Is Zuckerberg losing the battle for the Metaverse?


Remember the Metaverse, the vacuous term Mark Zuckerberg decided to rename his company to signal its pursuit of? It’s fair to say things could be going better when it comes to this VR-meets-AR-meets-Roblox. Recently, quite a few things have not exactly gone to plan.

First, the company was ridiculed over an announcement post for Meta’s Horizon Worlds. On 16th August, to celebrate the roll-out of this proto-Metaverse in France and Spain, the company posted a photo of CEO Zuckerberg’s in-game avatar in front of a digital Eiffel Tower. Suffice it to say it did not meet with the cheers he had hoped. The graphics were terrible, with many internet users comparing it to Roblox, and the post was widely mocked.

Many are puzzled by the blunder. Horizon Worlds, a VR social virtual world accessed with Meta’s Oculus headsets, does not always have terrible graphics, so it is unclear why the company was so keen to show off that photo. But it wasn’t just the “roughly 2007” levels of detail that provoked widespread mockery. Many criticised the sheer lack of creativity displayed in the product, which is far blander than competitors such as ‘The Sandbox’.

Facebook is in serious long-term trouble

Probably worse than that was Zuckerberg’s attempt at damage control, which included an appearance on The Joe Rogan Experience. Turning a blind eye to the show’s history of promoting Covid-19 misinformation that would violate Facebook’s content policies, he tried to play to Rogan’s 11m-strong fanbase, attempting a personal rebrand from billionaire robotic geek to what one observer called “a combat sports-obsessed gym rat.” After listing “wrestling around with friends” as one of his favourite pastimes, he compared his planned Metaverse to the “beta state” of watching TV. As Bloomberg commentator Max Chafkin sarcastically put it, “apparently for Zuckerberg, real men scroll.”

Facebook is in serious long-term trouble. Its share price fell 26% in a single day in February due to growth predictions dampened by Apple’s privacy changes that restrict its data harvesting. Consumers are losing interest: monthly active users in Europe shrunk by 20 million in the first 6 months of 2022, as its regulators work on new laws to prevent data from being sent across the pond. Meanwhile, new competitors are successfully vying to be users’ timewasters of choice. UK users now spend an average of 49 minutes per day on TikTok compared to 43 minutes for Facebook, down from 47 mins in 2020.

Meta is fighting a losing battle to adapt, improvise, and overcome. Within Instagram, its reels attempt to mimic TikTok, while leaked company memos show that it is modifying its Facebook algorithm to be more similar to that of the Chinese firm. The slow sinking continues: according to another leaked memo from August, the total hours spent watching reels each day is a tenth of the hours spent on TikTok.

Zuckerberg thinks by investing enough, his company can hop onto a new ship: the Metaverse. So far, results have been mixed. On the plus side, his new Oculus Quest 2 headsets have done reasonably well in the last year, with 2 million new headsets activated over the two-week Christmas period alone (for reference, 20 million PS5s have been sold over the last 2 years). The flip side is that they are being sold at a loss, as company reports for ‘Reality Labs’ indicate. Meta lost $10bn which it styled as an investment in a company whose losses were up 15% in the last quarter compared to the same period in 2021.

What’s the ultimate goal here? These Oculus headsets are mostly at present used for gaming. Many commentators believe that the ultimate business model for them is the same as Facebook’s social media wings: data harvesting and ad monetisation. VR games are less well-suited to this than large social platforms where all interactions can be tracked and nudges to make purchases can be put everywhere. But Zuckerberg’s vision, if we can generously call it that, is that the Metaverse will revolutionise business as well as games.

Its long-term viability is in question, if it cannot effectively be moderated

The problem is that companies are lukewarm about the vision Zuckerberg has for them. Companies that have bought Oculus Quest 2 headsets aren’t using them for meetings: Accenture, for example, bought 60,000 in 2021 but uses them for training and new-hire orientation. Many worry about discussing company matters on a Facebook-designed platform, concerned by both security concerns and its creator’s reputation for data-harvesting and monetisation. What ‘the Zuck’ seems not to want to accept is that the business model that made Facebook and Instagram ‘free’ to users and thereby led to Meta’s success may not work in the Metaverse.

There is a further problem with the metaverse. With 300 million photos uploaded per day, content moderation on Facebook is a nightmare as it is. Now imagine trying to moderate not blocks of text, images and videos but complete virtual social interactions. The company has introduced new features to protect users after two reported incidents of virtual sexual assault on the platform but, even if those are effective, its long-term viability is in question, if it cannot effectively be moderated. It has ‘community guides’ as a sort of security guard to keep an eye on, but aside from hiring vast numbers of those, content moderation is going to remain a challenge.

Content moderation, and security, are the factors keeping people away. But what is there to actually draw people to Zuckerberg’s Metaverse? Instagram and Facebook have constant updates to their newsfeed, making users keep coming back. The metaverse has no clear equivalent.

Meta has a new VR headset due to come out this month, with better facial tracking such that when you smile, your avatar does too. That may cause excitement in some circles. But it will not detract from an increasing sense that for this corporate behemoth, its best days are behind it.

Illustration: Anna Kuptsova

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