Rumors of the death of the metaverse have been greatly exaggerated

When Meta recently laid off more than 11,000 employees in November 2022, then another one 10,000 in March 2023, some tech industry viewers concluded it was a nail in the coffin for the metaverse.

But before we lower the metaverse chest basically, let’s remember why Meta CEO Mark Zuckerberg turned to the metaverse in the first place. It causes vital context for recent events and casts them in a different light.

Contrary to popular belief, the demise of Meta (the parent company of Facebook, Instagram and WhatsApp) did not come from investing in Zuckerberg’s vision for the future. Meta’s plummeting share was tied to its longtime investment in social media platforms whose lifeblood — its ability to track users and their data — has been choked by market forces beyond their control.

One bottleneck came into effect in April 2021 when Apple made changes to its ad tracking policy. In a nutshell, Apple’s “App Tracking Transparency” feature gave users a clear choice about whether to allow a company to track them or their data across different apps and websites.

If a user didn’t give that permission, Facebook essentially lost the ability to both target and measure an ad’s impact. The new rules bit a A piece of $10 billion from Meta’s advertising activities. This represents nearly 25% of Meta’s net profit in 2021.

Facebook was aware of its vulnerability to such policy shifts. As an advertising-based company, Facebook did not own the hardware platform on which its products lived. Nor did it own the operating systems and app stores on which the apps ran. That put it on the whim of companies like Apple and Google.

Long before 2021, in an effort to solve the problem, Facebook engaged in conversations with Apple about an ad-free, subscription-based version of Facebook. The deal would have given Apple 30% of Facebook’s revenue on Apple’s platform, but negotiations fell through.

The spindle

Six months after Apple’s privacy change, Zuckerberg steered Facebook hard to the left, renaming it Meta and moving full steam ahead into the metaverse, fueled by billions of dollars in R&D and product development.

The company has been positioning itself for this self-reinvention for years. In 2012, Facebook rolled out its own open app store. In 2014, it bought the VR headset maker to take ownership of the hardware platform oculus. The moves gave Facebook more power to determine the fate of its own apps and profit from the sales of other apps, in a similar way to Apple.

The wisdom of self-disruption in anticipation of market tipping points is well established in the tech industry. Equally well established are the dangers of not doing so. Look no further than Blockbuster, Kodak, MySpace and Palm Pilot – once household names that became cautionary tales because they failed to innovate. Meta did what it was supposed to do.

In all the speculation about the demise of the metaverse, two important points often get lost. First and foremost, Meta and the metaverse are not the same. Even if Meta eventually sinks, the metaverse – a shared, persistentand open experience characterized by 3D virtual and augmented worlds — is much bigger than any company.

Second, inflection points can take a long time to unfold, and we humans often get the timing wrong. Roy Amara, a computer scientist at Stanford University and longtime head of the Institute for the Future, devised a “law” for this tendency. Amara’s law states that we tend to overestimate the impact of a new technology in the short term, but underestimate it in the long term. The law has much in common with Gartner’s hype cycle for emerging technologies.

Examples of the law of Amara abound. Consider self-driving vehicles and VR/AR, both of which have been criticized as overhyped and unlikely to deliver on their promise. This trend is nothing new. There were even people who believed that the Internet was just one passing fad.

Using Amara’s law, you could argue that those who insisted that the metaverse would change our daily lives in the near future are overestimating its short-term impact.

There is also evidence that those who other way around dead, underestimate its long-term impact. To use Gartner’s terms, the naysayers have simply slipped from the “peak of inflated expectations” to the “trough of disillusionment.” But that trough is just that: a temporary dip until the metaverse climbs up to the “plateau of productivity.”

Numerous technology trends point to the inevitable opportunity for the metaverse. For example:

• Two out of three people on Earth will be on the Internet.
• Mobile devices are exploding in numbers, averaging 3.6 per person.
• GPUs, which didn’t exist 25 years ago, are dramatically transforming the display capabilities of these devices.

The metaverse is not limited to wearable technology. GPU-powered smart devices can display beautiful 3D visuals and connect to virtual content in the cloud, bringing the metaverse both before our eyes and at our fingertips. The question will be less about technology or access and more about our willingness to participate.

Will we participate in virtual worlds?

The pandemic has accelerated the creation and normalization of virtual worlds and virtual economies. Online gaming, for example, is now one of the fastest growing industries in the world, with an estimated revenue of more than $196 billion. Gartner predicts that by 2026, one in four people will spend an hour a day working, studying, shopping and socializing in a shared virtual environment. And some estimate that the industrial metaverse – how we virtually design, manufacture and interact with physical objects – is a $100 billion market in 2030.

So are we going to join? The answer seems to be a resounding and ultimately yes.

All this suggests that the rumors of the death of the metaverse are greatly exaggerated. Like the previous iterations of computing and networking — the mainframe era, personal computing and internet, and the mobile and cloud era — this next paradigm shift to the metaverse will take time. And that’s good news for investors, because the best time to invest in future technology is before it exists.

Doug Griffin is a managing partner at Sspatial.