Why Facebook is Becoming a Metaverse Company and Why it May Lose to These 3 Companies

Introduction?

The competition for a piece of the new pie in the decentralized tech industry has started on full scale as giants like Meta erstwhile Facebook, Microsoft, Apple are rebuilding their inventories.?

In this article, I will specifically focus on Meta and where it stands in this race of web3. As one of the greatest winners of the web2 era, founder Mark Zuckerberg will definitely want to keep his winning streak going in the web3 era as well. Looking back in the mid-2000s, Facebook got more than a few things right that helped create the multi-billion dollar company that it is today.

Creating a platform that merges the real world with the digital world at a time when connectivity was still a work-in-progress made Facebook the king of social media. Zuck’s farsighted visions dethroned established platforms like myspace, that prioritized marketing, and customer acquisition more than innovation and user experience.

Facebook also opted for a stealth mode in the beginning days in terms of revenue generation and slowly yet steadily deployed its advertising model for businesses. These and countless other right decisions at the right time made the giant that it is today. But just like most good things don’t last long, Facebook wasn’t any exception to this case.

Reports after report of illegal user data tracking, user information exploitation, apathetic stunts at mitigating socio-political unrests across the globe made Facebook the target of several controversies. And in the midst of a dire situation, when whistleblowers from inside the company are testifying to the lawmakers, Facebook announces Meta. A social media platform turns into a metaverse company.?

Now the question arises, what is a metaverse company and where does Meta stand in this industry?

Facebook’s entry and possible aftermath

On October 28th, Meta released a video of its Founder and CEO Mark Zuckerberg explaining what Meta is and how it fits into the narrative of a decentralized VR environment. To quote Zuck, “our devices are still [in 2021] designed around apps, not people. The experiences we’re allowed to build and use are more tightly controlled than ever. And high taxes on creative new ideas are stifling. This is not the way that we are meant to use technology. The metaverse gives us an opportunity to change that, if we build it well, but it’s going to take all of us; creators, developers, companies of all sizes.”

In my experience, the tech world has gone under an astronomical amount of change in the past decade, but sadly the people who use the tech have little voice in the matter. Whether it’s a company that builds the most premium tech and yet isolates itself, like Apple or a cluster of social media platforms that only function because people use them and yet care least about taking the necessary measures, like Facebook née Meta.

So yeah, Zuck is right. And that’s where the Metaverse or web3 as a whole comes into action. The fundamental difference between web2 and web3 is that web3 supports user ownership. There is no single point of failure in web3 because it’s inherently decentralized and community-based, decisions are made through consensus on an open chain.?

As the popular saying goes,

• Web1 was Read-only.
• Web2 was Read and Write.
• Web3 is Read, Write, and Own.?

So where does Meta sit in all these? To answer this question, I’ll present a few arguments for what I think a metaverse should look and feel like and how much Meta is aligned with those criteria.

The idea of the Metaverse was first introduced in the 1992 Neal Stephensen science fiction novel Snow Crash.

Like any place in Reality, the Street is subject to development. Developers can build their own small streets feeding off of the main one. They can build buildings, parks, signs, as well as things that do not exist in Reality, such as vast hovering overhead light shows, special neighborhoods where the rules of three-dimensional spacetime are ignored, and free-combat zones where people can go to hunt and kill each other.

The only difference is that since the Street does not really exist — it’s just a computer-graphics protocol written down on a piece of paper somewhere — none of these things is being physically built. They are, rather, pieces of software, made available to the public over the worldwide fiber-optics network. When Hiro goes into the Metaverse and looks down the Street and sees buildings and electric signs stretching off into the darkness, disappearing over the curve of the globe, he is actually staring at the graphic representations — the user interfaces — of a myriad different pieces of software that have been engineered by major corporations.

Since then the idea has been tried and tested in many ways and forms for the next two and a half decades by many companies. Even though the news of a metaverse is just hitting the mainstream tech news cycle, predecessors of the Metaverse have already been working to create a superficial environment in the virtual world. The roadmap is there and companies have already managed to create their products, onboard their users and customers, and most importantly had the first movers’ advantage to try and test strategies to pick the best one.?

Known as the godfather of Metaverse, Epic CEO Tim Sweeny has been at it since the inception of Xbox twenty years ago. And today Epic is valued at over $25 billion with Fortnite at its forefront. Fortnite alone has over 350 million active players across the world and a perfect environment for making the game accessible to VR and subsequently to the Metaverse.?

Tim is one of the vocal CEOs in the tech world who wants a more open space in the gaming scene. It challenged Apple in a lawsuit to lift the 30% App Store fee to leave some breathing space for the developers.?

