Nearly four months ago, amid a firestorm of critical coverage stemming from a whistleblower’s leaks, Facebook shifted its strategic focus to building an immersive version of the internet it calls the “metaverse” and changed its company name to Meta.
This week, the company continued with its rebranding campaign. The News Feed, for years the centerpiece of the Facebook user experience and also central to some of its controversies, was rebranded simply as Feed. Its employees, previously known as Facebookers, became Metamates. And its corporate values got a refresh, too.
Gone are corporate maxims like “be bold.” Instead, the company introduced guidelines such as “focus on long-term impact” and “be direct and respect your colleagues.” Mark Zuckerberg, the company’s cofounder and CEO, said the changes were needed because “we’re now a metaverse company, building the future of social connection.”
“We’ve already built products that are useful to billions of people, but in our next chapter we’ll focus more on inspiring people as well,” Zuckerberg wrote in an explanation of the new value “build awesome things.”
The changes this week once again hint at the company’s eagerness to turn the page and refocus its employees, and arguably the general public, on a new era of its business — one less tarnished by years of controversy.
Zuckerberg himself appears eager to turn away from some of the recent turmoil, announcing this week that Nick Clegg, formerly Meta’s vice president of global affairs and communications, has been promoted to president of global affairs. Clegg’s promotion will free up time for Zuckerberg to focus on the company’s efforts to build new artificial and virtual reality products, Zuckerberg said.
But despite Zuckerberg’s and Meta’s apparent effort to “live in the future,” as one of its new values dictates, the social media giant still has to wrestle with many of the same old problems that have plagued it for months or, in some cases, years. If anything, some of its challenges only seem to be getting worse.
Meta’s core advertising business faces threats from other Big Tech giants. Facebook (FB) whistleblower Frances Haugen has filed two new complaints with the Securities and Exchange Commission over the company’s handling of misinformation. And the company continues to grapple with regulatory scrutiny.
“At the end of the day, Mark can run, but he can’t hide from the regulatory pressure,” Katie Harbath, a Facebook alum who helped lead the company’s global election efforts until her departure last year, said of his making Clegg effectively the company’s most public face on policy issues.
For a long time, it seemed like Zuckerberg and Facebook could at least find some comfort during the company’s various PR crises in the resiliency of its stock. But that’s no longer the case. Meta’s shares have fallen more than 40% over the past six months, with much of the loss in value following a rough holiday quarter earnings report which showed, among other things, a rare lapse in user growth.
“Wall Street and the investment community [have] caught up with [the fact that] that the core business at Facebook is no longer growing, it may even be in decline at some point, and therefore Facebook has had to make an enormous pivot into a tangential, and really unrelated, space,” said Gil Luria, technology strategist at investment firm D.A. Davidson.
Asked for comment about this story, Meta directed CNN Business to Zuckerberg’s post about the company’s changing values.
Facebook’s problems continue
While Meta’s announcements this week center on its vision for a new, virtual world, the company’s problems continue to pile up in the real world.
On Friday, the Washington Post broke the news that two new whistleblower complaints against Meta were filed with the SEC. Andrew Bakaj, a lawyer for Whistleblower Aid, which filed the complaints, confirmed to CNN Business that they were filed on behalf of Haugen. Haugen is the former Facebook product manager who left the company last May and took with her a trove of internal documents that would later be disclosed to Congress and inform the blockbuster Facebook Papers reporting that fueled the company’s prolonged PR crisis.
CNN Business obtained redacted copies of the new SEC complaints as part of a consortium of news organizations from a Congressional source, who also provided the internal documents that formed the basis of last year’s Facebook Papers reporting.
The new complaints accuse the company of misleading investors about its efforts to address climate and Covid-19 misinformation on its platforms. They detail how Facebook had repeatedly touted its efforts to fight misinformation about Covid-19 and climate change and allege that internal documents indicate employees were raising concerns at the same time about such content being easily available on the platform and about shortcomings in the company’s efforts to address it.
“Some investors simply will not want to invest in a company that fails to adequately address such misinformation,” one of the SEC filings states. Haugen previously filed SEC complaints against Facebook related to its handling of misinformation about the 2020 Presidential election and January 6 insurrection, human trafficking on its platforms, the effects of its products on teens and more.
In a statement to CNN Business, Meta spokesperson Drew Pusateri said the company has directed two billion people to authoritative public health information and used its Climate Science Center, available in more than 150 countries to provide reliable information about the climate, while working with independent fact checkers to address and remove false claims. “There are no one-size-fits-all solutions to stopping the spread of misinformation, but we’re committed to building new tools and policies to combat it,” Pusateri said.
The news of the SEC filings followed a slew of other headlines for the company this week. Meta agreed to pay $90 million to settle a decade-old class action lawsuit over a (now long defunct) practice that allowed the social network to track users’ activity across the internet, even if they had logged out of the platform. The agreement, which also involves deleting the data it collected in this manner, is one of the biggest settlements in the company’s history. Pusateri on Tuesday said the settlement “is in the best interest of our community and our shareholders and we’re glad to move past this issue.”
Lawmakers this week also added to the slate of proposed legislation that could affect Meta. Sens. Richard Blumenthal and Marsha Blackburn proposed the Kids Online Safety Act, which would create new responsibilities for tech platforms to protect children from digital harms such as sexual exploitation, and require them to create default settings for families to protect their kids from harmful content.
But perhaps the biggest potential problem for Meta to emerge this week was an announcement by Google that it plans to develop new privacy measures that would remove the ability to track users across apps and limit the sharing of user data with third parties on Android devices.
The announcement comes after a similar move by Apple (AAPL) caused a huge hit to Meta’s advertising business by giving users the chance to opt-out of being tracked by apps, thereby making it harder for Facebook to target ads. Meta’s ad business is heavily dependent on small businesses “that are relying on the benefits of being able to access a lot of information about users to effectively target advertising … without those details, advertisers are not going to pay as much money,” Third Bridge Group analyst Scott Kessler said. The Apple (AAPL) change is expected to have a $10 billion impact on Meta’s bottom line this year.
While Google (GOOG) suggested its new privacy-focused advertising system will work differently from Apple’s — and a Meta executive lauded Google (GOOG)’s “long-term, collaborative approach” to developing it — the change could still ultimately be yet another blow to Meta’s core ad business.
Building out its VR efforts might help. Indeed, Meta’s and Zuckerberg’s focus on the company’s metaverse ambitions may be an acknowledgment of the fact that its existing business is in trouble, Luria said. He noted that Zuckerberg’s updates this week may be a way of communicating, both inside the company and externally, “the importance and timeliness of this pivot.”
Meta is working to develop its own tech ecosystem that users will be able to access with its own Quest headsets and where it can run its own app stores, without being at the whim of companies like Apple and Google. The problem: the metaverse, and broad adoption of its related technologies by consumers and advertisers, is still years away, so that solution is unlikely to turn Meta’s fortunes around anytime soon.
“In the meantime,” Luria said, “if their core business is slowing down and will possibly start declining at some point, that will break Facebook’s long streak of fast growth that they’ve had… since they’ve gone public.”
CNN’s Brian Fung contributed to this report.