Meta will introduce a digital wallet for use in the metaverse, as part of its Meta Pay (formerly Facebook Pay) service.
Meta CEO Mark Zuckerberg announced the news in a post shared to his Facebook account. Zuckerberg wrote that the company’s existing service, Facebook Pay, is now Meta Pay — in line with the brand changes taking place across the year. Zuckerberg also indicated that Meta Pay will soon include “a wallet for the metaverse that lets you securely manage your identity, what you own, and how you pay.”
He said that this will let you purchase digital items — “digital clothing, art, videos, music, experiences, virtual events” — with some form of proof of ownership. Zuckerberg said this would be important for using those items across different services:
Ideally, you should be able to sign into any metaverse experience and everything you’ve bought should be right there. There’s a long way to get there, but this kind of interoperability will deliver much better experiences for people and larger opportunities for creators.
Chances are still that if you ask a family member, friend or contact what their thoughts are on the metaverse, Facebook’s name is likely to come up. Remarks on Zuckerberg’s viability as a digital leader might even follow. But whether we like it or not, social media’s biggest mogul is still regarded by many as an unofficial showrunner in the emerging space, using the company’s rebrand as a way to tightly covet the term “metaverse” and all it encompasses.
Unsurprisingly, Meta’s recent announcement that digital creators on Horizon Worlds (the company’s dedicated metaverse application) will be subjected to a 47.5% cut has been met with public backlash. It’s easy to be angered by these figures if we compare them to significantly lower cuts and creator fees placed by other outlets (such as NFT marketplace OpenSea or decentralised metaverse platforms Decentraland and The Sandbox). After all, many of the favoured tenets of a more decentralised internet include fairer compensation and a more enticing economy for creators — features that Zuckerberg himself has even promised.
This precarious announcement seems to have come straight after a rough first quarter of the year, where we’ve seen Meta lose upwards of $2.9 billion USD and experience significant blowback in the wake of its many controversies. As we dive into a greater breakdown of Meta’s new fee structure for creators, reflect on the social media giant’s most recent quarter and take a deeper glimpse into its penchant for capitalistic gain, we’ll explain why we think Meta’s sizeable virtual asset cut is destined to fail.
How will Meta’s fee structure work?
With Horizon Worlds, Meta is aiming to build an economy and open up metaverse commerce — creating something that can be compared to the systems currently available in platforms such as Rec Room and Roblox.
According to Meta’s official statement: “The metaverse — by nature of its not being limited by physical space — will bring a new level of creativity and open up new opportunities for the next generation of creators and businesses to pursue their passions and create livelihoods.” Moreover, the company insists that: “Creators and entrepreneurs will have more freedom to find a business model that works for them… For example, someone could make and sell attachable accessories for a fashion world or offer paid access to a new part of a world.”
Interoperability and cross-app capability are still a far cry away, however. So far, it seems like items will only be compatible with the worlds in which they’ve originated, all while still being positioned to help creators monetise their items on the platform. “What the creators can do as part of building their world [is to] attach behaviours that trigger monetisation, which means that we actually don’t know all the things they can do to monetise,” Vivek Sharma, Meta’s VP of Horizon, recently told CNET.
While creators will be offered the opportunity to make and sell assets in Meta’s Horizon Worlds platform, their earnings will be cut short significantly — as the company plans to take an overall cut of up to 47.5% on each transaction. Included in this cut is a 30% “hardware platform fee” for any sales made through the Meta Quest Store, coupled with a 17.5% fee charged by Horizon Worlds. To also incentivise engagement with VR, Meta claims that it will be adding a monthly performance bonus for creators. Similar to Instagram’s current monetisation strategy, this approach will follow a unique set of metrics.
While Meta cites these new rules as simply “tests”, they’ve also suggested that these approaches could continue to change and evolve. While there is a promise that assets will eventually be made more interoperable and capable of being carried across apps (Sharma alleges that Meta “wants to do this in a way that will scale eventually to cross worlds, into shared spaces and beyond”), it’s still quite unclear how the marketplace will be managed or what this roadmap might look like — particularly when it comes to figuring out whether items can one day live beyond Meta’s parameters.
