Did you hear? Facebook Inc. is going to become a metaverse company. At least that’s the story its management wants everyone to believe after a flurry of interviews and announcements over the past couple of weeks. It’s a narrative that seeks to put the social-media giant at the leading edge of one of the most audacious concepts in tech. I’m skeptical.
But first, what exactly is the metaverse? The term was created by sci-fi author Neal Stephenson in his 1992 dystopian novel “Snow Crash” to describe a virtual space where people interact with one another through user-controlled avatars. Venture capitalist Matthew Ball has also written extensively on what he believes are the main attributes of a metaverse, including a fully-functioning economy, its real-time persistence (no pausing), and interoperability of digital “belongings” such as clothing across multiple platforms. Here’s how I would simplify it: Think of it as a futuristic version of an always-on multiplayer video game where you can play, socialize or even run a moneymaking business in a realistic computer-generated environment.
Facebook Chief Executive Officer Mark Zuckerberg started the hype cycle when he told The Verge in an interview published in late July that his company will invest aggressively to be a big metaverse player, saying it will be a place where you feel fully present with others when sharing virtual experiences. Days later, Facebook announced creating a new metaverse product group within its virtual-reality business, telling the media it intends to hire hundreds of new employees for the project. Then on its earnings call last week, Facebook revealed it would spend billions annually for its Facebook Reality Labs, where the metaverse business resides.
We have heard similar things from Zuckerberg before. When the company acquired the virtual-reality startup Oculus for $2 billion in 2014, he excitedly wrote that it would enable immersive virtual experiences where you feel “present in another place with other people.” Two years later, he told Bloomberg Businessweek in an interview that VR would render an alternate reality and that Facebook would invest a large amount of money to make that happen. Sound familiar?
Facebook’s actual track record on VR tells a different story. Has the company made significant progress since it bought Oculus seven years ago? Not really. Its latest VR headset, the Quest 2, has sold about 4 million units in the U.S. It isn’t much more advanced than the original version. In fact, Oculus’s technology has been surpassed by smaller competitors such as Valve Index, which offers better fidelity.
It speaks to the flaws in Facebook’s strategy. The two critical components needed for companies to take advantage of potential metaverse opportunities are advanced semiconductors and software tools. Facebook is not strong on either front. For its VR devices, the company uses off-the-shelf chips from Qualcomm Inc. That isn’t going to cut it. When Apple Inc. launches its own virtual-reality headsets, chances are it will use internally developed chips that deliver superior performance and will likely offer far better user experiences. It’s not going to be a contest.
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