By Casey Bukro
Ethics AdviceLine for Journalists
Rebranding is a big deal for any company, a decision that can make or break a company.
It’s also an occasion for a company leader to show how powerful he or she is. It’s usually their decision.
Facebook founder Mark Zuckerberg last October announced that the giant tech company was changing its name to “Meta,” which included a new corporate logo: A distorted, sideways figure eight similar to the mathematical symbol for infinity, blue on a white background.
The Facebook logo, a white letter F on a blue background, is one of the most recognizable corporate logos in the world. The new logo, says Zuckerberg, signals that the company is shooting for the “metaverse.” In Greek, the word “Meta” translates to “beyond,” reflecting Zuckerberg’s belief “there is always more to build.” The company, he believes, should not be identified only with what it is doing today. He sees a future digital universe combining online, virtual and augmented worlds that users can traverse seamlessly.
While announcing the new name, the company said it will change its stock ticker from FB to MVRS.
It might be relevant, or not, that the identity transformation came a year after a congressional investigation into Amazon, Apple, Google and Facebook found they hold “monopoly power” in the digital marketplace.
“To put it simply, companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons,” said the report from the subcommittee on antitrust, commercial and administrative law of the committee on the judiciary.
“Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook and Google has come at a price,” said the subcommittee. “These firms typically run the marketplace” while setting rules for others and playing by another set of rules, so that they are “unaccountable to anyone but themselves.”
The findings potentially set the stage for future legislation and action by the Justice Department and the Federal Trade Commission.
Big and powerful companies always attract governmental attention.
Silicon Valley tech giant leaders Zuckerberg, Jack Dorsey of Twitter and Sundar Pichai of Google took what amounted to a tongue-lashing while appearing at a U.S. Senate hearing in October, 2020.
“The three witnesses we have before this committee today collectively pose, I believe, the single greatest threat to free speech in America and the greatest threat we have to free and fair elections,” said Republican Senator Ted Cruz of Texas. Democrat Senator Amy Klobuchar of Minnesota accused Facebook of promoting divisiveness with algorithms that push users to polarizing content. Zuckerberg said the system directs users to content most likely to be of interest to them.
In his opening remarks, Zuckerberg stated that both political parties are pushing tech companies to make changes, but in opposite directions. Democrats, he said, say Facebook does not remove enough content while Republicans say the company removes too much.
Bloggers likely have run afoul of Facebook’s policing algorithms, including this one. A recent attempt to boost a post with a paid ad was answered with, “your ad won’t run.” The reason, said Facebook, was violations of policies against “ads about social issues, elections or politics.”
The post was about journalism ethics. Journalism by its very nature is about social issues. That’s like blaming a dog for being a dog, or a cat for being a cat. It’s the nature of the beast.
But puzzled or frustrated users probably are the least of Facebook’s worries. Governmental regulators have far more clout, and U.S. officials are not the only ones focusing on Facebook or Meta practices. Ireland’s Data Protection Commission in March fined Meta $18.9 million for 12 data breaches, saying the company violated several articles of the European Union’s General Data Protection Regulation to protect EU users’ data.
This has the earmarks of a gathering storm, one that might change the tech companies in unexpected ways.
Recalling Waste Management, Inc.
Although the comparisons are not exact, some of what Facebook is doing seems reminiscent of Waste Management, Inc., the giant waste disposal company once based in the Chicago area.
The company’s fortunes seemed to change after it, too, switched its name in 1993 to WMX Technologies, Inc., WMX being its stock ticker symbol.
The new name “really reflects more for our shareholders that they own WMX Technologies, which is a full-service company,” explained Dean Buntrock, chairman and chief executive officer. “I think we are really raising our profile by what we are doing.”
Waste Management was founded in 1968 as a regional waste hauler. Based in Oak Brook, Illinois, it grew into a giant international environmental-services firm with nine subsidiaries, and the nation’s biggest waste hauler. Buntrock said he named the company in 1968 himself. It became the world’s first global environmental services company.
I covered this transition as a reporter for the Chicago Tribune.
The reason Buntrock gave for the name change seems similar to the one given by Zuckerberg, that the company was changing and growing into activities unforeseen by its founders. Zuckerberg changed the stock ticker symbols.
Experts in crafting corporate names said the change to WMX Technologies was a terrible idea, because “Waste Management” perfectly described the company and its mission in a few words. It was instantly recognizable worldwide.
What’s in a corporate name?