In all, this news has both angered and excited those in the Web3 community. One Twitter user wrote: “If Meta wants 47.5% of NFT sales, they’ve gotta talk to the IRS — because I don’t even have that after taxes.”
Sharma has since responded to the friction, defending the sizeable cut as a “pretty competitive rate in the market.” He also added: “We believe in the other platforms being able to have their share.”
A look back at a difficult first quarter
Earlier this year, Meta experienced a historic plunge in its stock price — with over $230 billion USD in its market value erased (the largest-ever one-day loss for any US-based company in history). Due to privacy changes made by Apple, the company also readied itself for another continued loss in the billions. The slump in stock price also caused Mark Zuckerberg to lose a whopping $30 billion in personal wealth.
In contrast with other Web3 platforms, Meta also failed to launch its own cryptocurrency and achieve a “deep compatibility” with blockchain. With a goal of empowering “billions of people” and hoping that 1.7 billion users would be able to create digital wallets, too much resistance from regulators led to the project ultimately failing and being shelved. Since then, however, reports have revealed that Meta hasn’t given up on entering the crypto space — having filed 8 trademark applications earlier this year (including applications for crypto tokens, crypto trading, blockchain software, wallets and crypto exchanges).
In 2022, Meta isn’t the only Big Tech company to come under pressure. As policies have tightened at the US Federal Reserve to decrease the industry’s rich valuations following years of ultra-low interest rates, the NASDAQ — which is primarily made up of tech and other growth stocks — fell by more than 9% in January. This was the biggest monthly drop since COVID-19 first struck the market in March 2020.
And while Big Tech companies were credited with driving gains for the wider market throughout the course of the pandemic, analysts believe that the market has now shifted. According to Brad McMillan, chief investment officer for Commonwealth Financial Network: “There’s a general sense that what’s been moving the market higher is not going to take us to the next level. The question is where is the next growth engine coming from.”
How does this stack up against Web3 traders?
As more metaverse worlds continue to rise in popularity, this raises an important question: should these worlds be open or closed? To clarify, a closed metaverse can be defined as one governed by a central authority (like Meta) that takes ownership of lands and items sold within its platform. On the other hand, an open (or decentralised) metaverse is one that allows users to buy and own metaverse land and items as NFTs, in addition to an ability to exchange them for cryptocurrency.
Comparatively, decentralised platforms and marketplaces appear to take much smaller cuts from creators. OpenSea, the leading NFT marketplace in Web3, currently only takes a 2.5% cut from each transaction — whereby creators usually take anywhere between 2.5% and 7.5%. LooksRare, another popular NFT marketplace, only takes a meagre 2% — while BinanceNFT charges only 1%.
While critical of Meta’s large virtual asset cut, many Web3 community members have also seen this move as an unintended push towards decentralisation. “Facebook charging 47.5% for every NFT sale is the best thing to ever happen to us,” one person tweeted after the news was released, implying that Meta’s massive fee would ironically help steer more users towards open, decentralised platforms like Decentraland and The Sandbox.
Other users, however, have expressed clear anger at the social media giant’s announcement, calling it “the enemy of decentralisation and freedom in Web3.” Following Big Tech’s reign of increased profit during the course of the pandemic (Facebook reported an increase of 10% from targeted advertising during COVID-19 lockdowns), it’s hard not to see this move as doubly harmful to online creators and small businesses who may seek out opportunities in Web3.
Prioritising growth over other concerns
If we take a long, hard look back at Facebook’s history and online trajectory (including its encounters throughout its pre-Meta days), it isn’t out of left-field to suggest that the social media giant has been primarily fuelled by greed and profit.
