Metaverse Companies In, Tech Companies Out

By in
Metaverse Companies In, Tech Companies Out

Ever since Facebook recently rebranded as “Meta Platforms” to signal its change in focus to the metaverse, other major companies have started announcing their own ambitions in the space. But what exactly is the metaverse? The term comes from Neal Stephenson’s 1992 science fiction novel “Snow Crash”, where people use digital avatars to escape their own dystopian world by exploring a new one in virtual reality.

Fast forward to now, and companies like Meta are trying to build out and capitalize on an actual metaverse as the next version of the internet. In this case, avatars will represent users in an online world by leveraging video as well as augmented and virtual reality. Users will be able to do everything from interact, shop and play games to work, travel and attend events in virtual spaces with people who are not physically there with them. They can access this online world through a raft of devices from headsets and glasses to PCs and smartphones.

Here are three examples of how and why major US and Chinese companies are getting involved:

Meta Platforms (Facebook): CEO Mark Zuckerberg has been on the forefront of pushing into the metaverse, where he expects digital avatars to collaborate, socialize, work and be entertained among a host of other uses. In his presentation of the company’s rebranding last month, he said:

“Our hope is that within the next decade, the metaverse will reach a billion people, host hundreds of billions of dollars of digital commerce, and support jobs for millions of creators and developers.”

Zuckerberg also acknowledged that it would take many years and billions of dollars before it reaches scale, but that he believes “the metaverse will be the successor to the mobile internet.”

Our take: every tech company is trying to develop the next major platform after the smartphone and Meta clearly thinks the metaverse is it. Apple and Google own the current smartphone operating system, which Facebook missed out on. Now, Meta is trying to get ahead of the curve by defining and building out the next platform that will define daily activities and social interactions. The more the company can form the metaverse, the more it can set the tone for how Meta and other companies monetize it. Many are criticizing Meta for using its rebranding as a way to distract from current regulatory scrutiny. Fair enough, but it’s working on its next business model over the next decade.


Microsoft: Microsoft is creating a metaverse inside its business communication platform Teams, called Mesh. This feature will allow users to make their own 3D avatars and collaborate in virtual meetings using Microsoft’s smart glasses, mixed reality headsets, PCs and smartphones. Users can join meetings with their avatars that talk and animate their voices using AI. It will also include pre-built virtual spaces for people to collaborate in, which Microsoft hopes to customize in the future to mimic companies’ actual offices.

Our take: The real utility of creating a metaverse for work is allowing companies to better track the productivity of their workers, more so than even if they were in the actual office. That should keep employees more focused and accountable as a result. Moreover, this virtual office/meeting concept is another example of the pandemic advancing a new technology by creating new use cases. The world has clearly moved to remote or hybrid work settings, and this innovation makes that transition more seamless and hopefully efficient. Lastly, these virtual options help companies’ bottom lines as they can cut down on physical office expenses.


Tencent: The world’s largest gaming company and owner of super app WeChat finally announced its intention to enter the metaverse through a variety of businesses, particularly in gaming and social networking. This is the first time Tencent acknowledged its efforts amid China’s ongoing crackdown of tech companies. The company’s president said Beijing is not “fundamentally averse to the metaverse”, but he expects “a set of regulations different from the rest of the world” according to South China Morning Post.

Out take: Chinese tech companies are much more regulated and vertically integrated than their US counterparts. The metaverse is a new frontier on both fronts, so it will put both countries’ government – industrial models to the test. US regulators tend to be late to the party on new technologies, which may benefit US tech companies’ growth initially. That said, Chinese companies’ vertical integrations may make for a more seamless user experience from the outset.


Bottom line: Facebook, Microsoft and Tencent already have large user bases that will give them an advantage over competitors in their respective markets. Gaining a lead and molding the metaverse will allow them to increase their total addressable markets and craft the rules of commerce in the virtual world. The key will come down to developing not just the hardware, but more importantly software to create the next big app that drives engagement and therefore profits.