Instead, the move reflects the company’s desire to grow into a full-fledged technology company that creates solutions for the future beyond social media.
And while Facebook will remain a service under its existing name, it will now be listed under an umbrella of services of Meta Platforms alongside other services like Instagram and WhatsApp.
Facebook’s rebranding is much like what Google did...
Back in 2015, Google reorganized entirely under a holding company called Alphabet to signal it was no longer merely a search engine – rather, it was now a conglomerate developing products like robotics and self-driven cars.
The name Meta is derived from the word “Metaverse.”
Currently, the “Metaverse” is still a concept.
The term was originally coined by the science fiction writer Neal Stephenson to depict a digital universe inhabited by avatars of real people in a virtual world.
We experienced how virtual interactions became more mainstream during the pandemic. A lot of us have embraced remote work, online education, and app-based food delivery services at a rapid pace. Metaverse is a concept that will take virtual interactions into another dimension.
Here, we can live in an Augmented Reality (AR) enabled world. The technology will incorporate the real environment while also including virtual objects with which we can engage.
As of now, "Decentraland" is the closest we've come to a Metaverse so far. It is a virtual environment where users can purchase digital assets such as land and trade them for in-game cryptocurrency tokens. All the transactions work on a blockchain ecosystem.
Side note: Epic Games (the creators of Fortnite), Nvidia, and Microsoft are all investing aggressively in Metaverse technology right now.
How is the new entity different?
Unlike other companies that specialize either in the software or hardware aspects of the Metaverse, Meta Platforms wants to be an "all-encompassing company" with a diverse product range.
It intends to launch "Horizon Home," a new social version of your home where you can invite your friends in the Metaverse via the "Quest" headsets. Furthermore, Meta Platforms' goals do not end there; the company will also launch a Remote Working Platform, allowing customers to work from anywhere while bringing their workplace with them.
Imagine if you could work in the office without the commute while having a sense of presence there.
It's possible that the rebranding is part of a plan to kill two birds with one stone.
Many users have been looking at Facebook with skepticism, after a cascade of news reports since the past month, after Frances Haugen, a former employee turned whistle-blower, leaked internal company documents to news outlets, lawmakers and regulators.
The documents revealed that Facebook adopted more lenient secret rules for elite users… Instagram made body issues worse for one in three teen girls… and that Facebook knowingly amplified outrage on its main site through an algorithm tweak in 2018.
During the Q3 earnings call, Zuckerberg vehemently refuted the allegations and said that the documents painted a false picture of the company.
The overhaul also serves to separate the company from the allegations.
Aside from these reports, Facebook’s heavy investment moving into Metaverse is their way of betting that this new “Metaverse” entity is where everyone will spend their time. Part of the makeover reflects Facebook's aspirations to transition away from its social network roots and migrate towards the next level of social technologies.
The metaverse vision, according to Mark Zuckerberg, depicts an immersive virtual reality environment with real-time users using the platform for business, concerts, family gatherings, and more.
During the same earnings call, Zuckerberg stated that he believes the Metaverse would be the mobile internet's replacement to enable social experiences.
This shift may not be a profitable one for Meta in the near-term. It intends to first subsidize the devices and services to establish a user base. There's a lot of basic infrastructures that have to be put in place. However, it is undeniable that the world is shifting to more all-encompassing online one – both for social and work life.
Meta Platforms will be able to monetize the virtual world through advertisements and by supporting the digital economy merging cryptocurrencies, blockchain technology, non-fungible tokens (NFTs), video gaming, and facilitating digital transactions.
If this transition works out, Meta Platforms (FB:NASD) could make for a very solid long-term investment.