At the time of writing, Zuckerberg owns the four most downloaded mobile apps in the last decade: Facebook, Facebook Messenger, Instagram and WhatsApp. Sources have long since accused Zuckerberg of seeing company acquisition as a means of neutralising potential competition and preventing users from ditching Facebook for alternative platforms. For instance, the social media tycoon’s initial acquisition of Instagram followed a general likening to Facebook’s features and revocation of other leaders’ rights (including those of company founders Kevin Systrom and Mike Krieger, who eventually left the platform after Zuckerberg took control).
In late 2021, internal documents known as “The Facebook Papers” were published by an international consortium of news outlets, following their access to the materials once they were made available by U.S. Congress (and now-revered whistleblower Frances Haugen). This assemblage of documents, according to the Financial Times, included “thousands of pages of leaked documents [painting] a damaging picture of a company that has prioritised growth” over other concerns.
The Associated Press, another news outlet reporting on the matter, summarised the documents as such: “These complaints cover a range of topics, from its efforts to continue growing its audience, to how its platforms might harm children, to its alleged role in inciting political violence.”
Following Haugen’s release of the documents, Jessica J. Gonzalez, co-CEO of advocacy group Free Press Action, remarked that the whistleblower revelations “confirm what many of us have been sounding the alarm about for years” — that the real problem behind Zuckerberg’s empire is actually the business model in which he’s used as a means of governing his platform all along. One that subsists almost entirely on greed and capitalistic gain.
Even as far back as 2010, Zuckerberg began touting his belief that “privacy was no longer a social norm”. And in the following years, Facebook users have been unwittingly trading their privacy for a seemingly more enhanced online experience. Studies have suggested that an estimated 4 in 10 users use social media accounts to follow their favourite products or brands, while 28% of online users claim that targeted ads on social media have effectively brought new services or products to their attention.
On the other side of the curtain, our online data has been regularly harvested and fed to algorithms — serving as raw material for advertisers to make better predictions about what will generate the highest levels of profit. It’s a process called surveillance capitalism — and it’s allowed Big Tech companies to claim our online activity and turn it into their own proprietary knowledge for capitalist gain. In other words, our online personas have, in essence, become products themselves.
Author and tech analyst Shoshanna Zuboff refers to surveillance capitalism as “the dominant economic institution of our time”. Furthermore, “this system successfully mediates nearly every aspect of human engagement with digital information” and “today all apps and software, no matter how benign they appear, are designed to maximise data collection.”
This brings us to another important question: if a company should have no shame in monetising the very marrow it can milk from its users, then what’s stopping it from doing the same thing with any assets they produce?
Why is Meta’s approach the wrong one?
Let’s circle back to the main subject — which is Meta’s proposed virtual asset cut for creators in Horizon Worlds. How might this approach be setting the company up for failure?
For one, many will know that Meta’s big cut isn’t the first instance of Big Tech greedily clawing funds away from small creators. For years now, Apple has come under fire (even from Mark Zuckerberg himself) for charging developers a 30% fee for in-app purchases made through its dedicated App Store.
Funnily enough, Zuckerberg has even raised Apple’s App Store fee as an example of what he claims he doesn’t want to repeat with metaverse creators. “As we build for the metaverse, we’re focused on unlocking opportunities for creators to make money from their work,” he said back in November 2021. “The 30% fees that Apple takes on transactions make it harder to do that, so we’re updating our subscriptions product so now creators can earn more.” In typical fashion, however, Zuckerberg has done just about anything but place the best interests of creators at the forefront of his roadmap.
Like many of its other visions, Meta’s promise to build the metaverse has also been largely rhetorical and not fully clear. The company’s rebranding, name change and acquisition of Oculus have proven Zuckerberg’s seriousness about growing the VR ecosystem and developing a metaverse-building strategy. However, massive losses to the company’s Reality Labs Division and relatively low adoption rates of VR still indicate that the company isn’t quite dominating the space.
