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Can Facebook, now known as Meta, monopolize the metaverse? – Vox.com

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The company’s new direction is already sparking antitrust concerns.
Uncovering and explaining how our digital world is changing — and changing us.

This story is part of a Recode series about Big Tech and antitrust. Over the next few weeks, we’ll cover what’s happening with Apple, Amazon, Microsoft, Meta, and Google.
It wasn’t immediately clear what Mark Zuckerberg wanted to do with Oculus when Facebook bought the virtual reality headset maker back in 2014. Those plans are now coming into focus: Facebook is now called Meta, and it’s not just a social media company, it’s a metaverse company. And as the new name implies, Meta wants to win in this space, just as Facebook won in social media.
But a growing group of regulators, politicians, and advocacy groups are raising concerns about Meta’s plans in this realm.
The company formerly known as Facebook spent nearly two decades cementing its position as the biggest social media company in the world — in large part by buying other social media startups, like Instagram and WhatsApp. Critics have accused Mark Zuckerberg and his company of using a “copy-acquire-kill” strategy to pressure its would-be competition into selling or risk being crushed by Facebook.
Now, some are concerned that Meta may be employing the same tactics in the metaverse, a concept that Zuckerberg describes as “an embodied internet where you’re in the experience, not just looking at it.” In practical terms, the metaverse is a virtual space where people wearing AR/VR headsets can interact with each others’ avatars, play games, have meetings, and so on. While Meta is still in the early stages of developing the futuristic hardware and software that will make this possible, the company is already a market leader. Meta’s VR headsets made up an estimated 75 percent of all AR/VR headset shipments in the first quarter of 2021. And as Recode’s Peter Kafka has reported, the social media giant has been quietly buying up companies in the metaverse, acquiring at least five AR/VR-related companies in the past year.
Regulators are paying attention. The FTC and several state attorneys general are investigating whether Meta is using monopolistic practices in the AR/VR market, according to a January Bloomberg report. The Information reported that the FTC is taking a close look at Meta’s planned acquisition of Within, the company behind the popular VR fitness game Supernatural. In a new report highlighting Meta’s metaverse-related acquisitions, the Tech Oversight Project, an antitrust advocacy group, claimed that the company was using “its same playbook to squash potential competition,” as it has in the past.
Meta’s critics are especially skeptical about the company buying up metaverse companies because of its contentious acquisitions in the past, particularly Instagram and WhatsApp. The FTC and 48 states and territories sued Facebook over these purchases at the end of 2020, drawing on internal emails showing how Facebook executives allegedly strategized to get rid of the company’s competitors, including Zuckerberg saying that it’s “better to buy than compete.” The states’ case was dismissed (a decision the states are appealing), but the FTC’s is still going. Meta now argues that the government is backtracking and going after deals that it approved years ago.
Antitrust regulators argue that Meta is an unbeatable social media behemoth, but in recent weeks, Meta has suffered a series of setbacks that might make it harder for that argument to stand. After a fourth-quarter earnings report showed shrinking user growth on the Facebook app, Meta’s stock price took a historic dip, losing more than $250 billion in market value in a day, the largest ever single-day drop for a US company. Executives blamed the bad news, in part, on competition from TikTok, which is popular with younger users Facebook is struggling to attract.
That Meta is losing relevance in the social media market is a very real threat for the company. It’s also why, even though the technology is still largely hypothetical, the potential regulation of the metaverse — not social media regulation — could become the more worrisome long-term threat for Meta, one that could slow down the company at a time when it needs to reinvent itself to succeed.
For users, the debate is also about who will control the metaverse. Many leading technologists say the rise of the metaverse is akin to the invention of the mobile web or the internet itself. And if this new alternate reality really is this powerful, then whoever controls it — whether that’s Meta, a handful of other Big Tech companies, or smaller companies — could become the tech giants of the future.
