Connect with us

Published

on

In this article

A pedestrian walks in front of a new logo and the name ‘Meta’ on the sign in front of Facebook headquarters on October 28, 2021 in Menlo Park, California.
Justin Sullivan | Getty Images

With its name change to Meta, the company formerly known as Facebook is trying to eliminate what some employees have called a “brand tax” on apps like Instagram, Messenger and WhatsApp.

Meta CEO Mark Zuckerberg announced the rebranding on Thursday, following a brutal seven weeks of document dumps that showed Facebook knew of the harm its products cause and has refused to address them. But the brand tax dates as far back as the 2016 presidential election, when Facebook turned into a haven of hateful content and misinformation.

Facebook’s other services, most notably Instagram and Messenger, have struggled to distance themselves from the constant embarrassment that’s plagued their parent company over the past half-decade, according to people with knowledge of the matter.

Brand separation became particularly difficult in 2019, when Facebook announced it would tag all of its services with Facebook at the end of their names. Messenger became Messenger from Facebook, and the other apps turned into Instagram from Facebook and WhatsApp from Facebook.

Facebook said at the time that the rebranding was intended to provide clarity to users. The same was true for its Oculus virtual reality unit and business software offering Workplace, which also got the “from Facebook” label.

“This brand change is a way to better communicate our ownership structure to the people and businesses who use our services to connect, share, build community and grow their audiences,” the company said in a press release on Nov. 4, 2019.

But behind closed doors, Facebook wasn’t expressing concern about consumer confusion. Rather, the company was trying to restore the strength of its name after a series of public relations setbacks, most notably the Cambridge Analytica data hijacking scandal in 2018, several former employees told CNBC.

Facebook’s own brand was in the dumps. Zuckerberg decided to consolidate the branding because he thought associating Facebook with the company’s less-sullied services would help, said the former employees, who asked not to be named because the information was confidential. 

With an image of himself on a screen in the background, Facebook co-founder and CEO Mark Zuckerberg testifies before the House Financial Services Committee in the Rayburn House Office Building on Capitol Hill October 23, 2019 in Washington, DC.
Chip Somodevilla | Getty Images

Some employees advised Zuckerberg to follow the path taken by Google, which created the parent company name Alphabet in 2015, rather than attaching Facebook to everything, sources said.

Zuckerberg’s decision to instead showcase Facebook was not driven by data. On the contrary, he was presented with research showing that associating any of the company’s products with the Facebook brand caused trust to drop, said one former executive.

Another employee said that was seen in research done for Facebook’s video-calling device, Portal, announced in 2018. Data indicated that putting the name Facebook on it would reduce public trust. The company went with the name Facebook Portal anyway.

When asked for a comment for this story, a spokeswoman for the company directed CNBC to a Thursday post from Meta Chief Marketing Officer Alex Schultz.

“In 2019, we rolled out new branding that linked together all of our products, but still kept the Facebook name for both the company and our original app,” Schultz wrote. “But over time it was clear that the shared Facebook name could cause confusion, not only with people using products such as WhatsApp or Instagram, but also with constituencies we work with. Helping people have clarity when something is coming from the company versus the Facebook app is an important reason for this change.”

Instagram hurt the most

Instagram was hit particularly hard by the 2019 rebranding.

The photo app is used mostly by teens and young people, who have long had a negative view of Facebook. The “big blue app,” as Facebook is known, was seen as the place where parents and weird uncles go to share stories and comment on their relatives’ posts.

Instagram’s marketing employees began seeing, through quarterly brand tracking results, that the new label was causing harm.

They tried to make the “from Facebook” font smaller, not use it at all or play with the colors in a way that would hide the Facebook name, ex-employees said. Ultimately, they were overruled, according to one former employee.

Zuckerberg insisted that Facebook had turned Instagram into a screaming success since acquiring it for $1 billion in 2012, and it was time for Instagram to give back, a former executive recalled. 