A steep decline in Facebook use has also been a recent concern, with a reported 45% of users allegedly dropping from the platform. With competitor apps (not yet acquired) such as TikTok dominating the market — particularly with Gen Z users — Meta appears to be losing any hope of having a dedicated user base that will seamlessly migrate into the metaverse.
Other moves have also indicated Meta’s lack of clarity in winning the metaverse category. It recently shut down a project to build its own VR/AR operating system, instead choosing to build on the Android platform. The company is also opting to use Qualcomm chips in its upcoming augmented reality glasses, as opposed to utilising its own internal design. Unlike Apple, the company hasn’t embraced vertical integration and carved out its own adoption of particular hardware and chips that will ensure maximum performance. And so far, Meta has been unwilling to open its operating system to other manufacturers — an advantage that has historically allowed Microsoft to dominate the PC market over the last few decades.
While the Meta Quest 2 is currently the best-selling VR headset at the time of writing, this success is forecasted to change once other companies start releasing their own dedicated devices. Apple is likely to produce a high-performance headset that will be equipped with LiDAR technology — a feature that may allow it to one day dominate the headset market.
So, is Meta a premium supplier of technology? Or will it serve as a trailblazing metaverse platform? The problem is that we still don’t know. Combine all of these shortcomings with a very steep fee and you have a particularly muddy strategy that’s likely to fail.
Other major tech leaders have also voiced their lack of belief in Meta as a leader in the emerging metaverse space. Reggie Fils-Aime, former president of Nintendo of America Inc., recently spoke about his stance on Meta in an interview with Bloomberg: “Facebook itself is not an innovative company,” he’s bluntly stated. “They have either acquired interesting things like Oculus and Instagram, or they’ve been a fast follower of people’s ideas. I don’t think their current definition will be successful.” Conversely, Fils-Aime has also expressed his belief that smaller companies will play a much larger role in creating successful metaverse worlds.
Keeping in line with Fils-Aime’s projection, Web3 presents a more creator-focused and community-driven approach to online content creation. Allowing creators to have greater ownership over their digital goods will let them move away from expensive, centralised platforms that are no longer serving them.
The report largely deals with the freeze on new hires — first discussed in a report from Reuters last week — as the company reevaluates priorities and cuts back on and postpones select projects. The Verge reports this will affect non-Reality Labs divisions such as those that deal with Facebook Dating, Messenger Kids and more. The Reality Labs-specific changes will be announced soon, according to internal comments from CTO Andrew Bosworth last week, but Meta and CEO Mark Zuckerberg insist that staff lay-offs are not planned “at this time.”
However, after mentioning that Meta isn’t planing to move staff off Reality Labs and onto other teams, The Verge’s report also makes a passing comment claiming that the Reality Labs division “already totals over 17,000 people.” We reached out to Meta to independently confirm the accuracy of this number, but Meta spokespeople declined to comment.
Meta is cutting back or postponing some projects in its Reality Labs division and halting hiring for some positions.
Reuters first reported earlier this week that Meta’s Chief Technology Officer Andrew Bosworth broke the news to Reality Labs staff in a weekly Q&A session, according to a summary of his comments viewed by Reuters, with more specific changes to be announced within the week. We independently reached out to Meta about the report, and a spokesperson reiterated to UploadVR they’re “evaluating key priorities,” not planning layoffs “at this time,” and “so far, Meta has hired more engineers in Q1 than all of 2021.”
While Meta isn’t alone among platform-building tech companies that seem to be preparing to weather a “market downturn“, Zuckerberg’s investment in realizing VR and AR technology remains significant and we’ll be curious to see how the company focuses its efforts going forward. In June, for example, the poorly rated Venues app will disappear as events move inside Meta’s broader Horizon Worlds effort.
In the increasingly lifelike worlds of VR, users are experiencing hate speech and sexual harassment. How should these lawless spaces be governed?
