Mark Zuckerberg’s ambitions for the “metaverse,” the buzzy brand he has assigned to the idea of a digital world buttressed by virtual reality and dominated by Facebook parent Meta, have already run afoul of government regulators.
On Wednesday, the Federal Trade Commission filed an antitrust lawsuit against Meta, seeking to block its acquisition of a virtual reality firm called Within, which makes the popular fitness app Supernatural.
“One need look no further than the rebranding of the company from Facebook to Meta in 2021 to understand its vision and its priorities for the future,” the complaint reads, adding that the buyout would bring Meta “one step closer to its ultimate goal of owning the entire ‘Metaverse.’” “But instead of choosing to compete on the merits through its own VR dedicated fitness app, Meta has resorted to proposing this unlawful acquisition.” The terms of the deal were undisclosed.
The lawsuit highlights an uncomfortable truth for Meta as it pursues its conquests of virtual worlds: the hurdles are adding up. Zuckerberg may have gavage fed the term “metaverse” into popular usage, (it was first coined in the 1992 novel sci-fi Snow Crash), but despite Meta’s head start, the company faces dangers from all angles: regulators, competitors, moderation problems, and a weary ecosystem of potential partners put off by years of Facebook-related baggage. Meanwhile, the company on Wednesday faced its first-ever decline in revenue — a stark blow because Facebook’s juggernaut advertising machine fuels its metaverse ambitions.
Facebook parent Meta declined to answer specific questions about challenges it faces while carrying out its metaverse vision, instead commenting only on the FTC lawsuit. “The FTC’s case is based on ideology and speculation, not evidence,” company spokesperson Christopher Sgro said. “The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible.”
Meta has good reason to be confident about its metaverse. It made an early bet on VR with its $2 billion acquisition of Oculus in 2014, then a fledgling platform. The company has also poured serious investment into its metaverse projects. Last year, Reality Labs, ground zero for Facebook’s metaverse efforts, lost more than $10 billion. But the money and time may not necessarily translate to success. Other tech giants have already tried: Alphabet’s foray with Google Glass ended in implosion, while Microsoft’s efforts with its Hololens goggles have so far been met with a lukewarm reception.
To start, Meta has to contend with its poor track record in content moderation. For years, Facebook has been dogged with its inability to police harassment, extremism, violence and suicide on its social network. Some of those issues are already bleeding into the metaverse. Earlier this year, BuzzFeed News created a private test world in Meta’s Horizon World app that ran afoul of the company’s policies on hate speech. Meta’s moderators ignored it even after it was reported as violative. Children are also already flocking to Horizon Worlds, and experts are worried predators will follow.
As Meta works to establish its metaverse as the next big platform, Zuckerberg has identified Apple as a key foe. For years, a rivalry has been bubbling between the two companies. As Facebook limped from one privacy scandal to the next, Apple CEO Tim Cook criticized the social network’s advertising business, and Meta’s revenue has been torpedoed by the iPhone’s new guardrails for data tracking in apps. Zuckerberg has also taken potshots, deriding Apple’s high price tags for consumer devices.
Zuckerberg reportedly thinks the two companies are primed for an even bigger battle, with monumental stakes: the future of the internet itself.
“Apple is going to be a competitor,” Zuckerberg said during a company all-hands meeting earlier this month, according to the Verge. “It’s not just [that] they have a device that has some more features than us. It’s a very deep, philosophical competition about what direction the internet should go in.”
Apple has mostly been mum about its plans for virtual and augmented reality — and it doesn’t use the word “metaverse” — but the company is rumored to soon be releasing a mixed reality headset. The device would be the company’s first entrance into a major new hardware category since the Apple Watch in 2015, and would be a major initiative as the tech industry attempts to settle a frontier beyond smartphones.
Apple and Facebook, in Zuckerberg’s eyes, have visions for virtual/augmented reality that are diametrically opposed. Facebook intends to work with several different companies to power its efforts, he told employees, while Apple will make everything itself — an approach the company has taken with all of its other products.
Last month, Meta helped launch the Metaverse Standards Forum, a coalition of companies that aims to develop open standards and interoperability in the metaverse. High-profile members include Microsoft, Epic, and Nvidia. But one glaring, but obvious, absentee is Apple. It’s also notable that whenever Facebook has tried big projects that require buy-in from several different partners, like with its Libra cryptocurrency initiative, its efforts to build its own phone, or connectivity projects like Internet.org, those efforts have eventually fizzled out.
But while Zuckerberg touts the openness of Facebook’s metaverse, Apple’s approach is open as well in the one way that matters most: its relationship with app developers, said Bob O’Donnell, principal analyst for the research firm Technalysis. “Meta has a good amount of developer support, but nothing like what Apple has done,” he said. Meta will also be at a deficit when it comes to its reputation with privacy, O’Donnell said. “Apple starts with a clear advantage, and Meta starts with a clear disadvantage.”
Apple didn’t respond to a request for comment.
Apple is also more adept at selling hardware. Jaron Lanier, a pioneer in the field of virtual reality, said he would like Meta’s business model in the metaverse to focus on selling devices and other goods, instead of relying on an advertising model that could be used for “influence peddling.” The model has its limitations, as illustrated by Wednesday’s revenue decline, so the metaverse could be an opportunity to experiment with something different. “But Meta is really just stuck in ideology,” he said. (Lanier currently works for Microsoft, but said he doesn’t speak on behalf of the company.)
Still, Meta has faced challenges when it comes to selling hardware. Earlier this week, the company said it’s raising the price of its Meta Quest 2 from starting at $300 to $400, a sign that it can’t continue to subsidize its device business like it has up until now.
And Apple, likely to be Meta’s most formidable competitor, hasn’t even released a product yet.