Meta’s metaverse plans
Meta’s main revenue source is targeted advertising, and it has perfected this concept by collecting as much user data as possible. However, as privacy becomes an increasingly important – and regulated -issue, the company must realize the need to diversify. Last year’s changes in Apple iOS settings that enabled users to chose which apps are allowed to track their behaviour (spoiler: many chose “none”) has put an additional hardship on Meta’s practice, which it estimated at $10 billion of losses in 2022.
Mr Zuckerberg had a plan though, which he revealed this spring together with the rebranding of his empire into Meta.
The metaverse is generally described as an immersive virtual realm that can be filled with all kinds of digital experiences: games, social interaction, e-commerce, media, remote work… etc. What a better way to diversify a social media giant that might be hitting a wall than to create a whole new world and monetize every aspect of it, from taking a cut of game developers’ revenue to charging interaction fees to... well, same old advertising.
The metaverse is not a new notion, at least in its centralized form. Roblox released in 2006 as a game platform or Fortnite released in 2017 as a Battle Royale game can be considered metaverses in a way, especially now that Fortnite is becoming famous with online concerts featuring global stars like Ariana Grande.
However, since the advent of crypto, and more specifically web3, the crypto-enabled Internet, the concept of metaverse is changing. Blockchain-based metaverses not only promise the platform for people to build games on and hang out virtually, they actually give land ownership rights to the owners of the associated NFTs. With these rights comes the freedom to create one’s own virtual businesses and charge one’s own fees (or not).
Most famous decentralized metaverses today are Decentraland and The Sandbox, and despite their (still) modest graphics and UX, the prices of virtual real estate can be measured in millions of dollars.
Meta embracing crypto
It is quite clear that the future of the metaverse(s) must include cryptoassets, because they alone can guarantee true platform-agnostic ownership of digital assets. Hence Meta’s recent interest in NFTs.
Last month Meta rolled out an NFT pilot for Instagram, which allowed creators and collectors showcase their NFTs on their profiles, while NFT-featuring posts would stand out from the usual ones with a shimmer effect. The pilot was extended to worldwide audience in the end of June, followed by a similar one launched on Facebook soon after. For the moment the supported blockchains include Ethereum and its layer-2 Polygon, with Solana and Flow to be added later.
The next logical step for Meta would be enabling NFT trade, and this will likely happen on its Meta Quest Store built in the Horizon Worlds, Meta’s attempt at a (centralized) VR metaverse.
The conditions, however, appear absurd: the company announced in April its intentions to set 47.5% fees on digital assets’ sales. With most popular NFT marketplaces charging between 2% (LooksRare) and 2.5% (OpenSea), this pricing might need some reconsideration.
Opportunities and threats
Meta’s move into crypto, albeit very modest still, can expose the NFTs to its stunning 3.84 billion monthly active users. Existing NFT projects could get a huge new audience, while non-crypto creators might start considering NFTs as a new way of monetizing their work.
However, there might be a setback.
With Meta’s history of user data abuse there is a real possibility that it would store public addresses of the crypto wallets’ users connect to its platforms, and map them to the users’ profiles. Blockchain keeps the history of all transactions ever made on it, and it is fully transparent, which makes it possible to reconstitute someone’s wallet’s history. This leads us back to privacy invasion resulting in a more effective advertising targeting, or something more treacherous.
Some technological solutions to preserve the wallets’ privacy are in the works, but for the moment this problem exists, and it is exacerbated when it comes to web2.5 – the term used for web2 companies tinkering with crypto concepts.
This might be an inevitable evolution ending in a whole new level of crypto awareness. However, it is important that privacy and security are put on the forefront of Meta’s crypto projects.
Written by D.Center