“Everything,” said Naseem Javed, president of ABC Namebank, a global naming and branding consulting firm with offices in New York and Canada. “Heart, soul, body. Names are like people. Some are successful and some are not. They have to be cultivated. If you want a legendary name, it must pass the acid test. It must be powerful, unique, user-friendly. But most important, it must belong to you.”
Javed frowned on corporate initials, considering them passé because “initials belong to everybody.”
A poor name, said the expert, “is the fastest way to hit oblivion.”
And WMX Technologies did hit oblivion, although you couldn’t pin it all on the name change.
On March 12, 1998, WMX announced a merger with Houston-based USA Waste Services, Inc., a merger that looked like a minnow swallowing a whale. WMX had 58,800 employees worldwide at the time, and generated $9.2 billion in revenues the previous year. USA Waste, the third-ranked company in the waste industry after Browning Ferris Industries, employed 17,700 and had $2.6 billion in revenues in 1997. Combined, they became the world’s largest garbage company, controlling 20% of the U.S. market.
The New York Times described it as “an unusual merger” that valued WMX at more than $13 billion, leaving its shareholder owning a majority of stock in the troubled market leader, but with USA Waste’s top management in charge. WMX lost control of its own company, once a Wall Street darling.
Deposed, WMX CEO Buntrock said in a statement: “This merger is a powerful combination and should enable shareholders, customers and employees of both companies to benefit.”
Peter Huizenga, a long-time Waste Management director whose family built the garbage-hauling giant, was less laudatory.
“It’s sad to see the end of a company as we had built it. It’s a shame that the wonderful company we built was not able to be sustained. What happened was the leadership that we were able to put together in the early days drifted away and new leadership was not put in place with the same quality….to take it to the next plateau.”
Leading up to the merger, WMX went through a period of turmoil in the board room, management purges and resignations and angry shareholders.
A colorful, outspoken man, Huizenga was a lawyer and helped to take Waste Management public in 1972 and served as a director for 30 years. He described himself as the “go-to guy.” Growing up in the Chicago area in a family of garbage haulers, he worked as an adolescent on a garbage truck daily from 2 a.m. to noon. He left WMX in 1990, but remained on the company’s board of directors until 1997.
“I would say Waste Management failed leadership,” said Huizenga. “The leadership failed Waste Management.” He died in 2018.
The extent of those failures soon became evident. Later in the same month WMX announced the merger with USA Waste Services, it said that the Securities and Exchange Commission was investigating the company for dubious accounting practices and internal controls. A month earlier, WMX said changing its accounting systems resulted in a $1.18 billion loss for 1997. The company also restated earnings back to 1992, erasing another$1.7 billion in profits.
This was more than a change in accounting practices.
On March 26, 2002, the SEC filed a complaint in federal district court against Buntrock and five other top company executives with “a massive financial fraud motivated by greed and a desire to preserve professional and social status.”
Buntrock, the leader of the scheme, made false and misleading statements about the company’s financial performance, allowing them to unload company stock on unsuspecting investors, who lost more than $6 billion when the company’s bogus accounting was later revealed and the stock price dropped by more than 33 percent. When the company’s new management announced what was then the largest restatement in history, the company admitted that its profits had been overstated by $1.7 billion. The WMX executives falsified company results between 1992 and 1997.
A simple scheme
“Defendants’ scheme was simple,” said the SEC. “They improperly eliminated or deferred current period expenses in order to inflate earnings.” The company’s highest ranking officers also collected bonuses on what appeared to be outstanding company performance.
“For years, these defendants cooked the books, enriched themselves, preserved their jobs and duped unsuspecting shareholders,” said an SEC lawyer. “It is one of the most egregious accounting frauds we have seen.”
The merged waste disposal company agreed to pay $26.8 million to settle the SEC suit. That included $17.1 million on behalf of founder and former chairman Dean Buntrock, who paid another $2.3 million out of his own pocket. SEC accused him of leading the accounting hoax.
Arthur Andersen, the auditor for the two merged companies, paid $7 million to settle with SEC over allegations that it helped cook the books.
The scheme came to light after the new corporate CEO ordered a review of financial records.
And what do you suppose was the name of the newly merged trash hauling company? They called it Waste Management, resurrecting the perfect name that had been jettisoned by Buntrock, the discredited CEO. A good name just won’t die.
The Ethics AdviceLine for Journalists was founded in 2001 by the Chicago Headline Club (Chicago professional chapter of the Society of Professional Journalists) and Loyola University Chicago Center for Ethics and Social Justice. It partnered with the Medill School of Journalism at Northwestern University in 2013. It is a free service.
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