What the Metaverse is meant to be, what it needs to happen, why many think it’s the most important tech development today, and why others are afraid it could be the worst thing to happen to humanity.
Last year, a word suddenly burst onto the global scene, taking the planet by surprise: ‘Metaverse.’ By announcing the rebranding of Facebook to Meta and the company’s enhanced focus on this next stage of the Internet (massive investments included), Mark Zuckerberg ignited a firestorm. The images of the boyish CEO – arguably the most powerful man on Earth – having an awkward exchange with his black-clad avatar may be burnt in our retinas forever but the fact remains that, overnight, Zuck turned something that the general public viewed as a vague sci-fi idea into the talk of the town.
The Metaverse has long been in the making but tech-heads are now more decided than ever to make it happen, even if they don’t know exactly what it will look like, what it will do, who will be in there, when it will become a reality, and, crucially, who will own it. A new focus on an old concept. People who have been enjoying parallel lives in video games like Second Life or World of Warcraft since the early 2000s may think that the Metaverse, a concept – and term – first conceptualized by sci-fi author Neal Stephenson in his 1992 book “Snow Crash,” is nothing new. In these games, they can design their own appearance, interact with other people in a variety of ways (from fighting to marrying), use digital currencies to make transactions, and even work (kinda). For example, Roblox, founded in 2004, now has globally 47 million daily active users and 9.5 million developers who create “experiences” (aka user-created worlds and games) for which they get paid in Robux, Roblox’s in-game currency and its largest source of operating cash – in Q4 2021, 54% of its $509 million in revenue came from Robux sales on app stores. Besides, some of these games are already accessible in virtual reality (VR) for more complete immersion. And some brands are already exploring ways to enter such platforms, if not create their own. For example, the online retail marketplace Highstreet has its own VR, e-commerce-based metaverse, Highstreet World, where players can not only kill monsters but also purchase phygital products from real brands via merchants everywhere in the game, using cryptocurrencies. This is why, for now, we probably should be talking about metaverses rather than the Metaverse.
However, the likes of Zuckerberg have in mind something far more ambitious: an online, centralized, all-encompassing, persistent, virtual reality world inhabited by businesses and consumers alike, without capacity or time limitations, and where many aspects of real life, from socialization to commerce and entertainment, will be replicated. Such bridging of countless smaller digital worlds and experiences will require a massive technological leap to allow users to move seamlessly between them, carrying their virtual identity, social connections, and possessions as they go. In particular, it will involve standardization and cooperation among tech giants – things that they are notoriously not good at.
WORK IN PROGRESS
Venture capitalist and tech thought-leader Matthew Ball identified eight core categories that will ultimately need to come together for the Metaverse to become fully operational (with crypto or blockchain technologies spanning and/or driving several categories):
1. Hardware: The sale and support of physical technologies and devices used to access, interact with, or develop the Metaverse, including consumer-facing hardware (such as VR headsets, mobile phones, and haptic gloves) and enterprise hardware (such as industrial cameras, projection and tracking systems, and scanning sensors).
2. Networking: The provisioning of persistent, real-time connections, high bandwidth, and decentralized data transmission by backbone providers, networks, exchange centers, and services that route amongst them, as well as those managing ‘last mile’ data to consumers.
3. Compute: The enablement and supply of computing power supporting such diverse and demanding functions as physics calculation, rendering, data reconciliation, and synchronization, artificial intelligence, projection, motion capture, and translation.
4. Virtual platforms: The development and operation of immersive digital and often three-dimensional simulations, environments, and worlds wherein users and businesses can explore, create, socialize, participate in a wide variety of experiences, and engage in economic activity. These businesses differ from traditional online experiences and multiplayer videogames by the existence of a large ecosystem of developers and content creators which generate the majority of content on and/or collect the majority of revenues built on top of the underlying platform.
5. Interchange tools and standards: The tools, protocols, formats, services, and engines that serve as actual or de facto standards for interoperability and enable the creation, operation, and ongoing improvements to the Metaverse.
6. Payments: The support of digital payment processes, platforms, and operations, from fiat on-ramps (a form of digital currency exchange) to pure-play digital currencies and financial services, including cryptocurrencies.
