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Why the Tech Giants are interested in the Metaverse

Published on 18 August 2022 by NEOMA

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What motivation is behind the tech giants’ interest in the metaverse? Why now? Three reasons can be offered: commercial, sociological and technological. Florence Duvivier and Jiachen Yang, strategy professors at NEOMA, share their views in Monde des Grandes Ecoles review.

The original article was published in French on the website Monde des Grandes Ecoles : Intérêt des Géants de la Tech pour le metaverse on 08/07/2022.

The embodied internet is the merger of the physical and digital worlds through technological solutions called the metaverse. It will be embodied in the sense that, instead of interacting with it through screens, the users will be immersed in it, where their visual or auditory (perhaps more so) senses will be enveloped by the internet. Once this occurs, the transition from Web 2.0 to Web 3.0 will have happened. The metaverse should find a wide application for work, entertainment and the combination of the two: socialisation, a virtual space in which we can connect with others like in the real world. What motivation is behind the tech giants interest in the metaverse? Why now? There are three values behind it: commercial, sociological and technological.

Commercial Value

At the Connect 2021 event, Mark Zuckerberg, CEO of Meta Platforms, officially announced the prioritisation of the metaverse on Facebook, going so far as to involve its rebranding. As the largest and most successful social media platform of our time, how can Facebook suddenly take a step into the wings, behind the metaverse? First, the growth and involvement of the user base on Facebook and its associated services has stagnated. Second, adolescents and young adults, the most commercially lucrative audience, have been attracted to rival services like Snapchat and TikTok. As a new strategy, Meta Platforms decided to disrupt its own company before someone else did it. Zuckerberg’s vision is a metaverse for everyone, meaning that all the companies should contribute to building a single, interoperable metaverse. In this vision, large companies will deal with building the metaverse’s global environment (for example, the payment and transaction systems) while small companies will deal with producing assets (avatars and digital goods for example). Being the first to pave the way for the metaverse is a crucial step towards possibly controlling it. Constructing the metaverse from scratch and connecting directly to the users through its own device, the Oculus headset, Meta Platforms aims to exclude the intermediation of third parties like Apple and Google. To implement its new strategy, Meta Platforms has planned to invest 180 billion dollars over the next ten years to construct the hardware and software solutions needed for a totally immersive and addictive user experience.

Sociological Value

Unlike the vision presented by Meta Platforms that incorporates work and entertainment for its metaverse, Microsoft chose to focus mainly on work and commercial collaborations in the foreseeable future. In his Microsoft Ignite 2021 talk, Microsoft CEO Satya Nadella described how work has evolved since connectivity became a keystone of the modern workplace, and how the pandemic drove the transition from rigid to flexible work. Microsoft launched a series of solutions, among them the metaverse and HoloLens, that would provide both flexibility and sociability reinforced by the merger of the physical and digital worlds. In addition, acquiring Ativision Blizzard Inc. for 68.7 billion dollars, as announced at the start of 2022, shows that video games are among Microsoft’s main priorities. This acquisition will make Microsoft the third largest gaming company in the world in terms of revenue, and it can serve as the second platform for converting existing users and attracting new users for its non-work-related metaverse.

Technological Value

Apple Inc. and Alphabet Inc. developed Artificial Intelligence (AI) solutions that aim to respond to the augmented reality expectations of users through the VR headset market.

With this current technological landscape being a bit broken up, all the leading companies in the industry today are each developing their own solutions. It remains to be seen how this competitive dynamic will play out over the next decade.

Professor

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DUVIVIER Florence

Strategy & Entrepreneurship

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YANG Jiachen

Strategy & Entrepreneurship

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