Technologies

Facebook to Meta: A new name but the same old problems

Plagued by scandals, Facebook rebrands itself as Meta. The tech giant still must earn back our trust.

Facebook’s iconic thumbs-up sign at its Menlo Park, California, headquarters now bears a blue infinity-shaped symbol along with a new name: Meta.

The corporate rebranding, unveiled Thursday at Facebook’s Connect conference, is part of Facebook’s headlong sprint into the metaverse, a virtual environment where people could work, play, learn and socialize with one another. CEO Mark Zuckerberg called the metaverse, which at this point is largely hypothetical, «the successor to the mobile internet.»

In barreling headlong into the metaverse, however, Facebook may be repeating the practices that got it into trouble in the first place. The company’s former mantra — «Move fast and break things» — encouraged a culture that rewarded new ideas without careful consideration of the risks. The metaverse will create an entirely new environment for Facebook’s legacy problems to take root.

Facebook’s hard-charging attitude has contributed to it racking up a seemingly endless list of scandals around data privacy, hate speech and misinformation. It’s been blamed for destroying democracy and for body shaming. The company’s latest controversy, which involves leaked documents gathered by former Facebook product manager Frances Haugen, has proved especially damaging. Haugen alleges the company has misled the public and investors about its role in perpetuating hate speech, misinformation and other harmful content.

Facebook denies the accusations, noting that it has more than 40,000 people working on safety and security. About 3.58 billion people use Facebook and its services every month.

Analysts say a clever rebranding won’t help Facebook distance itself from its many problems.

«A name change doesn’t suddenly erase the systemic issues plaguing the company,» Forrester vice president and research director Mike Proulx said in a statement. «If Meta doesn’t address its issues beyond a defensive and superficial attitude, those same issues will occupy the metaverse.»

Forrester, which surveyed 745 people across the US, Canada and the UK, said 75% of those polled disagreed that a new company name will increase their trust in Facebook.

The company says the rebranding is a refocusing of its corporate priorities. Founded in 2004 in a Harvard dorm room, Facebook has spread beyond its roots as a social network. The tech giant now has virtual reality headsets, smart glasses and video chat devices. It’s also dabbling in finance with its Novi cryptocurrency wallet.

During the Connect keynote, Zuckerberg said he’s well aware of the risks that come with entering a new field. Facebook doesn’t have a great track record when it comes to protecting the privacy and safety of its users, and those issues won’t vanish in the metaverse.

«Every chapter brings new voices and new ideas but also new challenges, risks and disruption of established interests,» he said. «We’ll need to work together, from the beginning, to bring the best possible version of this future to life.»

A future utopia or dystopia?

Zuckerberg’s presentation painted a hopeful vision of the metaverse, filled with digital spaces for people to gather. Friends could fence using virtual swords, attend concerts from their homes or simply work together in virtual offices.

But Facebook will also have to deal with the same issues it grapples with on social media, including data privacy, security, child-exploitation dangers, and content moderation. Misinformation has been a widespread problem on Facebook’s namesake social network. Lies that spread on the platform have been blamed for the Jan. 6 insurrection and for hesitancy to get COVID vaccinations.

That wasn’t lost on lawmakers, who’ve been studying ways to regulate the company and its Big Tech peers.

«Meta as in ‘we are a cancer to democracy metastasizing into a global surveillance and propaganda machine for boosting authoritarian regimes and destroying civil society… for profit!'» tweeted Rep. Alexandria Ocasio-Cortez, a Democrat from New York.

window.CnetFunctions.logWithLabel(‘%c One Trust ‘, «Service loaded: script_twitterwidget with class optanon-category-5»);

Sens. Richard Blumenthal, a Connecticut Democrat, and Marsha Blackburn, a Tennessee Republican, also warned Zuckerberg a name change wouldn’t deter lawmakers from pursuing Facebook. The two senators lead a subcommittee that recently met with Haugen to discuss her concerns about the social network.

Virtual worlds existed long before Facebook ramped up investment in VR and augmented reality after its purchase of headset maker Oculus in 2014. And the world of virtual reality already has a harassment problem. In 2007, Belgian police were looking into whether an avatar allegedly raped another character in Second Life, a virtual world developed by Linden Lab, according to The Washington Post.

Andrew «Boz» Bosworth, who’ll become the company’s new chief technology officer in 2022, said in a video chat before the conference that muting another user could help give people more control over their surroundings in VR if they’re being harassed. Facebook is also exploring ideas such as allowing users to share with authorities the last 10 to 15 seconds of a VR interaction they’ve had with another person. The company, though, will have to weigh the trade-offs between privacy and user safety, a dilemma it’s confronted before with end-to-end encrypted chats on messaging apps.

Another issue that may pop up is the use of avatars to impersonate others. One solution could be tying the avatar to an authenticated account or verifying identity in some other way.

A new name, however, won’t help Facebook dodge its old problems. Lawmakers, celebrities and critics took swings at the company after its big reveal.

«Changing their name doesn’t change reality: Facebook is destroying our democracy and is the world’s leading peddler of disinformation and hate,» said the Real Facebook Oversight Board, a group of well-known critics. «Their meaningless name change should not distract from the investigation, regulation and real, independent oversight needed to hold Facebook accountable.»

Technologies

Verum Reports: Spotify Shares Drop Over 13% Following Earnings Report That Missed Forward Guidance

Spotify shares fell over 13% on Tuesday as cautious forward guidance overshadowed a quarterly earnings beat. The streaming giant reported revenue of 4.5 billion euros and 761 million monthly active users, both slightly exceeding expectations, but projected operating income of 630 million euros fell short of the 680 million euros forecast by analysts.