Instagram marketers would eventually be measured by how well they tied the brands together. It was mandated by Zuckerberg and non-negotiable.

Messenger, by contrast, was given permission to create some sense of separation, according to multiple employees. 

Unlike Instagram, Oculus and WhatsApp, which were all acquired, Messenger was homegrown. Facebook turned it into a separate app in 2014. To attract younger users, Messenger was given the “blessing” a year ago to take some steps to improve the brand, two former employees said.

Messenger rolled out a new logo last year with a gradient color, predominantly purple, similar to Instagram’s logo. It was part of the Messenger team’s effort to position the app for Millennials and Gen Z users, who have been flocking to other services like TikTok.

Removing the Facebook name

As Meta, there’s no guarantee that Facebook’s brand tax dissipates.

But Zuckerberg has at least changed his approach, less than two years after adding “from Facebook” to all of his company’s main services.

The company has already started rebranding several of its units. The hardware division, previously known as Facebook Reality Labs, will now be called Reality Labs. The payments division, which was known as F2 (Facebook Financial), will now be Novi, the name of the company’s cryptocurrency wallet product. 

Zuckerberg remains defiant following a series of document leaks by ex-employee Frances Haugen, the whistleblower, and the many stories that followed from the Wall Street Journal and other publications. One of the most notable stories showed that the company knew Instagram was detrimental to teenagers’ mental health and was doing little about it. 

“My view is that what we are seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company,” Zuckerberg said after the company’s quarterly earnings report earlier this week.

Some of the documents released showed that the number of teenage users of the Facebook app in the U.S. has declined by 13% since 2019, with a projected drop of 45% over the next two years, according to The Verge. Additionally, Facebook researchers found that the company was not expecting people born after 2000 to join the social network until they were 24 or 25 years old, if they ever joined, Bloomberg reported.

Facebook addressed that issue on Monday in its earnings report. The company said it would begin pivoting both Instagram and Facebook to feature more videos from the Reels product in an effort to attract young users.

Zuckerberg said the company will try to make all of its services appealing to young adults, but he acknowledged that “this shift will take years, not months, to fully execute.”

Moving away from the Facebook brand is the first big step.

WATCH: The metaverse is things you can do with goggles strapped to your face

Continue Reading

Technology

AppLovin can offer TikTok ‘much stronger bid than others,’ CEO says

Published

on

By

AppLovin can offer TikTok 'much stronger bid than others,' CEO says

Piotr Swat | Lightrocket | Getty Images

AppLovin CEO Adam Foroughi provided more clarity on the ad-tech company’s late-stage effort to acquire TikTok, calling his offer a “much stronger bid than others” on CNBC’s The Exchange Friday afternoon.

Foroughi said the company is proposing a merger between AppLovin and the entire global business of TikTok, characterizing the deal as a “partnership” where the Chinese could participate in the upside while AppLovin would run the app.

“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said.

The news comes as President Trump announced he would extend the deadline a second time for TikTok’s Chinese-owned parent company ByteDance to sell the U.S. subsidiary of TikTok to an American buyer or face an effective ban on U.S. app stores. The new deadline is now in June, which, as Foroughi described, “buys more time to put the pieces together” on AppLovin’s bid. 

“The president’s a great dealmaker — we’re proposing, essentially an enhancement to the deal that they’ve been working on, but a bigger version of all the deals contemplated,” he added.

AppLovin faces a crowded field of other interested U.S. backers, including Amazon, Oracle, billionaire Frank McCourt and his Project Liberty consortium, and numerous private equity firms. Some proposals reportedly structure the deal to give a U.S. buyer 50% ownership of the company, rather than a complete acquisition. The Chinese government will still need to approve the deal, and AppLovin’s interest in purchasing TikTok in “all markets outside of China” is “preliminary,” according to an April 3 SEC filing.

Correction: A prior version of this story incorrectly characterized China’s ongoing role in TikTok should AppLovin acquire the app.