Psychotherapist Nina Jane Patel had been on Facebook’s Horizon Venues for less than a minute when her avatar was mobbed by a group of males. The attackers proceeded to “virtually gang-rape” her character, snapping in-game pictures as mementos. Patel froze in shock before desperately trying to free her virtual self – whom she had styled to resemble her real-life blond hair, freckles and business casual attire.
“Don’t pretend you didn’t love it,” the human voices of the attackers jeered through her headset as she ran away, “go rub yourself off to the photo.”
Founder says his company is committed to augmenting the real world rather than replacing it
The Snapchat founder, Evan Spiegel, has dismissed Facebook’s “metaverse” ambitions as “ambiguous and hypothetical” as he announced a raft of new augmented reality features coming to phones and Snap’s experimental AR Spectacles over the next year.
Speaking ahead of the Snap Partner Summit, the company’s flagship annual event, Spiegel argued Snapchat was uniquely placed to guide the next decade of technology thanks to the company’s vast array of augmented reality services, such as the “lenses” that are used by millions of people every day.
Company’s push into ‘metaverse’ continues with Bay Area shop offering headsets and smart glasses
Meta Platforms is set to open its first physical store where shoppers can try out and buy virtual reality headsets and other gadgets as the company plots a course to take its highly touted “metaverse” mainstream.
The 1,550-sq ft Meta Store at the company’s Burlingame campus in California opens on 9 May, and will feature demos for its Quest 2 VR headset and video calling device Portal, as well as smart glasses it produces with Ray-Ban, Meta said on Monday.
The online store seems to have launched on the same day Meta announced it is opening its first physical store in Burlingame, California. Both the physical store and online store sell the Quest 2 VR headset and Portal video calling appliances, while also marketing the Ray-Ban Stories smartglasses.
This change continues the slow but ongoing rebrand from Oculus Quest to Meta Quest:
The Oculus brand still remains as the name for the required smartphone app, the URL for the web version of the app store, and the brand for many of the developer tools and SDKs needed to build for Quest.
If there’s one person to thank for the current virtual reality (VR) industry it’s Oculus founder Palmer Luckey – not Meta CEO Mark Zuckerberg. Last week Luckey marked what would have been Oculus’ 10th anniversary with the first in a series of new blog posts looking at the company’s history, his role, and most surprisingly; teasing mention of new VR tech he’s been keeping under wraps.
So a quick history lesson if you’re not aware. Luckey founded Oculus in 2012 at the age of 19, turning a niche hobby into something far bigger. After bringing on board the likes of John Carmack (Doom co-creator) and running a successful Kickstarter, Facebook stepped in and bought the startup for $2 billion USD in 2015. However, it wasn’t plain sailing thanks to a number of issues including a Zenimax lawsuit and Luckey’s own actions on Reddit. This led to him leaving the company in 2017, just shy of the five-year mark.
Five years on from that event and now CEO of military drone manufacturer Anduril, it seems the VR evangelist isn’t done with the technology. “This year is also the right time to finally unveil some VR technologies I haven’t been able to talk about for a variety of reasons,” said Luckey on his blog.
What these could be are anyone’s guess at the moment, Luckey plans on releasing further details during the course of the coming year. As he’s not “been able to talk” about whatever these technologies are suggests he’s been under NDA for a while, could they be due to military contracts or could they be more mainstream focused?
Expect to hear a few Oculus home truths and some angry venting from Luckey, hopefully providing a few juicy morsels regarding Oculus’ inner workings. “I have quite a bit to share, especially regarding portions of Oculus history that have been subject to extensive revisionism in public accounts.”
In 2022 the Oculus brand is slowly sunsetting as Meta’s rebranding continues down its metaverse path. Oculus Quest 2 is now Meta Quest 2, with packaging and online branding all now brandishing the new logo. The name hasn’t disappeared completely though, Oculus.com still exists, and App Lab is still referred to as Oculus App Lab.
This year is also set to welcome new headsets like Meta’s Project Cambria, reportedly packed full of sensors for more immersive interactions. As and when Palmer Luckey divulges these VR technologies, gmw3 will let you know.