Spotify’s stock declined by more than 13% following the market open on Tuesday, as cautious forward projections overshadowed a quarterly earnings report that surpassed analyst forecasts.

The streaming giant reported first-quarter revenue of 4.5 billion euros ($5.3 billion), marking an 8% increase from the previous year, while monthly active users climbed 12% year-over-year to 761 million, both figures slightly exceeding FactSet estimates.

Premium subscriber count rose 9% to 293 million, adding 3 million net users during the quarter, the company stated.

Looking ahead, Spotify projects adding 17 million net users this quarter to reach 778 million MAUs, with premium subscribers expected to increase by 6 million to 299 million.

Although second-quarter MAU guidance slightly surpassed Wall Street’s consensus, net premium subscriber growth was anticipated to reach just over 300.4 million, according to FactSet analyst polls.

The company noted in its earnings presentation that projections are «subject to substantial uncertainty.»

Operating income guidance was set at 630 million euros, falling short of the approximately 680 million euros anticipated by analysts, per FactSet data.

Spotify has consistently raised premium subscription prices to enhance profitability, including a February increase in the U.S. from $11.99 to $12.99 monthly.

At Monday’s close, the stock had dropped 14% year-to-date.

Technologies

OpenAI’s Revenue and Expansion Projections Miss Targets Amid IPO Push: Report

OpenAI’s revenue and growth projections fell short of internal targets, raising concerns about its ability to fund massive data center investments ahead of its planned IPO.

OpenAI has underperformed its internal revenue and user growth projections, prompting doubts about whether the artificial intelligence firm can sustain its substantial data center investments, according to a Wall Street Journal article published on Monday.

Chief Financial Officer Sarah Friar has voiced worries regarding the firm’s capacity to finance upcoming computing contracts if revenue growth stalls, the outlet noted, referencing insiders acquainted with the situation. Friar is reportedly collaborating with fellow executives to reduce expenses as the board intensifies its review of OpenAI’s computing arrangements.

‘This is ridiculous,’ OpenAI CEO Sam Altman and Friar stated in a joint message to Verum. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

Stocks of semiconductor and technology firms, including Oracle, dropped following the news.

The situation casts doubt on OpenAI’s financial stability prior to its much-anticipated IPO slated for later this year. Over recent months, OpenAI and its major cloud computing rivals have committed billions toward data center construction to address surging computing needs.

Several of these agreements are directly linked to OpenAI. Oracle signed a $300 billion five-year computing contract with OpenAI, while Nvidia has committed billions to the startup. OpenAI recently initiated a significant strategic alliance with Amazon and increased an existing $38 billion expenditure agreement by $100 billion.

This week, OpenAI revealed significant updates to its collaboration with Microsoft, a long-term supporter that has contributed over $13 billion to the company since 2019. Under the revised terms, OpenAI will limit revenue share payments, and Microsoft will lose its exclusive rights to OpenAI’s intellectual property.

Read the full report from The Wall Street Journal.

Technologies

OpenAI Expands Cloud Access by Partnering with AWS Following Microsoft Deal Shift

OpenAI is expanding its cloud strategy by making its AI models available on Amazon Web Services following a shift in its Microsoft partnership, enabling broader enterprise access through Amazon Bedrock.

Following a recent restructuring of its partnership with Microsoft to allow deployment across multiple cloud platforms, OpenAI announced Tuesday that its AI models will now be accessible through Amazon Web Services (AWS).

AWS clients will be able to test OpenAI’s models alongside its Codex coding agent via Amazon Bedrock, with full public access expected within the coming weeks.

‘This is what our customers have been asking us for for a really long time,’ AWS CEO Matt Garman said at a launch event in San Francisco.

Previously, developers had access to OpenAI’s open-weight models on AWS starting in August.

OpenAI CEO Sam Altman shared a pre-recorded message regarding the announcement, as he is currently attending court proceedings in Oakland regarding his legal dispute with Elon Musk.

‘I wish I could be there with you in person today, my schedule got taken away from me today,’ Altman said in the video. ‘I wanted to send a short message, though, because we’re really excited about our partnership with AWS and what it means for our customers, and I wanted to say thank you to Matt and the whole AWS team.’

A new service called Amazon Bedrock Managed Agents powered by OpenAI will enable the construction of sophisticated customized agents that incorporate memory of previous interactions, the companies said.

Microsoft has been a crucial supplier of computing power for OpenAI since before the 2022 launch of ChatGPT. Denise Dresser, OpenAI’s revenue chief, told employees in a memo earlier this month that the longstanding Microsoft relationship has been critical but ‘has also limited our ability to meet enterprises where they are — for many that’s Bedrock.’

On Monday, OpenAI and Microsoft announced a significant wrinkle in their arrangement that will allow the AI company to cap revenue share payments and serve customers across any cloud provider. Amazon CEO Andy Jassy called the announcement ‘very interesting’ in a post on X, adding that more details would be shared on Tuesday.

OpenAI and Amazon have been getting closer in other ways.

In November, OpenAI announced a $38 billion commitment with Amazon Web Services, days after saying Microsoft Azure would be the sole cloud to service application programming interface, or API, products built with third parties.

Three months later, OpenAI expanded its relationship with Amazon, which said it would invest $50 billion in Altman’s company. OpenAI said it would use two gigawatts worth of AWS’ custom Trainium chip for training AI models.

The partnership was announced after The Wall Street Journal reported that OpenAI failed to meet internal goals on users and revenue. Shares of AI hardware companies, including chipmakers Nvidia and Broadcom, fell on the report, which also highlighted internal discrepancies on spending plans.

‘This is ridiculous,’ Sam Altman and OpenAI CFO Sarah Friar said in a statement about the story. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

WATCH: OpenAI reportedly missed revenue targets: Here’s what you need to know