By Arun Kumar Shrivastav
Co-founder of Ethereum, the world’s second-largest blockchain network by market cap, Vitalik Buterin last week kicked up a storm by claiming that corporate efforts to create metaverse will not be successful. He specifically mentioned Meta Inc. (formerly Facebook), which suffered $10 billion of losses in 2021 and close to $6 billion in the first two quarters of 2022 on its metaverse project, saying its attempts in metaverse will “misfire”. Buterin said while metaverse “is going to happen”, corporate attempts to create it will not lead anywhere.
Big corporations will fail because it’s still early days for metaverse and no one knows what people want, he explained, hinting at the role of smaller companies in bringing innovative technologies into this space.
“My critique is deeper than “Metaverse Wikipedia will beat Metaverse Encyclopedia Britannica”. It’s that we don’t really know the definition of “the metaverse” yet, it’s far too early to know what people actually want. So anything Facebook creates now will misfire,” Buterin said in a tweet last Sunday.
Buterin expressed these thoughts while replying to two Twitter users who pointed out that while metaverse makes sense, it won’t happen through venture capital funds while and ironically barriers to entry such as research and hardware favoring large incumbents, giving a reference to Meta’s AR headsets Quest 2.
It seems these tweets touched the raw nerve of the fledgling metaverse industry where big players like Meta are relying solely on acquiring technologies instead of pioneering them or facing the competition.
In one of the harshest critiques, the chairman and co-founder of Animoca Brands said in December 2021, “What Facebook is doing with meta…is a fake metaverse, unless they actually have a real description as to how we can truly own it.” Animoca Brands is a Hong Kong-headquartered investor and builder in metaverse space.
“Until then, it’s just Disneyland. It’s a beautiful place to be, but we probably don’t want to really live there. It’s not the kind of place that we can actually build a business,” he added.
Buterin’s critique of corporates trying to decide the roadmap for metaverse failing finds an echo in Meta reporting a $2.81-billion second-quarter loss in its metaverse, augmented and virtual reality division – Reality Labs. The first quarter loss of $2.96 billion was even higher and the company believes that its third-quarter loss for the division could be higher. Meta has posted $28.4 billion in second-quarter revenue.
“The “metaverse” is going to happen but I don’t think any of the existing corporate attempts to intentionally create the metaverse are going anywhere,” Buterin added.
Besides Meta Inc., top technology companies such as Microsoft, Shopify, Roblox, Qualcomm, and Nvidia are also betting big on metaverse. However, these companies still don’t seem to have developed any successful metaverse products that users find truly useful.
Meta Inc came into being as a result of the rebranding of Facebook in October last year. It was part of the broader strategy for the social media giant to shift from web2 to web3, where users can have digital ownership. While innovative crypto projects such as The Sandbox, Decentralad, and Qualcomm have made some significant upward moves, industry representatives believe that Meta despite doubling down on its metaverse project has so far failed to leave its mark.
In its bid to dominate the metaverse business, Meta is being accused of anti-competitive buyouts and unfair practices. Critics find Meta using double standards when it says that it wants developers to build their businesses on metaverse.
A common complaint against Meta these days is about its AR/VR hardware. Some companies in this space complain that Meta offers heavy discounts on its VR headsets, making it impossible for smaller companies to succeed. Meta’s Quest 2 headsets are priced at $299, way below any comparable device in the market. “No one can put a product on the market at the price they’re at today, with the same kind of capabilities,” Stan Larroque, founder of the Paris-based AR/VR startup Lynx, was quoted by Recode as saying. From poaching teams of engineers to buying out companies, Meta is being accused of using its money to end competition. “I’ve spoken to a lot of developers who feel they don’t even have a chance to enter the market because Facebook is buying up the technology that they’re trying to develop,” Llamas, from VoxPop, said.
Meta’s policy of buying out competitors instead of facing competition is not going well with the regulators. On July 28, the Federal Trade Commission (FTC) filed a lawsuit against Meta and its CEO Mark Zuckerberg, charging it with trying to eliminate competition in the virtual reality market. The FTC action follows Meta’s move to acquire virtual reality company “Within” and its fitness app Supernatural.
FTC’s statement suggests that Meta is trying to establish a monopoly in the metaverse or virtual reality universe by buying technologies and companies instead of facing and growing on its own. Meta had faced similar charges by FTC when it acquired Instagram and WhatsApp in 2020. (IPA Service)