Twitter's bold rebrand to “X” – What are the risks of changing an established brand?

Twitter’s recent rebrand to “X” and abandonment of the iconic bird logo caught people by surprise. Opinions were divided: was it an irrational move, or could it breathe new life into the platform’s profile in a changing market?

Elon Musk, who owns the platform, has indicated his wish to transform X into an “everything app”, as the apparent driver for the change. While the details are not yet clear, it’s known that Twitter has applied to become a payments processor and Musk has indicated that Tencent’s WeChat, a Chinese super-app encompassing messaging, gaming, photo sharing, food delivery, shopping, location sharing and banking, might serve as inspiration.

 

Rebranding: what are the risks?

Establishing the new X brand is unlikely to be straightforward, and the move highlights some of the key risks in departing from a known brand:

 

Brand value

Twitter is a household name, and “tweet” and “tweeting” are by now well established in our modern lexicon. In changing the name, Twitter will forfeit much of that recognition. Whether or not you believe that Elon Musk’s personal brand has sufficient market traction to carry the platform, the move is extraordinarily risky, with losses in brand value estimated at anywhere from $4 to $20 billion.

Conflicts and disputes

With hundreds of companies trading under marks and/or owning registrations incorporating the letter X in the US alone, including Meta and Microsoft, the likelihood of objections and intellectual property disputes seems high. Meta faced similar difficulties after it changed its company name from Facebook.

Registrability

Trade mark registration provides a more effective and enforceable means of protecting a brand than an unregistered trade mark. In countries where trade mark applications are examined on relative grounds, such as the USA, China and India, an earlier same or similar mark can be a bar to registration. Given the prevalence of “X” in branding, this could be a hurdle for Twitter to jump. In addition, a single-letter trade mark may lack the distinctiveness necessary for registration, and this may limit the classes of goods and services for which registered protection is available. That said, a mark can acquire distinctiveness through use, and be eligible for registration, if it becomes known to consumers as coming from a specific source. Typically, proving this is an onerous task, but given X’s high media profile and the fact the platform has around 450 million monthly users, it could be argued that distinctiveness has already been achieved.

 

Managing your business brand

Rebranding a household name carries a huge risk, and the company potentially now faces years of brand defence and establishment. Still, Musk has proven his critics wrong before and certainly has the finances to back the move.

For businesses considering a rebrand, whether to support an image update or shift in commercial focus, key factors to consider are:

• Consumer research – consider what your customers identify with and assess how much dependence consumers place on your brand, in order to find you. It may be that a brand refresh, e.g. updates to logos and brand styling, is more appropriate than a change of name.
• Finances – rebranding is a big investment, taking a big chunk from your marketing budget to ensure consumers recognise the new brand. Old material will need to be updated, including websites, stationery, sales materials, etc. and your brand identity will need to be rebuilt.
• Review the market – choosing a brand that is distinct from competitors operating in your market or your target markets helps to avoid disputes, improve chances of registration and maximise your investment. Trade mark clearance searches are key.
• Trade mark applications – obtaining registrations in relevant markets will protect your new brand and make it easier to enforce against copycat brands.
• Update partner contracts – if you have business partners who use your brand, any changes will need to flow through to their contracts, both to ensure the use of current branding and to prevent dilution of the image.

Rebranding shouldn’t be taken lightly and is a complex process, requiring careful planning. Seeking early advice on any proposed new brand and the business impact of any change can save considerable cost and legal disputes.

As for Musk, whilst the move seems to throw caution to the wind, his willingness to take chances has played a large part in many of his successes. With usage of Meta’s Threads app plummeting, analysts have speculated that X’s biggest threat is not its rivals, but X itself.

 

Do you need legal advice?

If you are considering re-branding your company, our commercial & technology team can assist with key legal areas that should not be overlooked, including identifying, registering and protecting your branding rights, data protection for your business, and intellectual property legal rights. Contact our team today, on [email protected].