Is the metaverse really the future of the Internet and the advent of a new “open and decentralized” world in which real and virtual intertwine in perfect fluidity? Or is it simply a brilliant marketing move to make the use of virtual and augmented reality desirable, technologies that will finally reach maturity in the coming years, to transform them into ATMs and in the meantime consolidate the dominant positions of some digital giants? ? The question deserves to be asked in view of the strategy shown by the most enterprising players on the subject, starting with the rightly named Meta, parent company of Facebook, Instagram, Messenger and WhatsApp since the end of the year 2021.
More than a treasure, the metaverse has become Meta’s new raison d’etre and the obsession of its CEO, Mark Zuckerberg. The entire activity of the company rotates in this universe and in its new “revolutionary” applications. Having long been convinced that virtual and augmented reality will reshape social interactions and open new advertising opportunities for brands, Mark Zuckerberg wants Meta to become the reference platform for this web3. Meta’s chief executive has pledged to invest $ 10 billion annually over the next decade to shape this virtual, immersive world full of avatars.
In other words, Zuckerberg wants to avoid obsolescence and the gradual cancellation of his social networks, which currently dominate the web2. The idea is to harness their power – each has between 2 and 3 billion monthly active users worldwide – so that new uses of the metaverse are also democratized with and with them. The goal is in fact to reproduce for web3 the web2 model that has been so successful for Gafam (Google, Apple, Facebook, Amazon, Microsoft): to concentrate digital uses around a few dominant, structuring and essential platforms. And a shame about the enormous contradiction between the open and decentralized ideal of the web3 and the platforming strategy of the metaverse that Mark Zuckerberg wants to impose …
Trillions of dollars in revenue in sight
Because in theory the metaverse could become a real goose that lays golden eggs for those who manage to reach the general public. The studies of consulting and analysis companies multiply and all promise mountains and wonders: from the 31 billion dollars today, the turnover of metaverse applications should jump to 5 trillion dollars in 2030 according to McKinsey! The Grand View Research Institute is more modest: $ 678.8 billion expected in 2030. Unless it is $ 1,500 billion in 2029, as estimated by Fortune Business Insights?
Nobody knows, especially since the public’s appetite for shopping in a virtual environment in addition to the very expensive real world remains to be demonstrated. But the prospects seem attractive to those who believe in it. On the consumer side, we expect the metaverse to revolutionize the way people play online, socialize – with the advent of avatars and the creation of ultra-realistic virtual environments -, do fitness, shop on the Internet, learn online and to interact with colleagues from a distance. The potential of the metaverse in the sectors of culture, consumption (especially luxury and prêt-à-porter), retail, media, telecommunications and health would thus open great growth prospects to the most innovative.
Thus, many leaders in these markets, such as the LVMH group in luxury, are already rushing to announce an avatar clothing line, an NFT that guarantees the ownership of a pair of shoes, to position themselves and create desire to consume in this new world. Real estate is also on the move: a lucky few have already bought virtual goods, sometimes at crazy prices (over a million dollars), and received in exchange an NFT certifying, thanks to the non-falsifiable technology of the blockchain, their title of ownership. .
Meta wants to create the App Store of the metaverse … and pockets 30% commission on all its applications
The main thing remains: to create the platforms that will host future metaverse applications. And the technological standards that accompany it. This is where Meta wants to play a role, via hardware – virtual reality headsets – and software. In terms of hardware, Meta already dominates the VR headset market with its Oculus Quest brand, which accounts for 78% of headset sales in 2021, according to IDC.
Same thing for the software. Facebook’s parent company is using its lead to try and lock developers into its ecosystem. To start an application compatible with Oculus Quest headsets, you need to go to the Quest Store, the Meta in VR app store. The logic is exactly the same as Apple and Google’s application stores, which together control the entire mobile market. To access the market, you must comply with the Law of the Application Store, which also charges a high commission on all purchases made through the applications it hosts.
The irony is that Mark Zuckerberg has no shortage of harsh words to express his indignation at the predatory system of the App Store and Google Play Store. Did he especially regret being a victim? Because Meta has decided to do exactly the same thing with its Quest Store: the group automatically grants itself a 30% commission on all purchases and takes between 15% and 30% commission on subscriptions. Which, of course, triggers the anger of the developers. But the stakes for Meta are enormous: if the web3 becomes the reality of billions of Internet users around the world, then Meta will generate colossal additional profits, quantifiable in billions of dollars, just like Google and Apple today in mobile.
Finally an opportunity to get paid with NFT
Mark Zuckerberg has been trying to insert his social media empire into the world of payments for years. In 2019, Facebook launched Libra, its blockchain-based decentralized virtual currency. The idea: bypass the international monetary system by popularizing a new cryptocurrency based on a stablecoin of financial assets. Zuckerberg, through the Diem association that piloted the project, had managed to bring on board 28 prestigious partners: Visa, Mastercard and Paypal essential for the technique, as well as NGOs and giants of online sales such as eBay or Uber. Except that the scale of the project has frightened regulators, determined to ban this virtual currency that is out of control.
To return to the paid game, Meta is now changing gears. Since the metaverse and its abundance of virtual universes will be so many opportunities for brands, Mark Zuckerberg wants to control the financial exchanges that will take place via his platform by creating NFTs or digital tokens, nicknamed “Zuck Bucks” (Zuck dollars) from employees according to the Financial Times. These NFTs will allow any purchase made in the company’s metaverse to be tracked and tamper-proof.
A breath of fresh air for advertising?
Finally, the other business challenge for Facebook’s parent company in the metaverse is obviously advertising, the heart of my current business model. We recall that Meta generated in the first quarter of 2022 a turnover of 27.9 billion dollars (26.6 billion euros), of which 97% comes from online advertising.
But the advertising model is not sustainable in the long term for Meta, because it is based on the massive exploitation of the personal data of the users of its services. However, the regulation is less and less lax on data exploitation. The GDPR and its worldwide equivalents force players such as Meta to seek explicit consent to the use of personal data for advertising purposes. And now regulators are pushing for web services to be very clear about data usage, which is collecting more and more litter.
The biggest blow to Meta’s advertising business has come from Apple. Since April 2021, the Apple company has allowed iPhone users to opt out of targeted advertising from apps on their smartphones. It’s a revolution: iPhones now require user consent before enabling ad tracking via apps. The message is so clear that 80% of users refuse, which generates a colossal deficit estimated at 10 billion dollars for advertising platforms such as Facebook, YouTube, Twitter or Snap, or 12% of their revenues from advertising. last two quarters of 2021 according to the FT.
If Meta manages to become a major gateway into the metaverse with its VR headsets and application store, then this new Internet will escape the ” mobile dictatorship from Apple and its privacy rules that harm the entire online advertising industry.