Why Microsoft may beat Zuckerberg to the metaverse

When comparing Meta — formerly Facebook — and Microsoft’s approaches to the metaverse, it’s clear Microsoft has a much more grounded and realistic vision. Although Meta currently leads in the provision of virtual reality (VR) devices (through its ownership of what was previously called Oculus), Microsoft is adapting technologies that are currently more widely used. The small, steady steps Microsoft is making today put it in a better position to be one of the metaverse’s future leaders. However, such a position comes with responsibilities, and Microsoft needs to be prepared to face them.

The metaverse is a virtual world where users can share experiences and interact in real-time within simulated scenarios. To be clear, no one knows yet what it will end up looking like, what hardware it will use, or which companies will be the main players — these are still early days. However, what is certain is that VR will play a key enabling role; VR-related technologies such as simultaneous location and mapping (SLAM), facial recognition, and motion tracking will be vital for developing metaverse-based use cases.

Meta is set to grab a large portion of the $51 billion revenues from VR that GlobalData expects will be generated by 2030. Facebook led the consumer VR headsets market in 2020 and registered 255 VR-related patents between 2016 and 2020. And, as Meta, the company also plans to launch an enterprise-grade headset in Q4 2021.

However, VR hardware and software have not been widely adopted. This is attributable to several issues, including latency, nausea, high prices, privacy concerns, and a lack of compelling content. While technologies such as 5G, cloud services, and motion tracking should help to address latency and nausea issues, improving content and developing effective data privacy practices will be paramount for VR’s success (more on data privacy in a moment). For these reasons VR is not yet ready to take on the task of the metaverse.

Microsoft seems to have understood better than Meta how people actually use technology. All you need to use Mesh – Microsoft’s so-called gateway to the metaverse – is your current smartphone or laptop. No clunky headsets or expensive tech setups are needed. With this approach, Microsoft is keeping its focus on available capabilities and enterprise applications over Meta’s vision of total lifestyle adoption. Microsoft Teams also currently has over 145 million daily active users, whereas the total cumulative installed base of VR headsets is less than 17 million. From these numbers alone, Mesh for Microsoft Teams has a possible user base of more than eight times the number of users Meta could hope to reach with its VR headsets.

Back to the matter of privacy: Internal documents have been released outlining Facebook’s inconsistent application of moderation policies, and the company has been accused of prioritizing “growth over safety” by whistleblower Frances Haugen. Although it has affirmed its commitment to data privacy in the metaverse — saying that it will minimize the amount of data collected, build technology to enable privacy-protective data uses, and give people transparency and control over their data — this will not be enough to reassure most future users.

Microsoft, on the other hand, is a market leader in data privacy and, when ranked by the 10 themes that matter most to the social media industry, is in second place overall, according to GlobalData’s Social Media Thematic Scorecard. Meta is ranked 21st overall out of 35 companies on the scorecard, and its activity with regards to data privacy will be highly detrimental to its future performance. So while we are yet to see even a glimmer of what a fully formed metaverse will look like, Microsoft currently has the edge.

Can we avoid replicating the worst parts of the internet in the metaverse?

The metaverse will suffer from the same issues that plague the current version of the internet unless the right actions are taken by those that end up with control. Beyond data privacy, some  other issues that could easily leak into the metaverse are misinformation, disinformation, echo chambers, and platforms that act as hosts to far-right content and extremist groups.

Big Tech already struggles — and largely fails — to contain misinformation and disinformation. For example, TikTok, a social media platform that specializes in short-form video creation, uses a moderating service to prevent misinformation and dangerous content. Since TikTok’s fact checking is outsourced to a third-party company, oversight is largely lost and certain videos that do not directly break community guidelines but are still harmful are allowed through. Fact checking should be done in-house by all Big Tech companies, but the possible size and scope of the metaverse means effective moderation could be difficult.

Content promotion algorithms, such as those used by Meta and TikTok to hold users’ attention for as long as possible,are also problematic, as is the quality of the information they provide. These algorithms create echo chambers in which harmful views are propagated and encouraged. If the metaverse ends up being underpinned by an ad-funded business model, then these algorithms will continue to systematically target individuals with hyper-personalized ads. Regulators and companies should work together to maintain data privacy in the metaverse and limit the negative effects of these algorithms.

Finally, there are a number of internet platforms that have become notorious for hosting far-right and white supremacist content, including 8kun, Telegram, and BitChute. If one company ends up owning and running the metaverse, then such websites can easily be removed. However, under a single owner the metaverse would be tightly controlled and would not realize its possible potential or see mass adoption. So we are likely to see these internet platforms and detrimental content algorithms replicated in the metaverse. And with interactions set to be avatar-to-avatar, the spreading of information can be even more personal and influential.

Microsoft, or any metaverse player who ends up taking the lead, will have to deal with these issues, and finding a solution will not be easy. There is a huge amount of hype surrounding the metaverse, but it is refreshing to see Microsoft keeping its focus on our presently limited capabilities. These small, steady steps put it in a better place to be one of the metaverse’s future leaders.

Emilio Campa is an Analyst on the Thematic Team at data analytics and consultancy GlobalData.