Mark Zuckerberg wants to take the internet beyond the confines of mobile devices and create his own life-like digital world. He’s not the only one…
Here’s what you need to know this week:
- State affairs: Facebook entered the race to build a metaverse
State by state:
- Amazon denied it was preparing to accept Bitcoin for payments
- Google helped fund a report warning against AI regulation in Europe
- Microsoft and other tech states recorded booming quarterly profits
- Tencent had another acquisition stifled by regulators
- Apple announced its iPhones will store drivers’ licences and government IDs
State affairs: The race to the metaverse
First he came for your friends, with a mission to bring the world closer together. Now Mark Zuckerberg, the chief executive of Facebook, has announced an even bigger ambition: to build Facebook into a unified and interconnected digital world. And he’s not the only tech leader pouring billions into a meta-space race.
First, what did Zuckerberg mean when he told employees in June that his goal was to “transition” Facebook into a “metaverse company”? To Zuck, it’s a “successor to a mobile internet” where “instead of just viewing content – you are in it”. That means that Facebook users would feel as present in it as if they were in the real world.
If you wanted to see a friend, for instance, you could pop up as a hologram on their sofa. If you felt like working in Starbucks, you could conjure up your ideal workspace with a swipe of your virtual reality (VR) headset. (Read more of Zuck’s thoughts here in an excellent Verge interview.)
On Tuesday, Zuck appointed Vishal Shah, Instagram’s current VP of product, to run a new metaverse product group. Shah will try to connect Facebook’s disparate businesses – across social, creators, commerce and VR – into a holistic experience spanning the physical and virtual.
But the challenge of building an “embodied internet” is not just a technical one. A metaverse would raise huge and separate questions about how such a virtual space would be governed and how its contents would be moderated. It’s an audacious project for Facebook, which is already facing a regulatory storm around how it normally works.
What’s equally surprising is that Facebook is far from an outlier in this space. It seems – at least in terms of funding – that the metaverse is approaching its Big Bang moment.
- Epic Games announced in April a $1 billion round of funding to build a “long term version of the Metaverse”. Sony contributed an additional $200 million to align Epic’s vision with its own technology. Epic’s new graphics engine has to be seen to be believed.
- Nvidia’s CEO Jensen Huang told Time magazine that he’s creating a “virtual world that is a digital twin of our own”. The future of the metaverse is “ultimately about the fusion of the virtual and the physical world,” Huang said.
- Roblox, a gaming company valued at $45 billion, told investors in February: “We’re shepherds of the Metaverse”. Roblox’s open-ended virtual world is extraordinarily popular: three quarters of American children ages nine to 12 are on the platform.
Smaller players are innovating, too. German architect Fredrik Hellberg said the metaverse will “allow people to extend their bodies into architecture”. Balenciaga, the fashion house, launched its Fall 2021 collection with a 3D gaming experience designed by Epic. One analyst told us: “A lot of exciting innovations are happening. But a lot of it is marketing hype.”
Much depends on definitions. A fully-fledged virtual world, as depicted in Ready Player One or Snow Crash, is still a long way off. But what is likely to define our near future is a rapid integration of augmented reality (AR) and VR into everyday lives; and a corresponding move away from the phone – that glowing rectangle – as the primary means by which we access the virtual world.
Must read: this essay by Matthew Ball, a venture capitalist, which sets out the key characteristics of a metaverse.
Such is the volatility of Bitcoin – and the power of Amazon – that rumours of the company accepting cryptocurrency payments “by the end of the year” sent the value of the token soaring. Amazon had published a job advert for a cryptocurrency and blockchain lead, setting the hares running. An insider then apparently confirmed to a British newspaper that the company was gearing up to accept the token for payments this year. On Monday, an Amazon spokesperson issued an on-the-record denial, causing Bitcoin’s price to plunge from more than $40,00 to $37,598. But in other comments Amazon confirmed that it was interested in the crypto space, so it may be a question of when, not if.
Google: Industry influence
Europe’s proposed AI law could cost its economy $36 billion, according to a thundering headline on CNBC. The proposed Artificial Intelligence Act would impose the “world’s most restrictive regulation of AI” and cost small and mid-sized enterprises up to €400,000 in compliance costs, a Washington-based think tank found. CNBC waits until the last paragraph to reveal that the think tank – called the Center for Data Innovation – is backed by Amazon, Apple, Microsoft and NBCUniversal, parent company of CNBC. “When I worked there, I funded studies like these all the time,” William Fitzgerald, a former Googler, wrote on Twitter. “Complete fabrication.” We’d note that while industry funding doesn’t inevitably skew the results of studies, it’s certainly relevant context.
Apple: Department of Motor Vehicles
Apple may not have a specific plan to build a metaverse (Jony Ive would surely be brought back to design it), but the tech state is expanding its borders nonetheless. The company’s iPhone will soon be able to hold digital versions of house keys, hotel room keys, ID cards and, most significantly, drivers’ licences and government IDs. Arguably, carrying a cryptographically stored digital ID is more secure than a physical ID. But do you want your iPhone to be the crux of your entire identity?
Microsoft: Economic boom
Tuesday was tech earnings day as Apple, Google and Microsoft all reported quarterly results. Each of the tech states benefited from a red hot recovery market – with Google parent Alphabet enjoying its largest percentage jump in quarterly sales in more than 14 years, and Apple posting its best fiscal third quarter in its 45 year history. Microsoft reported its highest quarterly revenue ever – beating expectations. The record results were driven by profits from its Azure cloud computing platform as well as a 46 per cent growth in Linkedin sales, fuelled by the improving US job market.
Chinese regulators continue to remind private enterprise who’s in control, as they hit Tencent with an order to scrap its acquisition of music streaming player, China Music Corporation. The tech state already owns more that 80 per cent of China’s music streaming rights, and the deal would have extended this dominance, making it a clear target for anti-competition action by the State Administration of Market Regulation (SAMR). The crackdown is having a serious effect in the stock market, where Tencent has closed 7 per cent down on last week, and it raises the question of whether China is willing to sacrifice foreign investment for the sake of reining in its technology giants.
Thanks for reading,