The billionaires’ battle for the metaverse

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YesWHERE DID to hand it over to Mark Zuckerberg. When the Facebook founder announced in October that he was changing the name of the social media network’s parent company to Meta Platforms in order to help create an alternate digital reality known as the metaverse, he was ruthlessly mocked. For some, it generated a smokescreen to distract from political fury. To others, he was just the last middle-aged tech billionaire to pursue a childhood fantasy, just as Amazon’s Jeff Bezos and Tesla’s Elon Musk did with space rockets.

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And yet, his timing was impeccable. Since October, searches on Google for “metaverse” have exploded. Wall Street is stirring up the hype. According to Bernstein, a broker, the term appeared 449 times in third-quarter earnings calls, up from 100 in the second quarter. He says markets with potential annual revenues of at least $ 2 billion could be disrupted by the metaverse. Jefferies, a bank, says that although the phenomenon may occur in more than a decade, it has the potential to disrupt “almost everything in human life.”

Other tech giants like Microsoft have made plans to move into the metaverse. But it is the big companies still under the control of their founders that can become the most ardent evangelists. Most important is Mr. Zucker Berg, with a net worth close to $ 125 billion and almost total control of a company valued at $ 908 billion. Others include Jensen Huang of Nvidia, a maker of $ 722 billion graphics processors, and Pony Ma of Tencent, the $ 550 billion Chinese tech giant, whose portfolio investment in the game includes a 40% stake in Epic Games, owner of “Fortnite”, one of the most popular games in the world. Epic founder Tim Sweeney himself is a force to be reckoned with. He recently told Bloomberg that the Metaverse is a multi-trillion dollar opportunity and that companies like his are in a race to reach a billion users to set the standards for the Metaverse for the future.

It’s set to become a billionaire battle akin to the Bezos-Musk space race. Instead of rocket science, he’ll be fought with headsets, blockchains, cryptocurrencies, and mind-boggling amounts of computing power.

What these plutocrats mean precisely by the metaverse is not yet clear. Will it be a futuristic world devouring virtual reality, avatars, oceanfront mansions, and other online razzmatazz that will make the real world a boring place in comparison? Or will it just be a richer, more immersive version of what already exists today: a way to socialize, work, shop, and play online even as day-to-day life? is proceeding normally? It is even less clear whether the internet users of tomorrow will be seduced by the dreams of the titular tech billionaires.

A look at the ambitions of Meta, Nvidia, Epic and Tencent gives an idea of ​​the scope of the company. Each has its niches. Mr Zuckerberg has earmarked $ 10 billion this year primarily for the development of virtual and augmented reality headsets and glasses that he hopes will provide a dominant access point to the metaverse, much like Apple’s iPhone. does it with mobile internet. Nvidia is focused on what it calls the omniverse, a chip-based technology that virtually brings together engineers, designers, and other types of creation to create things, mostly, for now, in industrial environments. . Epic has been creating virtual worlds for years, including “Fortnite”. In the Metaverse, his killer app may be Unreal Engine, a platform that gives its own developers and others the ability to create 3 realists.D experiences, including games, films, architectural models and industrial designs. Tencent has a crush on China. Mr. Ma is probably wise to play it with caution, given the Communist Party’s techlash. But his company’s popular WeChat super-app, including WeChat Pay, is already a 2D version of what the metaverse could become in 3D.

Behind their futuristic ambitions lie common experiences. First, mobile internet is coming to the end of an era. In America and Europe, politicians are threatening to tighten the rules against monopolies and the abuse of privacy, especially when it comes to Facebook and Google. In China, the tech industry is reeling from the government’s assault. It’s not for nothing that some first-generation tech entrepreneurs in America and China are calling for an end. Those who stand still need a compelling new story to tell.

Then they operate in constrained worlds. Apple is a particular scarecrow to Mr. Zuckerberg and Mr. Sweeney. The iPhone maker uses privacy settings in its iOperating system operating system to control how well Facebook can sell digital ads. Epic is engaged in an antitrust battle with Apple over the fees its App Store imposes on game developers, which has so far been rather unsuccessful. This is why the two men are so vehemently committed to promoting interoperability, that is to say the absence of closed systems, as well as common standards. They too want to be the architects of the operating systems of the future.

They will not have the land to themselves. Apple, while silent so far on the Metaverse, is undoubtedly planning an offensive. Telecom companies want a sniff, having invested heavily in 5 ultra-fast, low-latencyg spectrum. Fast-growing platforms like Roblox, offering a model of do-it-yourself games that attracts 200 million users per month, have already won young hearts. There are also naysayers, including proponents of more distributed technologies known as Web3, who argue that blockchains and cryptocurrencies are the next big thing – although as tech expert Ben Thompson points out. , these can find much better use cases in the Metaverse than in the real world.

Moonshots

There is something to play. As Mr. Thompson says, “Elon Musk wants to go to the moon. Mark Zuckerberg wants to create entirely new moons in the digital space. But just as space is a race, so too is the metaverse. MM. Zuckerberg, Huang, Sweeney, Ma et al may promise a future for the Internet that is more open, immersive and engaging than the mobile one that exists today. But everyone wants to get there first, so they can set the rules to their advantage.

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Learn more about Schumpeter, our global trade columnist:

Big business for big work (December 11)
Can Johnson & Johnson put the shade of scandal behind this? (December 4, 2021)
Decoupling is the last thing on the minds of business leaders (November 27, 2021)

This article appeared in the Business section of the print edition under the title “Lords of the Metaverse”


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