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Meta is trapped in the metaverse

2021 is the first year of the metaverse. The metaverse got a lot of attention this year, and the biggest move was the name change of Meta and the future dedication to the metaverse. This move also drives other big technology companies to set off the wave of the metaverse, and have rushed to the beach layout of metaverse business, including Microsoft, Nvidia, Qualcomm, Google, etc. Domestic entrants include Baidu, Bytedance, Alibaba , and Tencent. However, Meta’s journey into the metaverse was not smooth sailing , and faced many difficulties.

The harassment of the metaverse

There has been a lot of news since Meta opened its virtual reality social media platform Horizon Worlds in 2021. One Meta tester reported harassment. On November 26, 2021, the tester was molested by a stranger on Horizon Worlds and later posted his experience on the test group.

However, Meta’s response is that Horizon Worlds offers a safety zone tool as part of Horizon Worlds’ safety feature, which testers can use to protect themselves. The safe zone is essentially a protective bubble that users can activate when they feel threatened, after which no one else can touch, talk to or interact with them. Although Meta has released relevant features, it still inevitably casts a psychological shadow on those involved, and it is still unknown how to punish those involved, which may be a legal, ethical and regulatory issue to be faced when the future metaverse is launched.

On June 2, 2022, on Meta’s Horizon Worlds platform, a female psychotherapist was sexually assaulted and shared her experience on the forum. Within 60 seconds of joining, the woman was verbally harassed and sexually harassed by three or four players with male voices. They “gang-raped” her avatar and took pictures of it. The woman said it was a nightmare and she froze in place so scared she didn’t even have time to put up a safety barrier.

When virtual reality equipment makes people feel as if they are in the virtual space, our virtual image or avatar may be touched and violated by others, resulting in a virtual reality sexual harassment.

Meta’s launch of digital currency ended in failure

On January 27, 2022, it was reported that Meta is selling its stablecoin project Diem, with Silvergate Capital, a Member bank of the Federal Reserve, acquiring Diem and its technology assets for $200 million.

Libra (later renamed Diem) was a proposed blockchain-based licensing payment system by Meta. In May 2019, Meta confirmed the layout of the cryptocurrency, and on June 18, 2019, the project was officially announced as Libra. The plan is to release in 2020, but only basic experimental code has been released.

The scheme is backed by an association of major companies. Each association member would need to inject $10 million first to support the value of Libra, but regulators never approved the plan. On July 15, 2019, Meta announced that it would not launch Libra until all regulatory issues were met and Libra received “appropriate approvals.”

Central banks, finance ministers, lawmakers, and privacy agencies around the world have all raised questions about Libra, listing multiple issues related to money laundering, terrorist financing, and affecting financial stability.

Eventually, because of regulatory obstacles, a number of companies withdrew from the program. In October 2019, multiple companies left Libra Association: PayPal left on October 4, followed by eBay, MasterCard, Stripe, Visa , and Mercado Pago on October 11, and Booking Holdings on October 14.

In December 2021, Diem project founder David Marcus left Meta, and it’s fair to say Meta hit a brick wall in its quest to launch its own metaverse currency.

The continuous litigation Meta

Haptic technology developer Immersion corp. filed a lawsuit against Meta on May 28, 2022, accusing Meta of building an industry-leading virtual reality headset by violating its patents.

Immersion said in a complaint filed in federal court in WACO, Texas, that Oculus Quest 2, which dominates the market for virtual reality headsets, violated six patents involving haptic technology. In video game systems and controllers, haptics allows users to experience vibrations that mimic real-life forces, such as blocking a punch in a virtual boxing game.

On October 4, 2021, a former Meta employee (Frances Haugen) publicly identified herself in a TV interview and accused Meta of “putting profit before security”. She said Meta knew that its products were fuelling hatred and harming children’s mental health, but ignored them for their own benefit.

The former employee called for Meta to be regulated, saying: ‘Over and over again, Meta has shown that it chooses profit over safety, that it profits from our safety.’ Existing versions of Meta are tearing apart our society and creating racial violence across the globe.

She previously anonymously revealed documents to the Wall Street Journal and MEMBERS of Congress that Meta had long known its products, such as social networking site Instagram, were harmful to young girls. The document also reveals Meta’s findings that it is easier to provoke anger than other emotions. Meta found that if you switch to a safer algorithm, people spend less time on the site, click fewer ads, and they make less money.

The document also reveals that during the 2020 U.S. presidential election, Meta realized that incense-provoking content could be dangerous and switched to a more secure system to reduce the risk. As soon as the election was over, however, they reverted to the old system, or changed back to a setting that prioritized growth over security.

Meta’s image has been dragged down by a lot of litigation lately. It’s hard to have a good impression of Meta. It remains to be seen whether people will be able to trust meta-universes built by Meta that disregard privacy. And Meta will have to face a lot of lawsuits and distractions on the way to building the metaverse.

Profit in the long run

Meta is a company whose motive force is profit. For the first time, the company reported a loss of over $10 billion in 2021, dragging down Meta’s overall profitability and triggering a sharp drop in its stock price in the capital market.

There’s no doubt that Meta is betting big on the metadverse. The company currently makes most of its money from online ads on several social tools, such as Facebook, Instagram and WhatsApp, which accounted for 97.5% of its revenue in the most recent quarter. Clearly, Meta hopes to diversify its revenue through the meta-universe.

Meta’s Reality Labs division, which develops products for the metaverse, has revenue of just $695 million, according to data. Reality Labs continues to be a money-burning division of Meta betting big on future opportunities. According to Meta’s financial report, Reality Labs posted a loss of $2.96 billion in the first quarter of 2022, up from $1.83 billion in the first quarter of last year. According to the management, although the scale of expenditure of Reality Labs exceeds expectations, Reality Labs will continue to be an expenditure growth department in the future.

In July 2021, Meta announced a future investment of $5 billion per year in the construction of the metaverse. By early 2022, Zuckerberg had promised to spend $10 billion a year to develop the metaverse. In Meta’s view, it will be a long road from investment to revenue growth and future profitability. Zuckerberg said the metaverse is a long-term investment and won’t be profitable in the short term. How much patience capital markets have, however, is a question. The results were lower than expected and disappointing financial results, including the huge loss of the space business bet, made Meta encounter pains in the transformation of the universe.