documents to back it up. The main brand’s user growth has been flat in the United States and Canada, its most profitable region, over the last year.

A name-change, which could be announced next week according to the Verge, would reflect the company’s evolution from a social media company to what Zuckerberg has dubbed the metaverse in which experiences in the physical and virtual worlds are combined. Facebook under its new name would become a collection of businesses including Facebook, Instagram, WhatsApp and virtual-reality specialist Oculus read more .

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Google’s 2015 reorganization introduced Alphabet as a holding company housing the Google search business, YouTube and other units . Co-founder Larry Page became chief executive, while Sundar Pichai got the same title for Google, initially. That helped increase accountability.

But Alphabet continued to lump together revenue for its biggest divisions. That changed when Pichai took over for Page as the overall CEO in 2019. Last year, the new boss began breaking out the top line for various segments separately in financial reports, making it easier for investors to assess the company.

At Facebook, the financial performance of Instagram and WhatsApp remain mysterious. Facebook only provides metrics for its eponymous brand and for the business as a whole. That obscures potentially faster growth for its other units. More than 70% of teens used Instagram compared with 51% for Facebook, according to a 2018 Pew Research Center survey, and that’s before video app TikTok became popular.

If a Facebook name-change remains just that, it's little more than a public-relations ploy. If it comes with more transparency and accountability, though, users and shareholders could benefit. A good start would be following Alphabet’s breakout of its different units' finances.

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- Facebook is planning to announce a new name for the company on Oct. 28, though the company could unveil it sooner, the Verge reported on Oct. 20. The change is meant to reflect the company’s move from social media toward what Chief Executive Mark Zuckerberg has dubbed the metaverse in which experiences in the physical and virtual worlds are combined.

- The new company would house Facebook's collection of businesses including the Facebook social network, Instagram, WhatsApp and Oculus.

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Editing by Richard Beales and Amanda Gomez

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