“Without the ability for other companies to compete with Facebook and their money, then you’re really only giving Facebook the opportunity to create for VR,” said Stephanie Llamas, founder of the metaverse market research firm VoxPop. “And that means we might be missing out on really cool stuff.”
We don’t know yet if Facebook will establish a monopoly in the metaverse because the metaverse doesn’t fully exist. The AR/VR ecosystem that exists today is just one part of what Zuckerberg and other business leaders see as a whole host of new technologies that will ultimately support the metaverse — or many metaverses. Apple and Google are reportedly working on headsets that could compete with the Meta Quest, while other major players like Microsoft and Sony are expanding their existing AR/VR product lines. Microsoft, for one, recently spent nearly $70 billion acquiring Activision Blizzard, one of the biggest gaming companies in the world, a deal that could have major implications for the development of the metaverse.
“Investing in and building products that consumers want is the key to success,” said Meta company spokesperson Christopher Sgro. “We cannot build the metaverse alone — collaboration with developers, creators, and experts will be critical. As we invest in the metaverse, we know that we face fierce competition from companies like Microsoft, Google, Apple, Snap, Sony, Roblox, Epic, and many others at every step of this journey.”
Some people in Washington want to take action before Meta has the chance to corner an emerging market once again. That may require changing existing antitrust laws, which critics say are too narrow. Antitrust regulations have also historically relied on the cost of goods to consumers and don’t take into account the modern digital economy, where services like Facebook and Instagram are free. Whatever regulators and lawmakers decide to do with Meta will have reverberations throughout Silicon Valley and might define the fight to break up Big Tech.
Do you work at Meta or in the AR/VR ndustry and want to talk about antitrust? If so, you can contact Shirin Ghaffary confidentially at shirin.ghaffary@protonmail.com (Signal number available upon request) or Sara Morrison at morrisonsara@protonmail.com
Some competitors are already complaining that Meta isn’t playing fair in the new metaverse market. Mark Zuckerberg has said that he wants the metaverse to allow other companies to build in this space. But some independent developers argue that Meta isn’t as open as it says it is.
One big issue: Some AR/VR hardware companies say Meta is discounting its VR headsets to the point that it’s hard for smaller startups to compete. Meta’s Quest 2 headset currently costs $299, which is several hundred dollars below any comparable device on the market. The FTC is reportedly looking into the possibility that Meta is selling Quest headsets at a loss in an attempt to undercut competitors and drive them out of the market, a practice known as predatory pricing.
“No one can put a product on the market at the price they’re at today, with the same kind of capabilities,” Stan Larroque, founder of the Paris-based AR/VR startup Lynx, told Recode. The company plans to release its first consumer headset, which Larroque says will have more advanced features than the Quest 2, for $700. “My name is not Mark Zuckerberg. I cannot sell my product at a loss.”
Larroque added that Meta has tried to poach his team of engineers with offers of higher salaries, but his staff stayed on. Larroque also said he’s spoken with various regulatory agencies and lawmakers in the US and Europe about Meta’s business practices. Meta declined to comment on Larroque’s claims.
But Meta’s lower price for its headsets is not necessarily an antitrust violation. Predatory pricing cases are very difficult to prove. The current law says below-cost pricing is only illegal if it’s done by a dominant company in order to run competitors out of business, allowing it to raise its prices above market levels to recoup its losses once it has a monopoly. Courts generally see low prices as good for consumers, even if they come at the expense of competitors.
Another topic that’s come under scrutiny is whether Meta’s metaverse is truly open to third-party software developers. Currently, Meta operates an AR/VR app store — similar to Apple’s App Store or Google’s Play Store — for which developers can create software for its headset. Meta, like Apple and Google, takes a 30 percent cut of any purchases made in the apps. Meta has also required users to sign in with Facebook accounts, a requirement that’s raised concerns about the company creating a walled garden. (Following an outcry from many gamers, Meta said it plans to end the Facebook account requirement.)
