Facebook Inc. is re-christening itself Meta Platforms Inc., decoupling its corporate identity from the eponymous social network mired in toxic content, and highlighting a shift to an emerging computing platform focused on virtual reality.
“The metaverse is the next frontier,” Chief Executive Officer Mark Zuckerberg said in a presentation at Facebook’s Connect conference, held virtually on Thursday. “From now on, we’re going to be metaverse-first, not Facebook-first.”
The name change is the most definitive signal so far of the company’s intention to stake its future on a new computing platform — the metaverse, an idea born in the imaginations of sci-fi novelists. In Meta’s vision, people will congregate and communicate by entering virtual environments, whether they’re talking with colleagues in a boardroom or hanging out with friends in far-flung corners of the world.
The new name won’t affect how the company uses or shares data, and the corporate structure isn’t changing. Apps including the flagship social network, Instagram, Messenger and WhatsApp will also keep their monikers. The company said its stock will start trading under a new ticker, MVRS, on Dec. 1.
The erstwhile Facebook is hoping to parlay its social-media user base, comprising more than 3 billion people globally, into an audience that will embrace immersive digital experiences through devices powered by augmented and virtual reality software, a business already being aggressively pursued by Meta and its rivals.
“Right now, our brand is so tightly linked with one product that can’t possibly represent everything we’re doing today,” Zuckerberg said, “let alone in the future.”
Adoption of virtual reality gadgets — like Meta’s Oculus headset — has so far been minimal and their use mostly relegated to games and other niche applications. While achieving the broader vision of the metaverse is still years away, at Thursday’s event Meta announced a handful of product updates meant to advance that goal.
Shares of Menlo Park, California-based Meta rose 1.5% to $316.92 at the close of New York trading. The stock has risen more than eightfold since the company’s 2012 initial public offering.
The name change follows Meta’s disclosure on Monday that it will start breaking out financial results for the division known as Reality Labs, which includes the Oculus hardware division, next quarter. Meta wants to separate its main digital advertising business from its new investments in AR and VR to let investors see the costs and revenue associated with those efforts. The company also said it will see a $10 billion reduction in operating profit this year because of investments in Reality Labs.
Meta isn’t the first tech giant to rebrand. Internet search leader Google changed its company name to Alphabet Inc. in October 2015, seeking to provide a stronger, more accountable corporate structure to oversee its disparate businesses, co-founder Larry Page said at the time. Alphabet became the holding company for Google’s internet businesses, self-driving car developer Waymo, life-sciences subsidiary Verily and others, including a variety of experimental endeavors. Facebook’s name change doesn’t include such a significant structural overhaul.
Meta may have other reasons to make changes to its corporate identity. Leaning harder into the metaverse lets the company appear to be diversifying its business at a time when it’s facing new pressures in the social media market. Younger rivals such as ByteDance Ltd.’s TikTok are gaining traction among the under-25 age cohort, and Zuckerberg said on Monday he is retooling Meta to focus on attracting young adults again.
Building out the metaverse will also allow Meta to reduce its dependency on mobile operating-system and browser makers such as Google and Apple Inc. to deliver services to consumers. Meta’s third-quarter sales and the fourth-quarter forecast missed analysts’ estimates in part because of Apple’s new rules around the data apps like Facebook and Instagram can collect from iPhone users. The company seems increasingly aware that it doesn’t own the foundations of the digital real estate most users occupy.
Still, Meta is a money-making machine, and has grown to be the sixth most-valuable company in the world by market capitalization. Revenue is expected to top $117 billion this year, up from $5 billion in 2012, the year Facebook went public. Net income is projected to approach $40 billion in 2021. The social network has about 24% of the estimated $200 billion digital advertising market, according to analyst EMarketer Inc., dominating the industry alongside Google, which leads with about 29%.
Meta may also be hoping the name change will divert public conversation from a wave of negative news reports based on the documents collected by former product manager-turned whistle-blower Frances Haugen. The documents, dubbed the Facebook Papers, were disclosed to the U.S. Securities and Exchange Commission and provided to Congress in redacted form by Haugen’s legal counsel. The company is battling accusations that it has misled investors and the public about its user growth, efforts to fight hate speech and disinformation, and how the platform was used to organize the Jan. 6 attack on the U.S. Capitol.
Realizing the company’s vision of a widely used metaverse will be an uphill fight. For starters, Meta will have significant competition when Apple releases a rival VR device. Facebook was years behind rival Snapchat with its debut last month of Ray-Ban Stories, smart glasses that can record audio and video but don’t yet have AR capability. Zuckerberg has said that multiple companies should build and contribute to the metaverse with interoperability in mind.
Reference: https://www.bloomberg.com/technology