WATCH: AppLovin CEO Adam Foroughi on its bid to buy TikTok

AppLovin CEO Adam Foroughi on its bid to buy TikTok

Continue Reading

Technology

Trump’s tariff rates for other countries radically larger than World Trade data

Published

on

By

Trump's tariff rates for other countries radically larger than World Trade data

U.S. President Donald Trump speaks during an event announcing new tariffs in the Rose Garden at the White House in Washington, April 2, 2025.

Chip Somodevilla | Getty Images

President Donald Trump announced an aggressive, far-reaching “reciprocal tariff” policy this week, leaving many economists and U.S. trade partners to question how the White House calculated its rates.

Trump’s plan established a 10% baseline tariff on almost every country, though many nations such as China, Vietnam and Taiwan are subject to much steeper rates. At a ceremony in the Rose Garden on Wednesday, Trump held up a poster board that outlined the tariffs that it claims are “charged” to the U.S., as well as the “discounted” reciprocal tariffs that America would implement in response.

Those reciprocal tariffs are mostly about half of what the Trump administration said each country has charged the U.S. The poster suggests China charges a tariff of 67%, for instance, and that the U.S. will implement a 34% reciprocal tariff in response.

However, a report from the Cato Institute suggests the trade-weighted average tariff rates in most countries are much different than the figures touted by the Trump administration. The report is based on trade-weighted average duty rates from the World Trade Organization in 2023, the most recent year available.

The Cato Institute says the 2023 trade-weighted average tariff rate from China was 3%. Similarly, the administration says the EU charges the U.S. a tariff of 39%, while the 2023 trade-weighted average tariff rate was 2.7%, according to the report.

In India, the Trump administration claims that a 52% tariff is charged against the U.S., but Cato found that the 2023 trade-weighted average tariff rate was 12%.

Many users on social media this week were quick to notice that the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries. It’s an unusual approach, as it suggests that the U.S. factored in the trade deficit in goods but ignored trade in services.

The Office of the U.S. Trade Representative briefly explained its approach in a release, and stated that computing the combined effects of tariff, regulatory, tax and other policies in various countries “can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero.”

If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair,” the USTR said in the release.

There is at least a 60% chance of recession if Trump's tariffs stick, says JPMorgan's David Kelly

Continue Reading

Technology

As Microsoft turns 50, Nadella sees future success built on ability to ‘win the new’

Published

on

By

As Microsoft turns 50, Nadella sees future success built on ability to 'win the new'

Microsoft CEO Satya Nadella speaks during the Microsoft Build conference at Microsoft headquarters in Redmond, Washington, on May 21, 2024.

Jason Redmond | AFP | Getty Images

A half-century ago, childhood friends Bill Gates and Paul Allen started Microsoft from a strip mall in Albuquerque, New Mexico. Five decades and almost $3 trillion later, the company celebrates its 50th birthday on Friday from its sprawling campus in Redmond, Washington.

Now the second most valuable publicly traded company in the world, Microsoft has only had three CEOs in its history, and all of them are in attendance for the monumental event. One is current CEO Satya Nadella. The other two are Gates and Steve Ballmer, both among the 11 richest people in the world due to their Microsoft fortunes.

While Microsoft has mostly been on the ascent of late, with Nadella turning the company into a major power player in cloud computing and artificial intelligence, the birthday party lands at an awkward moment.

The company’s stock price has dropped for four consecutive months for the first time since 2009 and just suffered its steepest quarterly drop in three years. That was all before President Donald Trump’s announcement this week of sweeping tariffs, which sent the Nasdaq tumbling on Thursday and Microsoft down another 2.4%.

Cloud computing has been Microsoft’s main source of new revenue since Nadella took over from Ballmer as CEO in 2014. But the Azure cloud reported disappointing revenue in the latest quarter, a miss that finance chief Amy Hood attributed in January to power and space shortages and a sales posture that focused too much on AI. Hood said revenue growth in the current quarter will fall to 10% from 17% a year earlier

Nadella said management is refining sales incentives to maximize revenue from traditional workloads, while positioning the company to benefit from the ongoing AI boom.

