Meta kicks company away from Facebook’s ‘trademark tax’

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With its name change to Meta, the company formerly known as Facebook is trying to eliminate what some employees have called a “brand tax” on apps like Instagram, Messenger and WhatsApp.

Meta CEO Mark Zuckerberg announced the rebranding on Thursday, after a brutal seven weeks of document dumps that showed Facebook was aware of damage to its products and refused to address it. But the trademark tax dates back to the 2016 presidential election, when Facebook turned into a haven of hate content and disinformation.

Facebook’s other services, including Instagram and Messenger, have struggled to distance themselves from the constant embarrassment that plagued their parent company over the past five years, according to people familiar with the matter.

A pedestrian walks past a new logo and the name “Meta” on the sign in front of Facebook’s headquarters on October 28, 2021 in Menlo Park, California.

Justin Sullivan | Getty Images

Separation of brands became particularly difficult in 2019, when Facebook announced he would mark all of his services with Facebook at the end of their names. Messenger became Facebook’s Messenger, and the other apps became Facebook’s Instagram and Facebook’s WhatsApp.

Facebook said at the time that the rebranding was aimed at bringing clarity to users. The same goes for its Oculus virtual reality unit and its Workplace business software offer, also labeled “from Facebook”.

“This rebranding is a way to better communicate our ownership structure to the people and businesses who use our services to connect, share, build community and grow their audiences,” the company said in a statement. Press release November 4, 2019.

But behind closed doors, Facebook was not expressing concern over consumer confusion. On the contrary, the company was trying to restore the strength of its name after a series of public relations setbacks, including the Cambridge Analytica data hijacking scandal in 2018, several former employees told CNBC.

Facebook’s own brand was in the dumps. Zuckerberg decided to consolidate the brand because he believed linking Facebook with the company’s less tainted services would help, said the former employees, who asked not to be named because the information was confidential.

With an image of himself on a screen in the background, Facebook co-founder and CEO Mark Zuckerberg testifies before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill on October 23, 2019 in Washington, DC.

Chip Somodevilla | Getty Images

Some employees have advised Zuckerberg to follow the path taken by Google, which created parent company name Alphabet in 2015, rather than tie Facebook into everything, sources said.

Zuckerberg’s decision to feature Facebook instead was not driven by data. Instead, he was presented with research showing that pairing one of the company’s products with the Facebook brand caused trust to plummet, a former executive said.

Another employee said it was seen in searches for Facebook’s video calling device, Portal, announced in 2018. Data indicated that putting Facebook’s name on it would reduce public trust. . The company still opted for the name of Facebook Portal.

When asked to comment on this story, a spokesperson for the company asked CNBC to a post Thursday from Meta Marketing Director Alex Schultz.

“In 2019, we rolled out a new branding that tied all of our products together, while retaining the Facebook name of the company and our original app,” Schultz wrote. “But over time, it was clear that Facebook’s shared name could be confusing, not only with people using products like WhatsApp or Instagram, but also with the ridings we work with. Helping people know clearly when something comes from the business versus Facebook app is a big reason for this change. “

Instagram hurts the most

Instagram was particularly affected by the 2019 rebranding.

The photo app is mainly used by teenagers and young adults, who have long held a negative view of Facebook. The “big blue app,” as Facebook is known, was seen as the place where parents and weird uncles go to share stories and comment on their loved ones’ posts.

Instagram marketing workers began to see, through quarterly brand tracking results, that the new label was causing damage.

They have tried to reduce the size of “Facebook’s” font, not use it at all, or play with the colors in a way that obscures Facebook’s name, former employees said. Ultimately, they were canceled, according to a former employee.

Zuckerberg insisted Facebook has made Instagram a smash hit ever since acquire it for $ 1 billion in 2012, and it was time for Instagram to give back, recalled a former executive.

Instagram marketers would end up being measured by how well they relate brands to each other. He was mandated by Zuckerberg and non-negotiable.

Messenger, on the other hand, was allowed to create a sense of separation, according to several employees.

Unlike Instagram, Oculus, and WhatsApp, which were all acquired, Messenger was local. Facebook turned it into a separate application in 2014. To attract young users, Messenger received the “blessing” a year ago to take steps to improve the brand, two former employees said.

Messenger deployed a new logo last year with a gradient color, predominantly purple, similar to the Instagram logo. It was part of the Messenger team’s efforts to position the app for millennials and Gen Z users, who flocked to other services like TikTok.

Delete Facebook name

As a Meta, the company has no guarantee that Facebook’s trademark tax will wane.

But Zuckerberg has at least changed his approach, less than two years after adding “Facebook” to all of his company’s major departments.

The company has already started to rename several of its units. The hardware division, previously known as Facebook Reality Labs, will now be called Reality Labs. The payments division, known as F2, or Facebook Financial, will now be Novi, the name of the company’s cryptocurrency wallet product.

Zuckerberg remains provocative following a series of material leaks by ex-employee Frances Haugen, the whistleblower, and the many stories that followed from the Wall Street Journal and other publications. One of the more notable stories showed that the company knew Instagram was damaging to teen mental health and was not doing much about it.

“My take is that what we are seeing is a coordinated effort to selectively use leaked documents to paint a false image of our business,” Zuckerberg said after the company’s quarterly earnings report earlier this year. week.

Some of the published documents showed that the number of teenage Facebook app users in the United States has declined by 13% since 2019, with an expected drop of 45% over the next two years, according to The Verge. Additionally, Facebook researchers found that the company did not expect people born after 2000 to join the social network before the age of 24 or 25, if they ever did join. Bloomberg reported.

Facebook addressed this issue on Monday in its earnings report. The company said it will start rotating Instagram and Facebook to feature more Reels product videos in an effort to attract younger users.

Zuckerberg said the company will try to make all of its services attractive to young adults, but acknowledged that “this change will take years, not months, to be fully implemented.”

Moving away from the Facebook brand is the first big step.

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