Dec
14
While regulators circle Facebook, Libra adds insult to injury.
Right now isn’t the best time to be Facebook. I shall defer to the New York Times to sum up the social media giant’s current regulatory woes:
The Federal Trade Commission and more than 40 states accused Facebook on Wednesday of buying up its rivals to illegally squash competition, and they called for the deals to be unwound, escalating regulators’ battle against the biggest tech companies in a way that could remake the social media industry.
Federal and state regulators … said in separate lawsuits that Facebook’s purchases, especially Instagram for $1 billion in 2012 and WhatsApp for $19 billion two years later, eliminated competition that could have one day challenged the company’s dominance.
Since those deals, Instagram and WhatsApp have skyrocketed in popularity, giving Facebook control over three of the world’s most popular social media and messaging apps. The applications have helped catapult Facebook from a company started in a college dorm room 16 years ago to an internet powerhouse valued at more than $800 billion.
It’s a curious move under an administration that touts its track record of lifting, not imposing, regulations. One could be forgiven for wondering if the hubbub has anything to do with accusations that Facebook and other social media giants suppress conservative voices, an easily disproved claim, and might be an attempt at some sort of punishment.
To add insult to injury, the cryptocurrency association that Facebook launched is going to change its name from “Libra” to “Diem” in an attempt to distance itself from Facebook.
This, too, is curious, since “Libra” was already a far cry from “Facebook.” Sure, both have two syllables, but they don’t even rhyme.
According to Finextra,
The Libra Association has hailed a “new day” for the Facebook-backed cryptocurrency project, rebranding as Diem in an attempt to stress its independence as it seeks regulatory approval for a 2021 launch.
Finextra did well to put “new day” in quotes. “New name” is more like it. True enough, “rebrand” is often flung around these days in ways that all but rob it of meaning. A marketer may trot out a new logo, perhaps with a new font and color scheme, and call it a “rebrand.” Or the marketer might trot out a new name and call that a “rebrand.” But consider what a brand truly is: a consistent experience. A McDonald’s franchisor could take a store and change every “McDonald’s” to “Phillippe’s,” replace every golden arch with a large P, and cart off every Ronald McDonald image—and you’d still know you were inside a McDonald’s. That’s because the McDonald’s brand is the totality of the experience it delivers—location, layout, facilities, Playland, menu items, flavors, warming lamps, furnishings, a RedBox sitting just outside the front door, and prompt albeit often bland service.
A name change to stem negative feelings toward a brand is like changing your hat to make people who don’t like you reconsider. The Libra-to-Diem switch is less of a rebrand and more of a statement, said statement being, “Hey, everyone, we’re not Facebook. Honest we’re not.”
Which in and of itself may well prove helpful. But it would be a mistake to count on the name change to convince regulators. The part about being independent of Facebook is where the PR emphasis needs to go. But it’s going to need some solid evidence behind it, which a name change isn’t.
From the get-go, Facebook’s relationship with its cryptocurrency offspring hasn’t been terribly smooth. A number of Libra partners had already bailed a little over a year ago. CNN reported at the time,
Mastercard (MA), eBay (EBAY), Visa (V) and Stripe, a payments platform, all confirmed on Friday that they would not be members of the governance organization for the Libra cryptocurrency developed by Facebook. PayPal said last week it would pull out of the organization. The firms were part of a group of more than two dozen nonprofits and companies originally listed as “founding members” of the Libra Association, which is intended to to be an independent overseer of the cryptocurrency.
Meanwhile, so much as a single unit of Libra, er, Diem has yet to move from the drawing board to the virtual wallet. Whether the name change heralds a new day or just a new hat may in the long run yet prove moot.