Facebook’s rebrand is ‘a strategy of last resort’

The name-change meant the consultancy would miraculously avoid tainted associations with Arthur Andersen, the once-towering accounting firm with which it shared a common origin (although the two had legally split apart by then). Two years later, in August 2002, Arthur Andersen—its reputation having gone through the paper-shredder (literally)—dissolved in infamy after the embarrassing revelation that its auditors had blessed Enron’s cooked books. (A unanimous Supreme Court decision later cleared the firm of wrongdoing.)

Today we’re looking at another cooked book—that is, Facebook.

The media giant is planning an imminent corporate rebrand of its own that could come as early as next week, the Verge reports. The Facebook name isn’t what it once was, you see. Looks fade, and even an Instagram photo filter isn’t enough to convince anyone that it retains its youthful beauty. In the minds of the public, lawmakers, and even current and prospective employees, Facebook has become synonymous with scandal, data privacy infringement, antitrust violations, and, worst of all for Facebook, “the olds.”

When companies rename themselves, it often signals that they’ve run out of other options. “It’s a strategy of last resort,” says Prashant Malaviya, professor of marketing at Georgetown University’s McDonough School of Business, “because brands are one of the biggest assets that companies own.”

Sometimes that asset can turn into a liability, though. If Facebook solely renames its parent organization—like Google did with Alphabet some years ago—the change will only go so far toward rehabilitating its image. “When you get rid of a name, then slowly over time our memory fades,” Malaviya says. But he warns that, “if Facebook”—the name of the big blue app—”continues to reside, Facebook will continue to have branding problems.”

Maybe it doesn’t matter? Reports suggest that growth at Facebook’s namesake service is quickly decelerating. If Facebook (the app) becomes irrelevant, then Facebook (the company) can just let that remnant product wither away on its own while focusing on things like virtual reality instead. The situation is reminiscent of Microsoft’s dwindling technologic significance at about the same time it faced antitrust action in the late ‘90s. Windows software was soon eclipsed in an iPhone-dominated world—and it wasn’t until Microsoft recently caught the cloud computing train that the company came roaring back.

Top contenders for the new parent name of Facebook are, apparently, Meta and Horizon—names that, like Accenture before it, connote “future.” Facebook is paranoid about remaining relevant, and the proposed brands lend a sense of a dawning “metaverse”—a hypothetical digital reality where people can virtually mingle, play, work, and do whatever else. If née Facebook can pull of this pivot—a far bigger leap than its earlier transition from desktop to mobile—it may indeed be remembered foremost as a metaverse company. But it will have to outmaneuver competitors that have also set their sights on the horizon of the metaverse, like Epic Games (with its virtual world video games) and Apple (with its designs on augmented reality glasses).

Like Accenture, it would be smart to accentuate that far-out vision rather than its lapses. 

Robert Hackett
@rhhackett
robert.hackett@fortune.com

Correction 10/22/21 (9:00 p.m. ET): The story has been updated to note that the U.S. Supreme Court later cleared the charges of obstruction of justice against Arthur Andersen, the accounting firm that audited Enron’s books.

NEWSWORTHY

Booming Bitcoin. The world’s largest cryptocurrency notched another record high Wednesday, cementing its turnaround from a dramatic sell-off just a few months ago that much more remarkable. Year to date, Bitcoin is up more than 127%, and, ahead of publication, was up about 3% in just the past 24 hours, according to coinmarketcap. 

Protest and walk out. A group of Netflix employees walked out on the job Wednesday to protest the streaming giant’s airing and subsequent handling of Dave Chappelle’s latest comedy special, which has come under scrutiny for comments the often abrasive comedian made about trans people. The walk out came on the heels of Variety and the Wall Street Journal publishing interviews with Netflix co-CEO Ted Sarandos in which he acknowledged that he had “screwed up” in initially defending the special. Yet, Sarandos notably said he does not question the decision to stream the special and that there are no plans to remove it. 

Help wanted: Find those billions of dollars backing Tether. Short-sellers at Hindenburg Research, the shop that has taken aim at SPAC targets like Nikola and DraftKings, is looking for the missing $70 billion or so of reserves backing the stablecoin Tether. So, according to the Financial Times, the group has put a $1 million bounty for information about where the money is, a question that is becoming increasingly central in the world of digital assets where stablecoins have taken off in popularity. 

Where in the world is Jack Ma? Spain, it seems. The Alibaba billionaire cofounder was recently spotted in Europe, with plans to travel to other countries around the continent for the next few weeks before returning to China in November, according to the Wall Street Journal. The trip marks Ma’s first time overseas since a China government crackdown on domestic tech giants took aim at his financial technology company, Ant Group, which was subsequently followed by Ma largely exiting from public view. 

The youths’ favorite social media head to the Hill. A subcommittee of the U.S. Senate Commerce Committee, the same one that has held hearings featuring Facebook’s Antigone Davis and whistleblower Frances Haugen, is not done yet. On Oct. 26, the panel will hold another newly announced hearing on protecting kids online that will feature executives from Snap, TikTok, and YouTube. In other words, the social media sites that younger people are actually on. 

FOOD FOR THOUGHT

Animal abuse on the web. A new lawsuit filed in California alleges that YouTube has an animal abuse problem, according to The New York Times. The lawsuit, backed by animal rights nonprofit Lady Freethinker, claims the Google-owned video streaming service has inadequately handled animal abuse videos posted on its site, thereby breaching its agreement with users. Some of the videos, the Times reports, have even been prefaced by ads for pet food. 

From the article (which, we’ll note includes disturbing details of animal abuse):

Lady Freethinker, which has exposed dogfighting rings in Chile and dog meat auctions in South Korea, said YouTube had ignored the group’s repeated flagging of animal abuse videos. YouTube’s community guidelines, the rules for what is allowed on the site, say animal abuse content is not permitted.

The ban includes videos in which humans inflict physical harm to an animal to cause suffering. The guidelines say YouTube also does not allow videos in which humans prompt animals to fight or stage a rescue that places the animal in a dangerous situation.

“YouTube is aware of these videos and its role in distributing them, as well as its continuing support of their creation, production and circulation,” the animal rights group’s complaint said. “It is unfortunate that YouTube has chosen to put profits over principles of ethical and humane treatment of innocent animals.”

IN CASE YOU MISSED IT

Facebook is reportedly considering a bold new re-branding as its reputation is under siege, and antitrust regulators are circling by David Meyer

Microsoft’s clear statement of purpose is a stirring manifesto by Alan Murray and David Meyer

Seagate CEO on COVID-19, crypto, and the global computer chip shortage by Jonathan Vanian

Beijing may finally fix one of the biggest headaches of using China’s Internet by Grady McGregor

US crypto companies are at the crossroads of regulation by Tor Constantino

5 hot-button issues facing Tesla as it looks to join $1 trillion club by Christiaan Hetzner

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BEFORE YOU GO

You get a gift card. You get a gift card. And you get a gift card! A global slowdown in supply chains (maybe you’ve heard of it?) is ripe to lead to a lot of gift card giving this holiday season, Bloomberg reports. And that’s good news for retailers and companies offering them: Consumers spend around 40% on average more than the value of the gift card.