When asked about an open Metaverse, he said, “I think we have to start from principles, right? Most companies focus just on their interests. And don’t think about the full reciprocity of how do I want this to work as a consumer. I think we have to look at it from all perspectives and play out basic foundational principles as opposed to just doing what we want. The popular thing now for tech companies is to just do whatever you think you can get away with. And that doesn’t really cut it.”

You have to understand, Meta isn’t inherently a gaming company, nor did it serve the creator economy in any way. It predominantly was and is an advertising agency extracting profit from its users. So even though it owns Oculus, a VR headset company, or stepping into the metaverse is the most logical decision for them since the next wave of socialization will take place in the metaverse, becoming a metaverse company isn’t actually in Facebook’s DNA. It seems like they are making the most logical decision but it’s making them go against their own instinct.

You have to accept it, the mindset of a tribe doesn’t suddenly change just because Zuck will spend $10 billion every year and hire 10,000 new employees. That means they’re starting way behind where they should. Whereas companies like Epic are at the core of this change. When the time comes developers will follow their footprint, users will look for their logo in the product. And that’s where Meta gets behind or even loses.

Even if we agree to give Meta the benefit of doubt for their late move, when the fundamental ideas of Metaverse come to question, Zuckerberg doesn’t have any practical answers for you.?

Let’s take decentralization and openness for example. A metaverse requires to be an open platform, highly transparent, and interoperable. We can all agree that transparency isn’t Zuck’s strongest suit. And the web2 world has no clue what open-source feels like.?

It seems that the concept of the metaverse and the image of Facebook are contradictory. On one hand, we have the epitome of a decentralized world run by interoperable platforms and protocols building on each other like lego pieces to create a gigantic and fully functional virtual world. On the other hand, we have Facebook, a notorious social media platform that has been accused of being the platform caught up in the middle of multiple political and religious unrests across the globe. Not that they are responsible for these events, but with great powers comes great responsibilities, and they have put very little effort to fulfill that responsibility.

Although I said he doesn’t have any practical answers, he does have the right things to say at every question. For example, Ben Thompson asked Zuck in an interview about his message on interoperability and openness in the metaverse. Zuck answered,

We don’t think about this as if different companies are going to build different metaverses. We think about it in terminology like the Mobile Internet. You wouldn’t say that Facebook or Google are building their own Internet and I don’t think in the future it will make sense to say that we are building our own metaverse either. I think we’re each building different infrastructure and components that go towards hopefully helping to build this out overall and I think that those pieces will need to work together in some ways.?

True. But the question remains, how radical a change is Meta willing to go through to reshape its core mechanism? It sure as hell isn’t an overnight game.?

Facebook as a single platform has nearly 3 billion users, WhatsApp and Instagram bring another 3 billion on the table. To convert this massive user base into Meta-users is going to be too large a task to handle in too little time.

And as per capturing users from the existing VR/AR world, it seems that they are already accustomed to their own choice of environment they’re currently using. To take a piece of this audience means delivering the end result to the end-user faster than the other giant competitors. And the other giants aren’t too far.?

That’s why I think, the odds of Meta succeeding the web3 race, at least as the crown prince, are pretty much against them. And there are other companies ahead of Meta at the race in terms of the existing user base, software, and hardware.

Better and More Competitive Options

As I mentioned above, the criteria for a proper Metaverse company can be divided into two sections. One is about the core concept and fundamentals, whereas the other is logistical, i.e. software, hardware, user base, etc. Even if we were to settle for a lesser version of the metaverse in terms of its philosophy, the tech has to be top-notch in all sections with an established user base.?

That’s where these three companies stand a better chance at succeeding as a Metaverse company.?

Microsoft Metaverse

The Microsoft Metaverse is a sleeping giant, to say the least. Microsoft ticks all the boxes to be the perfect Metaverse company to lead from the front. The metaverse covers almost all the aspects of human life, from professional areas to entertainment, to family time. And Microsoft, as a company, has been catering to all these requirements through their products. You have the Windows OS, the most used OS in the world, accounting for 71% of the desktop/laptop OS market.

Every 7 out of 10 people using a computer are using the Windows OS. Microsoft Team is a heavyweight contender in the online office space and team management space. Mesh from Microsoft, Microsoft’s VR meeting platform is the latest upgrade to this.

The Microsoft Office tools still command a huge market share in their respective field. And when it comes to gaming, Xbox controls the console industry.?

And the cherry on top for Microsoft is Minecraft, an already established, extremely popular, world-building game ready to be integrated into the Metaverse. Even some people are already calling it the metaverse. Because surprisingly it fulfills all the criteria of a metaverse.?

First of all, it’s decentralized. No one owns the game. You can create your own version of the metaverse and invite people into it. You can roam around other players’ open world or try to secure an invitation to a private world, the options are truly unlimited.

