In order to win the metaverse race, Meta (formerly Facebook) will lose it all.

In February 2022, Meta stock tumbled 26%, wiping US$230 billion of the value of the company. Since then, its stock has continued to slide and has now lost roughly one-third of its value in less than a week. Of particular concern to Meta CEO Mark Zuckerberg are privacy controls introduced by Apple last spring which allow users to prevent companies like Facebook from monitoring their activities. That upends Facebook's business model which is built on selling data on their users to advertisers. Zuckerberg says the change could cost the company US$10 billion a year. Facebook risks missing the point of the metaverse—and a coming shift in consumers' behavior—if it fails to permit digital ownership, according to some of the virtual world's pioneers.

What is Metaverse?

The metaverse is an immersive, interactive environment generated by a computer. Although there is no unified agreement on what the metaverse will look like — or how individuals will interact with it — Star Trek's holodeck is often used as an example to explain the concept.

Basically, after some sort of identity verification, metaverse visitors use an avatar (that may or may not resemble their real-life counterpart) to explore their new virtual environment. Technologies that support this type of immersive computing include:

• Virtual reality (VR) headsets
• Haptic interfaces
• Intelligent sensors
• Brain-computer interfaces (BCIs)
• Cryptocurrencies
• Blockchain distributed ledgers
• Nonfungible tokens (NFTs)
• Holograms
• Digital twins
• Augmented reality

Meta can see the metaverse coming but may still struggle to build it

It's been a few weeks now since Facebook announced its name change to Meta Platforms (FB 0.40%), which will officially make a ticker change to "MVRS" early next year. The company is clearly signaling to investors and employees that its future isn't just in social media but also in building the metaverse.

There's a lot of debate about what exactly the metaverse is and what devices and platforms it will involve. At the very least, it's a new paradigm for technology beyond the smartphone/social media-driven world we have today. But will Meta be the one to bring the metaverse to the world, or will it face challenges that have dogged big tech companies for decades?

Spending on the metaverse is bonkers

Mr. Zuckerberg believes so much that the internet's next generation is the metaverse — a still fuzzy and theoretical concept that involves people moving across different virtual- and augmented-reality worlds — that he is willing to spend big on it.

So big that the spending amounted to more than US$10 billion last year. Mr. Zuckerberg expects to spend even more in the future. Yet there is no evidence the bet will pay off. Unlike Facebook's shift to mobile devices in 2012, virtual reality use is still the province of niche hobbyists and has yet to really break into the mainstream. Widespread augmented-reality headsets are also months — if not years — away.

In essence, Mr. Zuckerberg is asking employees, users, and investors to have faith in him and his metaverse vision. That's a big ask for something that will cost the company billions in the coming years and that may never come to fruition.

Push from regulators

Add to this the intense pressure from the regulators to reign in Meta and Facebook. The call for breaking up (and other big tech companies) has gained momentum over the years. While Meta and its founder have placed safeguards to ensure that all platforms under its family of apps are technically inseparable, that hasn't stopped regulators and governments from across the globe to punish Facebook for being a monopolist and for its handling of user data. All of this, to some extent, has resulted in people losing faith in the company.

So why don't more people #DeleteFacebook as WhatsApp founder Brian Acton had once said? For the simple reason of not having a viable alternative. Meta, on its part, is trying to fix things and gain back some of that lost trust. But are its efforts sincere, and will these efforts be enough remains a thing to be seen?

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