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UPDATE 4-Facebook overhauls messaging as it pivots to privacy

Katie Paul

(Adds details on Instagram)

SAN JOSE, Calif., April 30 (Reuters) - Facebook Inc debuted an overhaul of its core social network on Tuesday, taking its first concrete steps to refashion itself into a private messaging and e-commerce company as it tries to move past a stream of scandals while tapping new revenue sources.

Chief Executive Mark Zuckerberg unveiled a fresh design for the world's biggest social network that de-emphasized its News Feed and showcased its messaging app, online marketplace and video-on-demand site.

The company also rolled out features aimed at encouraging users to interact with their close social circle as well as with businesses, such as a "Secret Crush" option for Facebook Dating and a tool for appointment booking.

Zuckerberg in March promised changes to the advertising-driven social media company as it was under regulatory scrutiny over propaganda on its platform and users' data privacy. Facebook's News Feed continues to draw ad dollars but user growth in its most lucrative markets has slowed.

"We believe that there is a community for everyone. So weve been working on a major evolution to make communities as central as friends," said Zuckerberg on Tuesday, speaking at Facebook's annual F8 conference, where the company gives developers a peek at new product releases.

Zuckerberg identified private messaging, short-lasting stories and small groups as the fastest-growing areas of online communication. In the last three years, the number of people using Facebook's WhatsApp has almost doubled.

The social media company is now working on "LightSpeed" in order to make its Messenger app smaller in size and faster.

Facebook will also introduce Messenger for Mac and Windows and launch a feature called "Product Catalogue" for WhatsApp Business. The desktop version of Messenger will be available this fall.

Later this week, Facebook will run a test in Canada for a major change to its Instagram app that would remove the number of likes on photos as well as video views from users' feeds, permalink pages and profiles.

Facebook had delayed rolling out certain products at last year's F8 event, which came soon after revelations it inappropriately shared information belonging to 87 million users with now-defunct British political consulting firm Cambridge Analytica.

"I know that we dont exactly have the strongest reputation on privacy right now, to put it lightly," Zuckerberg said on Tuesday.

Other Facebook executives introduced changes within the Messenger and Instagram apps aimed at helping businesses connect with customers, including appointment booking and enhanced shopping features as well as a tool to lure customers into direct conversations with companies via ads.

The online ad market is largely dominated by Facebook and Alphabet Inc's Google. But the field is more diverse for messaging, e-commerce and payments, with big players like Amazon.com Inc, Microsoft Corp and eBay Inc as well as fast-growing Silicon Valley unicorns like workplace messaging app Slack and video conferencing service Zoom Video Communications Inc.

"Weve shown time and again as a company that we have what it takes to evolve," Zuckerberg said.

Facebook shares were trading down 0.3 percent on Tuesday.

MAKING MONEY

Facebook pulled in nearly $56 billion in revenue last year, almost of all which came from showing ads to the 2.7 billion people who access its family of apps each month.

But Facebook is no longer adding many new users in the United States and Europe, its most lucrative markets, and it must find additional sources of revenue if it is to sustain growth.

The product releases at F8 indicated that its answer involves efforts to keep users on its apps for longer, coupled with e-commerce tools Facebook is hoping businesses will pay to use.

Features that drive the most user engagement, like Stories and videos, are being decked out with new tools and given increased prominence across the platforms.

One new feature will allow users to watch videos together in Messenger, while also viewing each other's reactions in simultaneous texts and video chats.

Facebook Dating will be expanded into 14 new markets, including places in Asia like the Philippines where Facebook has high user growth. The "Secret Crush" feature will allows users to explore potential romantic relationships within their friend circle.

The company is also courting businesses, giving them ways to chat with customers and conduct transactions, similar to how consumers in China are already shopping on services like WeChat.

Instagram is expanding a sales system introduced last month, allowing public figures, known as influencers, to tag products in their posts so fans can buy them right away. Sellers on Marketplace will likewise receive payments and arrange shipping directly within Facebook.

The company also said that starting on Tuesday, users in the United States can raise money for nonprofits directly through Instagram stories. (Reporting by Akanksha Rana in Bengaluru; Editing by Meredith Mazzilli)