7. Content, services, and assets: The design/creation, sale, resale, storage, secure protection, and financial management of digital assets, such as virtual goods and currencies, as connected to user data and identity. This contains all business and services “built on top of” and/or which “service” the Metaverse, and which are not vertically integrated into a virtual platform by the platform owner, including content which is built specifically for the Metaverse, independent of virtual platforms.
8. User behaviors: Observable changes in consumer and business behaviors (including spend and investment, time and attention, decision-making, and capability) which are either directly associated with the Metaverse or otherwise enable it or reflect its principles and philosophy. These behaviors almost always seem like ‘trends’ (or, more pejoratively, ‘fads’) when they initially appear, but later show enduring global social significance.
Real investment in virtual worlds.
Indeed, many tech platforms and companies have been investing vast amounts of money in metaverse-related products, but only in a siloed manner and without much to show for it thus far.
Google has been working on metaverse tech for years and is one of the few organizations that have launched a variety of devices for both AR and VR (although none really took off). Last May, Microsoft declared it is “uniquely positioned” with a stack of artificial intelligence and mixed reality tools to help companies start developing metaverse apps immediately; CEO Satya Nadella has been very vocal about what he calls the “enterprise metaverse,” a system of virtual worlds built for work. Apple has its own devices in the works. Snapchat has been moving in the metaverse direction for years, with custom avatars and filters that overlay the world with digital content. As for Meta, the social media giant had bought VR device manufacturer Oculus in 2014 with a metaverse vision in mind and had announced Facebook Horizon (now Horizon Worlds) in 2019, a virtual reality sandbox universe. Last October, it unveiled its plans to spend at least $10 billion this year on Facebook Reality Labs, its metaverse division tasked with creating AR and VR hardware, software, and content – it already makes the Oculus Quest headset and Portal lineup of calling devices. Meanwhile, China is doing its own thing (see sidebox page 28). The pace is picking up, driven in part by the ways in which the COVID-19 lockdowns have accelerated the digitalization of society, be it the forced adoption of remote work, the e-commerce boom, the surge in gaming, or the cryptocurrency frenzy. The COVID crisis demonstrated how quickly people were able to adapt and adjust to virtual connections and products, and the corporate world noticed. So, it’s no wonder that other players are trying to jump the bandwagon. In fact, the Metaverse is so central to the way tech sees our near future that you can already invest in it. Last December, for example, a group of influential tech players launched on the New York Stock Exchange the Exchange Traded Fund (ETF), a basket of securities that trade like stocks with the explicit purpose of investing in companies best positioned to build out the Metaverse.
Still, the creation of massive communal cyberspace open to an infinite number of users is a huge undertaking involving transformations on many fronts beyond technology: societal, regulatory, and even political. According to venture capitalist and tech thought-leader Matthew Ball, to come to fruition, the Metaverse “requires extraordinary technical advancements (we are far from being able to produce shared, persistent simulations with millions of users synchronized in real-time), and perhaps regulatory involvement too. In addition, it will require overhauls in business policies and changes to consumer behavior.”
The Matrix made real?
People may have lived with Zoom for a while, but would they embrace a completely virtual parallel life? Especially if it is ruled by a big corporation? And what if they do?
In theory, for the Metaverse to function as a full universe, no single company can own it, just like no one owns the Internet. It may not be what American computer scientist Jaron Lanier, often called the godfather of virtual reality, imagined – “A hundred million micro-entrepreneurs doing their little thing here and there” – but it shouldn’t be a centralized virtual kingdom ruled by one Silicon Valley overlord either.
However, it seems unavoidable that Silicon Valley (and Chinese) giants will try to monopolize at least some of its corners, the same way they dominate online content today. After all, 15 years of mobile computing boom have turned them into giants worth trillions of dollars, and controlling the Metaverse could be the next centerpiece of their business – a financial opportunity so huge that crypto investment company Grayscale called it “a trillion-dollar bet.” According to research firm Emergen, the global Metaverse market size, worth $47.69 billion in 2020, is expected to grow by a CAGR of 43.3% by 2028. So, how could tech companies not salivate at this prospect and try to own this new space?
Sci-fi authors have long imagined what the worst consequences of a centralized Metaverse could be. Amongst many others, Ernest Cline’s 2011 novel “Ready Player One” was a stark warning against a dystopian future of technology gone wrong, where the masses would abandon reality for an elaborate VR universe that a power-hungry corporation would seek to rule.