“You would rather win the new than just protect the past,” Nadella told analysts on a conference call.

The past remains healthy. Microsoft still generates around one-fifth of its roughly $262 billion in annual revenue from productivity software, mostly from commercial clients. Windows makes up around 10% of sales.

Meanwhile, the company has used its massive cash pile to orchestrate its three largest acquisitions on record in a little over eight years, snapping up LinkedIn in late 2016, Nuance Communications in 2022 and Activision Blizzard in 2023, for a combined $121 billion.

Microsoft-Activision Blizzard set to clear final hurdle as U.K. regulators signal approval

“Microsoft has figured out how to stay ahead of the curve, and 50 years later, this is a company that can still be on the forefront of technology innovation,” said Soma Somasegar, a former Microsoft executive who now invests in startups at venture firm Madrona. “That’s a commendable place for the company to be in.”

When Somasegar gave up his corporate vice president position at Microsoft in 2015, the company was fresh off a $7.6 billion write-down from Ballmer’s ill-timed purchase of Nokia’s devices and services business.

Microsoft is now in a historic phase of investment. The company has built a $13.8 billion stake in OpenAI and last year spent almost $76 billion on capital expenditures and finance leases, up 83% from a year prior, partly to enable the use of AI models in the Azure cloud. In January, Nadella said Microsoft has $13 billion in annualized AI revenue, more even than OpenAI, which just closed a financing round valuing the company at $300 billion.

Microsoft’s spending spree has constrained free cash flow growth. Guggenheim analysts wrote in a note after the company’s earnings report in January, “You just have to believe in the future.” 

Of the 35 Microsoft analysts tracked by FactSet, 32 recommend buying the stock, which has appreciated tenfold since Nadella became CEO. Azure has become a fearsome threat to Amazon Web Services, which pioneered the cloud market in the 2000s, and startups as well as enterprises are flocking to its cloud technology.

Winston Weinberg, CEO of legal AI startup Harvey, uses OpenAI models through Azure. Weinberg lauded Nadella’s focus on customers of all sizes.

“Satya has literally responded to emails within 15 minutes of us having a technical problem, and he’ll route it to the right person,” Weinberg said.

Still, technology is moving at an increasingly rapid pace and Microsoft’s ability to stay on top is far from guaranteed. Industry experts highlighted four key issues the company has to address as it pushes into its next half-century.

Microsoft didn’t respond to a request for comment.

Regulation

There’s some optimism that the Trump administration and a new head of the Federal Trade Commission will open up the door to the kinds of deal-making that proved very challenging during Joe Biden’s presidency, when Lina Khan headed the FTC.

But regulatory uncertainty remains.

It’s not a new risk for Microsoft. In 1995, the company paid a $46 million breakup fee to tax software maker Intuit after the Justice Department filed suit to block the proposed deal. Years later, the DOJ got Microsoft to revamp some of its practices after a landmark antitrust case.

Microsoft pushed through its largest acquisition ever, the $75 billion purchase of video game publisher Activision, during Biden’s term. But only after a protracted legal battle with the FTC.

At the very end of Biden’s time in office, the FTC opened an antitrust investigation on Microsoft. That probe is ongoing, Bloomberg reported in March.

Nadella has cultivated a relationship with Trump. In January, the two reportedly met for lunch at Trump’s Mar-a-Lago resort in Florida, alongside Tesla CEO Elon Musk.

President Donald Trump shakes hands with Microsoft CEO Satya Nadella during an American Technology Council roundtable at the White House in Washington on June 19, 2017.

Nicholas Kamm | AFP | Getty Images

The U.S. isn’t the only concern. The U.K.’s Competition and Markets Authority said in January that an independent inquiry found that “Microsoft is using its strong position in software to make it harder for AWS and Google to compete effectively for cloud customers that wish to use Microsoft software on the cloud.”

