Journey to the Metaverse?

Before Meta Platforms lost 64% of its value by the end of 2022, the term Metaverse was the buzzword of the year.

Fast forward to 2023 and the biggest advocates of the Metaverse, namely Meta Platforms CEO Mark Zuckerberg and Microsoft CEO Satya Nadella, have certainly changed their tune.

In February 2023, Mark Zuckerberg put a post on Facebook announcing Meta’s pivot away from the Metaverse, and both companies have been laying off staff attached to Metaverse projects.

However, Meta’s former Head of Policy Advocacy and Research, Dr Arturo Gonzalez said don’t count the Metaverse out just yet.

Dr Arturo said economic modelling by Meta Platforms shows that ten years after adoption, the Metaverse could contribute 3% a year to global GDP.

The region that stands to benefit the most is the Asia Pacific, due to its rate of adoption of new technologies over the past fifty years.

Dr Arturo compares the Metaverse to the evolution of the internet, which decoupled paper from digital and allowed innovation across the factors of production including geography, payments and cross-border economies.

He says the Metaverse is going to offer opportunities that are attached to experience, as people transition to being immersed in the internet, as opposed to simply observing it.

About $120 billion was invested into the Metaverse in 2022, but Meta Platforms revealed in its February earnings report that the company had lost $14 billion from its Reality Labs project in the same year.

Microsoft also suffered a major setback at the beginning of the year after the US Congress blocked a $400 million order for its HoloLens headsets for the US military.

While the journey to the Metaverse has seemingly been put on the back burner by the major players, Dr Arturo says the shift to a multi-dimensional world is inevitable.

“The internet was solving problems that were not yet identified. It was only after the internet was introduced that the early adopters who were excited about the internet got a chance to play with it, and then it became part of mainstream.”

Similar to the mass adoption of the internet, the countries that stand to benefit most from the proliferation of the Metaverse are developing countries.

“Developing economies are ripe for taking advantage of the Metaverse in ways that other regions that are growing at a slower pace are not. This is because of a range of factors including regulatory, innovation, the ecosystem, competition and the broad consumer base,” said Dr Arturo.

Dr Arturo says there is a risk to growth from the Metaverse being put on the back burner, and the countries that will be particularly impacted will be Latin America, the Middle East and North Africa.

“When the promise of the Metaverse is actually put in place, put into practice, through innovation, through R&D spend, through competition policies, that encourages more innovation, then there's opportunity that's going to be really not just in the future, but starting in the next couple of years."

Alex Holmes from Oxford Economics weighed into the debate, saying there are lessons from Big Tech about being too quick to cut investment into emerging technologies.

For example, he says Microsoft CEO Satya Nadella was under pressure to scrap costly projects like the Surface Pro and Bing.

If Mr Nadella had listened to that advice, it would have been a multi-billion dollar mistake.

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