True, Zuckerberg was careful to acknowledge, in his initial announcement, that “the Metaverse will not be created by one company.” But a number of real-world tech thinkers still criticized Meta’s very public move (right in the midst of a whistleblower crisis, notably), charging that the company changed its name to legally own the trademark as soon as possible and stake its claim on the Metaverse. Others highlighted the fact that Meta doesn’t have a good track record with user privacy and power-sharing. After all, the company that will create a universal pair of AR glasses will not only own the platform under which everyone will have to buy these assets but also the potentially huge amounts of data, including biometrics, that will be collected via these devices – a glorified walled garden, in other words.
John Hanke, the founder and CEO of Niantic Labs, which launched Pokémon Go in 2016 and reaped more than a billion dollars in revenue in the process, fears Meta’s vision of the Metaverse so much that last August, he penned a manifesto titled “The Metaverse Is a Dystopian Nightmare. Let’s Build a Better Reality.” Hanke doesn’t generally oppose the Metaverse; he just proposes one that is not based on VR. Instead, he’s betting – surprise, surprise – on augmented reality. He wrote, “We believe we can use technology to lean into the ‘reality’ of augmented reality – encouraging everyone, ourselves included, to stand up, walk outside, and connect with people and the world around us. This is what we humans are born to do, the result of two million years of human evolution, and as a result, those are the things that make us the happiest. Technology should be used to make these core human experiences better – not to replace them.” This is why Lightship, Niantic’s software platform for augmented reality apps, is hard at work mapping the entire physical world to better integrate it with digital objects. “Think of it as kind of a GPS but without the satellites and with a higher degree of accuracy,” wrote Hanke who calls this the “real world Metaverse.”
Yet, even Louis Rosenberg – the inventor of the world’s first functional AR system – is not convinced, publicly stating his grave concerns: “Personally, I find [the Metaverse] terrifying. That is because augmented reality will fundamentally change all aspects of society and not necessarily in a good way.” Rosenberg is afraid that these technologies will exacerbate the existing problems of the Internet to a dangerously high level, from toxicity and harassment to distortion of reality.
Regardless, Meta’s push in the Metaverse game has spurred a frenetic activity that cannot be denied and probably cannot be stopped. The full vision of the Metaverse may be decades away but, as Ball wrote in one of his numerous essays about the issue, at the end of the day, “Today’s generation of children express themselves, often learn, and constantly socialize through virtual worlds they can touch, change and collaborate in. That’s not going to stop. Rather, the capabilities of these virtual worlds will expand, their ease of use will improve, and their significance will grow. What’s more, the ‘iPad native’ generation will continue to mature. Most are still consumers, a few are creators, and almost none are business leaders. They will be, and their frames of reference will lead to transformative change.” We’ve been warned.
IGNORE THE CHINESE BEHEMOTH AT YOUR OWN PERIL
Interestingly, China seems quite ahead in the Metaverse race, despite the current crackdown sweeping across its Internet industry, including the prohibition of crypto activity within its borders. Its tech conglomerate Tencent’s core asset today is WeChat, on which Chinese consumers casually do everything: message, read the news, shop digitally, interact with businesses, communicate for work, pay for physical purchases, etc. WeChat’s Mini Programs also allow companies to build richer experiences within the ecosystem – something that Snap (in which Tencent has a minority share) has been trying to emulate. As a result, WeChat is already being described as a “2D metaverse.” Tencent also rolled its NFT trading platform, called Huanhe, in August and announced $70 billion in investment in infrastructure including cloud, AI, cybersecurity, blockchain, 5G, and quantum computing over the next five years, on top of major investment in smart retail. And Tencent discreetly contributes to the development of the Metaverse globally via its minority investments in tech companies such as Epic Games, which developed the hugely popular game Fortnite and announced last April it had completed a $1 billion funding round to support its long-term vision for the Metaverse. Meanwhile, other Chinese giants like Alibaba, Baidu, and NetEase have rushed to apply for dozens of trademarks related to the Metaverse. In that context, it’s easy to understand why Chinese gaming giant NetEase’s founder and CEO, William Ding Lei, said during the company’s third-quarter earnings call in November: “When the Metaverse eventually arrives […] We’ll probably be the fastest runners around.”
This article was published in Communicate's latest issue.