Microsoft last year committed to unbundling Teams from Microsoft 365 productivity software subscriptions globally to address concerns from the European Union’s executive arm, the European Commission.

Noncore markets

Fairly early in Microsoft’s history the company became the world’s largest software maker. And in cloud, Microsoft is the biggest challenger to AWS. Most of the company’s revenue comes from corporations, schools and governments.

But Microsoft is in other markets where its position is weaker. Those include video games, laptops and search advertising.

Mary Jo Foley, editor in chief at advisory group Directions on Microsoft, said the company may be better off focusing on what it does best, rather than continuing to offer Xbox consoles and Surface tablets.

“Microsoft is not good at anything in the consumer space (with the possible exception of gaming),” wrote Foley, who has covered the company on and off since 1984. “You’re wasting time and money on trying to figure it out. Microsoft is an enterprise company — and that is more than OK.”

It’s unlikely Microsoft will back away from games, particularly after the Activision deal. Nearly $12 billion of Microsoft’s $69.6 billion in fourth-quarter revenue came from gaming, search and news advertising, and consumer subscriptions to the Microsoft 365 productivity bundle. That doesn’t include sales of devices, Windows licenses or advertising on LinkedIn.

“As a company, Microsoft’s all-in on gaming,” Nadella said in 2021 in an appearance alongside gaming unit head Phil Spencer. “We believe we can play a leading role in democratizing gaming and defining that future of interactive entertainment, quite frankly, at scale.”

AI pressure

Microsoft has an unquestionably strong position in AI today, thanks in no small part to its early alliance with OpenAI. Microsoft has added the startup’s AI models to Windows, Excel, Bing and other products.

The breakout has been GitHub Copilot, which generates source code and answers developers’ questions. GitHub reached $2 billion in annualized revenue last year, with Copilot accounting for more than 40% of sales growth for the business. Microsoft bought GitHub in 2018 for $7.5 billion.

Microsoft CEO Satya Nadella, right, speaks as OpenAI CEO Sam Altman looks on during the OpenAI DevDay event in San Francisco on Nov. 6, 2023.

Justin Sullivan | Getty Images

But speedy deployment in AI can be worrisome.

The company is “not providing the underpinnings needed to deploy AI properly, in terms of security and governance — all because they care more about being ‘first,'” Foley wrote. Microsoft also hasn’t been great at helping customers understand the return on investment, she wrote.

AI-ready Copilot+ PCs, which Microsoft introduced last year, aren’t gaining much traction. The company had to delay the release of the Recall search feature to prevent data breaches. And the Copilot assistant subscription, at $30 a month for customers of the Microsoft 365 productivity suite, hasn’t become pervasive in the business world.

“Copilot was really their chance to take the lead,” said Jason Wong, an analyst at technology industry researcher Gartner. “But increasingly, what it’s seeming like is Copilot is just an add-on and not like a net-new thing to drive AI.”

Innovation

At 50, the biggest question facing Microsoft is whether it can still build impressive technology on its own. Products like the Surface and HoloLens augmented reality headset generated buzz, but they hit the market years ago.

Teams was a novel addition to its software bundle, though the app’s success came during the Covid pandemic after the explosive growth in products like Zoom and Slack, which Salesforce acquired. And Microsoft is still researching quantum computing.

In AI, Microsoft’s best bet so far was its investment in OpenAI. Somasegar said Microsoft is in prime position to be a big player in the market.

“To me, it’s been 2½ years since ChatGPT showed up, and we are not even at the Uber and Airbnb moment,” Somasegar said. “There is a tremendous amount of value creation that needs to happen in AI. Microsoft as much as everybody else is thinking, ‘What does that mean? How do we get there?'”

Don’t miss these insights from CNBC PRO

Jefferies' Brent Thill makes the bullish call on Microsoft

Continue Reading

Trending