The Metaverse: Fragmented Reality

The craze for the metaverse has reached a new scale since Mark Zuckerberg’s announcements. Meanwhile, key questions arise about a more immersive Internet, between virtual and augmented reality, as well as about the economic, monetary and geopolitical aspects. A trend of fragmentation, even balkanization, is looming, between companies as well as between regional areas. Governments are to embrace metaverses, in order to guarantee some key economic rules, based on interoperability and privacy. An interview with Rémi Bourgeot, Economist and Associate Fellow at IRIS.

Is the metaverse – as a digital mirror of the real world – within reach or is it a pipe dream? Is it based on a long-term commercial project, as Mark Zuckerberg’s announcements may suggest?

The metaverse originates from a desire to imagine a new, more immersive type of social interaction on the Internet. The main vision, which Facebook – renamed Meta – has adopted, is influenced by video games, with the use of avatars interacting in a virtual world. It is not the only one, however.

Games, like ultra-popular Fortnite, already offer a form of limited metaverse (subdivided into groups of players). They now even allow for mass concerts to take place. Some games, such as Sandbox, which is based on the blockchain, have a more financial focus, using cryptocurrencies and NFTs (certificates of ownership of digital assets based on the blockchain.) This includes the highly questionable purchase of « virtual land » on the platform, using a cryptocurrency aptly named « sand »…

With the immersion into a giant metaverse populated with social avatars, Zuckerberg’s idea consists in integrating all aspects of economic life. Advertising remains at the center of his project, but the plan is to go beyond. Nike has announced that it will position itself to sell virtual clothing in the metaverse!

Social networks have, over the past fifteen years, upended the Internet, for better or for worse, from misinformation to harassment to attention disorders. Despite the challenges, the metaverse consists in amplifying the digital experience, by allowing a greater level of sensory immersion, through virtual or augmented reality.

However, interactions in the metaverse can remain focused on the real world, for business meetings for example. With the Mesh service, Microsoft is taking this type of more incremental path. A maximalist vision, such as Zuckerberg’s, is still far away, given current resources. In fact, it would probably require a fundamental computing revolution, perhaps even moving beyond the era of semiconductors.

Given the multitude of services offered by the metaverse, many are rushing to invest in it. Could this reshuffle the cards of the digital world, and the weight of the digital giants?

Faced with the difficulty to define the metaverse, the only certainty lies in the immensity of the investments required. Facebook is ready to invest and lose huge sums of money (after its $10.2 billion loss in 2021 for its « Reality Labs ») to achieve its vision. Microsoft and Google follow a more progressive approach. Besides Microsoft’s more professional specialization, Google focuses on augmented reality, with everyday-life glasses integrating its various services. Amazon remains discreet for the moment. One can easily imagine the possibility of virtual stores, perhaps for virtual goods by means of NFTs for example, or as an extension of the purchase platforms for delivery in our good old real world. The experience of an Internet enhanced in terms of sensory interactions thus goes beyond avatars inspired by video games.

It can be argued that people might also want to limit immersion, offering opportunities for less grandiose technical solutions. For example, an audiobook is an intense immersive experience –augmented reality in a sense – since it can be combined with certain acts of daily life, while remaining less invasive than the exposure to images, all the more so in 3D. The introduction of large screen smartphones had led many younger public transport users to retreat into watching TV series. This trend seems to have been halted by the simple use of wireless headphones, for a softer immersion.

There is no guarantee that maximalist versions of the metaverse will be financially successful. A revolution is undoubtedly coming in the development of a more immersive Internet. However, the key to a well-designed metaverse lies, hopefully, in the respect for a certain human balance, through a reasoned integration into real life. This could allow new players to emerge, with perhaps better tailored means. To this end, governments will have to be on board, to define rules that will ensure access under acceptable conditions for all digital companies to the various metaverses and a broad level of interoperability, allowing them to offer their services on several platforms.

NFTs, cryptocurrencies, the metaverse… Is this a danger for national governments and their economies? How are they trying to regulate these digital disruptions?

The notion of virtual exchange environments, with decentralized monetary tools and no geographical boundaries, is a challenge for governments, in terms of economic control, taxation, as well as law and order. For the authoritarian states which have the means and a sufficiently advanced technological sector to develop their own platforms, the metaverse can, on the contrary, allow for greater social control. In the same way, digital giants will have a level of access to private lives without any precedent in history.

It is easy to imagine a significant fragmentation, a balkanization of the Internet, depending on the different interpretations of the notion of metaverse. This divide would not only take place between platforms within a geographical area, but obviously even more between political powers. China will have its own metaverse (or metaverses), just as it already blocks most of the the US digital giants’ services.

It is essential for democracies to embrace this revolution and keep up with it. Policy makers are already overwhelmed by the rise of crypto-currencies, which bypass the traditional monetary networks. Major central banks are struggling to design their own digital currencies and, by sticking to the banking status quo in every detail, they risk losing their way. It is essential to integrate public schemes into the emerging digital constructs. In addition to the monetary aspect, policy makers will have to ensure that real competition between companies of various sizes flourishes in the digital environments of the industry giants and establish new rules for privacy.