Facebook Changes Username to Meta: What Does the Future of the Internet Hold?

On 28th October, Facebook CEO Mark Zuckerberg announced a drastic change in their corporate identity. This started with a change in the company’s name to Meta Platforms Incorporated, hereunder referred to as ‘Meta’. In the founder’s letter published on Meta’s website, it was implied that the intuition behind the rebrand was to apply the corporation’s aims across its various platforms, ranging from Instagram to Oculus; “All of our products, including our apps, now share a new vision: to help bring the metaverse to life. And now we have a name that reflects the breadth of what we do”. This statement increases certainty in the unified direction of the company, an impact which is beneficial to understand the harmonised operation of its subsidiaries such as social media platforms Instagram and WhatsApp, and gaming businesses such as PlayGiga and Oculus VR.  

Zuckerberg’s announcement could not have been timelier for Facebook after years of congressional hearings and scandals tainting its overall brand image, namely the Cambridge Analytica consumer protection lawsuit filed by the Federal Trade Commission (FTC). Moreover, the corporation’s competition appears to be posing an increasingly large threat via their recent capital gains success, pushing investors to other aggressive technology equities. Indeed, compared to the average 52-week share price change of the top five US publicly listed technology firms (Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com, Inc. and Meta Platforms, Inc.), which is 33.52% as of November 3rd, Meta’s share price underperforms by 19.36%. It is evident that a change in corporate identity to launder adverse publicity and attract growth investors towards their aggressive stock, irrespective of the pressure to technologically innovate in the sector, was a necessity for Facebook to survive.

Aside from the notable negative aspects of the company, the fact that Meta remains a firm with a comparatively strong propensity to innovate internally can be evidenced upon analysis of its financial statements. For example, of the five aforementioned entities, Meta’s research and development to revenue ratio pursuant to its most recent annual income statement is 8.27% larger than its investment competition. This metric shed light on Meta’s intentions to dominate the internet space in its prospective ‘metaverse’ rendition with an apparent first-mover advantage.

From a financial perspective, investors should not expect to see profitable earnings from the metaverse project until far into the future. The research and development relating to the project will also cause a short-term increase in operating expenses, as was clarified by Meta’s CFO David Wehner in the quarterly earnings report from 26th October, stating “We expect our investment in Facebook Reality Labs to reduce our overall operating profit in 2021 by approximately $10 billion’.

In an interview with Casey Nelson, Silicon Valley Editor for The Verge, Mark Zuckerberg further explains the reasoning behind his company’s investment in the metaverse platform. “One of the reasons why we’re investing so much in augmented and virtual reality is mobile phones kind of came around at the same time as Facebook, so we didn’t really get to play a big role in shaping the development of those platforms”. One could interpret this as a regret upon reflection, forming the basis for mass investment in the future of the internet. The question remains what this will consist of according to Meta’s public plans, and whether the previous wrongdoings and allegations that hinder previously named Facebook will render the proposals realistic and feasible.

The metaverse described would offer a synchronous and permanent three-dimensional, augmented reality interface to consumers, as opposed to the traditional user experience associated with the internet. In theory, this would be achieved through the various platforms owned by Meta, bringing communities together much like the World Wide Web does today. However, speculation surrounding this concept poses many questions which Meta are yet to clarify.

One such problem is concerning the regulation of the metaverse: an issue already causing legal and ethical complications for Meta with the internet in its current form. An absence of comprehensive and functional regulation on social media presently poses a threat to the security and data assurances of internet users. One could dispute that regulation reform on social technological platforms must be implemented and proven successful prior to a radical innovation of online interfaces.

Meta’s attempt to reinvent the internet, catalysed through the combination of its platforms, is ironic given the controversy surrounding the potential separation of its subsidiaries. This has been advocated by the FTC due to the firm allegedly participating in anti-competitive wrongdoings in the past.

The prospects for the future of the internet are unquestionably exciting, creating opportunities for increased social mobility and communication on a globalised scale. However, the multitude of barriers obstructing the creation of the metaverse ultimately mean that the ideas outlined in Zuckerberg’s founder letter won’t become reality until many years into the future and will come at a great short-term expense.

By Maxime Bailey

Sector Head: Dylan Buckley