It’s open to a point where you can change the rules and introduce your own systems. Players can hack the game to a level where it seems like an entirely different part of the world. And that’s what makes Minecraft truly immersive because much like the real world, there’s no one rule that fits all.

And another aspect of Minecraft as a metaverse, which may seem counterintuitive, is the fact that it has got bugs and sometimes it glitches. In an environment where thousands of players hang out at the same time and do their things, no server or computer is strong enough to keep everything together. Glitches are bound to happen from time to time. So when Zuckerberg or anyone else talks about a seamless trans-world experience from day 1, take it with a pinch of salt.

Another fact that makes Microsoft the first company in line is the insanely interoperable environment it has already built. Microsoft products are the most interoperable systems out there with little to no outbound restrictions. Unlike Apple, a company that has isolated itself to such a degree that it has created its own world, Microsoft sees the value in providing developers value. When all the other companies are creating a platform that extracts from the user directly, Microsoft is letting the users and developers gain value first.?

Windows 11 is probably the best example of Microsoft's intention to become the platform where all the other platforms meet. And if that’s the case, then the Microsoft metaverse will lead in the race.

Also, Microsoft has got a $21 billion contract from the US military to build Hololens, a type of mixed-reality smart glasses to provide training conditions in VR. So yeah, it’s safe to say Microsoft is really really ahead of the game.

Roblox?

Similar to Minecraft, Roblox has also created a platform for gamers. Many people confuse Roblox as a game, but it’s actually a platform where one of the many things you can do is play games.

Recently, in their IPO launch, Roblox ruminated on their journey to success.?

An average of 36.2 million people from around the world come to Roblox every day to connect with friends. Together they play, learn, communicate, explore, and expand their friendships, all in 3D digital worlds that are entirely user-generated, built by our community of nearly 7 million active developers. We call this emerging category “human co-experience,” which we consider to be the new form of social interaction we envisioned back in 2004. Our platform is powered by user-generated content and draws inspiration from gaming, entertainment, social media, and even toys.

Nearly 50% of the 9-12 years old in the US either play Minecraft or Roblox on a daily basis. And just like Minecraft, it’s also a decentralized user-created world, where users say the last words.

Roblox also has a robust in-game economy based on the native currency Robux. Players can buy this from the stores to spend on avatar dresses, in-game accessories, and upgrade those accessories. Developers and creators can also earn Robux based on their contribution and cash out in fiat currencies providing a stable income opportunity, another aspect of the metaverse successfully accomplished.?

Tencent Virtual World

When it comes to real-world 3D gaming experience, Tencent comes on top of the list. The company owns games like Playerunknown’s Battle Ground (PUBG), Crossfire, Dungeon Fighters, etc. These games accumulate to a total of 3.5 billion player accounts across the world.

The company also owns more than 40% of Epic Games, subsequently giving them access to Fortnite and other popular Epic released games as well. So it’s undeniable that when it comes to the Metaverse, Tencent really has a high chance of getting at the helm of it.?

Another advantage that Minecraft and Roblox lack is Tencent’s market share over Asia and the Middle East, a huge potential market for the metaverse. The company also owns We Chat, a digital payment and wallet service that can be integrated with ‘their’ Metaverse as an in-platform payment system.?

Tencent is yet to make their goals clear about the metaverse, however, they have confirmed their intentions following Meta’s announcement.?

To understand the potential reach of Tencent’s metaverse, you can read this section from a Bloomberg article,

You design your 3D avatar on the QQ chat app and use it in live-stream calls with colleagues on Tencent Meeting. After work, your avatar pops into a game of PUBG Mobile and wins a ticket to a virtual concert on Kugou Music. Seeing conflicting schedules, you then sell the ticket on WeChat in exchange for a new haircut for your avatar the next morning. A scenario like this involves video streaming, gaming, social networking, e-commerce and money transactions—all made possible through Tencent properties.

Conclusion

The world of Web3 began with the creation of the Bitcoin blockchain in the late 2000s and slowly evolved into this behemoth of a tech revolution that is changing and challenging our idea of the known world.?

Companies like Meta, Microsoft, Apple, Amazon, etc, will definitely try to adapt to this environment and keep expanding their control over certain aspects of our life. But the fact is not all of them will win, some will fall behind, and Meta could very well be the casualty in this case. The advertising giant built on top of a successful social media platform might not have what it takes to serve the Metaverse.?

And as I laid out the structure of an ideal metaversal experience, components like decentralization, openness, transparency, interoperability, creator economy, customizability, seem to be missing from Meta’s catalog.?

What do you think about the Metaverse and Meta’s possibility to win the race? Let me know in the comments, I’m eager to know about the different perspectives on this issue. And if you have made it this far, thanks for hanging out inside my brain!