Google first changed its name to Alphabet in 2015, and Facebook followed six years later, changing its name to Meta to reflect its focus on the virtual reality space, the Metaverse. There are two main reasons that big-name companies change their name. One reason is that the current name doesn’t fit the company’s direction anymore, and the second reason is that there is a lot of baggage or negative press associated with the current name.
Besides Facebook and Google, several other companies have also changed their names in the past few years. Last year, Square changed its name to Block, and in 2016, Snapchat became Snap. Tesla dropped “Motors” from its company name in 2017, and other companies like Weight Watchers became WW.
Even though Facebook says it changed its name to Meta because of the shift to virtual reality, it seems that the company changed its name because of all the negative press associated with the name Facebook. In October, right before the name changed, the news released the interviews with whistleblower Frances Haugen. The former employee said that Facebook had known how the platform was used to spread misinformation and hate but chose to do nothing. This outraged consumers. However, it won’t be easy for the company to disassociate from the negative association with Facebook. At first, the change to Meta hurt the company’s stock, and the video release of the new name inspired jokes and criticism, but recently the stock increased, revealing strong user growth to the platform.
The second reason a company changes its name stems from the success of one product to building an empire of brands, some of which aren’t related to the original product. Google and Facebook are great examples of this; both companies started with one successful product and grew organically and through acquisitions. A marketing professor at Wharton, Barbara Kahn, stated that “being known as Facebook or Google is limiting when what you are is a house of brands.” A house of brands is described as owning various brands and businesses, and the parent companies’ relation to that brand isn’t necessarily visible. The opposite is called a branded house, where the parent company’s brand name supports all of the other products and businesses in the portfolio, like Disney, for example.
The house of brands approach diversifies risk and prevents contamination between brands and businesses so that consumers can separate these brands from the parent companies. For example, someone may not shop at Amazon but will still listen to Audible or shop at Whole Foods. Or consumers will use Instagram as a social media platform but won’t use Facebook. Meta’s name change also reflects the shift in strategy to gain the first-mover advantage into the virtual metaverse space. The repositioning and new values could take hold by changing the company name, but it’s never a guarantee.