As social media users around the globe prepare to say goodbye to Instagram and WhatsApp, and utter a tepid greeting to "Instagram from Facebook" and "WhatsApp from Facebook," many are left wondering what the company's motives are for the change. Others are simply poking fun, such as writer Jason Aten, who said: "Let's put this in context: This branding move would be like buying a successful line of luxury boats and renaming them 'Yachts From Titanic.'"
According to a spokesperson, Facebook's (NASDAQ:FB) goal for rebranding two of its most successful apps is "to be clearer about the products and services that are part of Facebook." However, there may be other intentions at play, namely legal ones.
Currently, Facebook is under investigation by the Federal Trade Commission on monopoly grounds (and was recently hit with a $5 billion dollar fine from the regulatory body). The FTC is attempting to establish whether or not Facebook acquired its popular rivals in a bid to destroy threats to its dominance and exert unnatural power over the social media industry. Meanwhile, politicians on both the right and left have been asking serious questions about the size and influence of big tech companies such as Facebook, with presidential hopeful Elizabeth Warren actively calling for them to be broken up. By bringing the big-name acquisitions under the umbrella of its central "Big Blue App" brand, the move looks like an attempt by Facebook to offset some of these concerns.
However, the move poses a pretty serious risk to the overall Facebook brand. Among investors and tech-savvy social media users, the fact that Facebook owns WhatsApp and Instagram hardly comes as a shock. However, the public at large appears to have other ideas. According to a recent survey, as many as 57% of users were completely unaware that Facebook owned Instagram. A separate survey of people who had used WhatsApp in the last six months found that about half were similarly unaware of the app's connection with Facebook.
For many, Facebook is strongly associated with privacy violations and shifty deals, as the world saw during the Cambridge Analytica data scandal. But it doesn't end there. With the rise of fake news, clickbait, a widely disliked user interface, and one of the most infamous CEOs of all time at the helm, both the brand and the platform itself have suffered in recent years.
Most notably, Facebook has lost almost all of its cool factor. The pioneering platform whose visionary founder was mythologized in David Fincher's movie The Social Network has given way in the past decade to a bloated, ad-ridden shadow of its former self. The attempt to fasten a tarnished brand onto two less controversial products could poison them with Facebook's negative image. Or it could have the opposite effect. It will be interesting to see how it plays out.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Facebook. Read our full disclosure policy here.