Developers have raised other concerns about how Meta operates its app store. Some have accused the company of blocking rival apps from being carried on Meta’s Quest AR/VR app store, or of copying the competition outright. For example, Meta’s Horizon Worlds social space is similar to the popular game Rec Room, and the company’s “Horizon Workrooms” virtual work conferencing software looks a lot like a collaboration app from a company called Spatial. (Spatial has since pivoted to NFTs rather than VR; the company’s head of growth Jacob Loewenstein told Recode that the reason for the pivot wasn’t because Meta copied Spatial but because of growing business opportunities around NFTs, artists, and creators.)
Meta has also acquired some of the most popular third-party games for the Quest headset, including not only Supernatural but also Beat Saber, which is one of the most popular games in VR and currently listed among top-selling games in Meta Quest’s app store.
“I’ve spoken to a lot of developers who feel they don’t even have a chance to enter the market because Facebook is buying up the technology that they’re trying to develop,” Llamas, from VoxPop, said. On the other hand, Meta’s AR/VR can be beneficial for the industry since the company can pour resources into developing startups and hardware to scale to a wider audience, she added.
In response to concerns about whether its AR/VR platform is truly open to third-party developers, Meta pointed to the fact that the company still allows the games it has acquired to run on third-party gaming systems.
As AR/VR becomes a more mainstream technology — and as Quest headsets capture a larger share of the market — whether or not Meta is giving its own products an advantage will become a higher stakes battle.
The metaverse is still very much part of a hypothetical future, which makes accusations that Meta is monopolizing it now tough to prove. And while Meta has had issues with the FTC in the past — including a record $5 billion fine over Facebook privacy violations a few years ago — the agency allowed it to acquire the companies that helped it become the dominant force it still is today. The FTC is reconsidering that now.
In their lawsuits against Meta, the FTC and attorneys general argued that the company’s acquisitions and anti-competitive practices helped it dominate social media and protected it from competition in up-and-coming spaces like mobile and messaging, which it was unable to do on its own. Other companies found their access to Facebook’s platform restricted or limited if they worked with competitors or were competitors themselves.
The FTC is now asking for the acquisitions of Instagram and WhatsApp — along with any other asset that is found to illegally harm competition — to be undone. This would effectively break up the company now known as Meta.
Meta says the FTC hasn’t proved that Meta has a social media monopoly. Meta Vice President and General Counsel Jennifer Newstead said that the FTC “cleared these acquisitions years ago,” and that the government “now wants a do-over, sending a chilling warning to American business that no sale is ever final.” Meta has scored one victory in the case, when a judge threw out the states’ lawsuit and said the FTC needed to make a better case that Meta had a social media monopoly. The FTC refiled a longer, more detailed complaint that so far has been allowed to move forward over Meta’s objections.
Meanwhile, other parts of the world may have lost some of their appetite for Meta mergers. The company’s attempt to buy Giphy, a generator and database of GIFs, is being fought by antitrust regulators in the United Kingdom, which fined the company millions of dollars and ordered it to sell Giphy off (Meta has appealed, and the acquisition is on hold until it’s resolved). But after more than a year of scrutiny, Meta’s $1 billion acquisition of customer service software company Kustomer finally went through after Meta secured approval from regulators in the UK, US, and EU, so not every Meta merger is being blocked.
In any case, Meta maintains that it has plenty of competitors, an argument that may be helped by its recent quarterly earnings.
“If Facebook is losing market power, that would be relevant to the FTC’s lawsuit,” Rutgers Law professor Michael Carrier said. “The suit challenges Facebook’s conduct not just at the time of the acquisitions but also continuing to the present.”
The history of antitrust cases against big, disruptive technology companies shows that the government doesn’t have to win to have an impact. The DOJ sued IBM and Microsoft for monopolizing the mainframe and operating system markets, respectively. Those cases ended up being dropped or settled, but miring the companies in years of litigation during technological shifts allowed for competitors to emerge.
The IBM and Microsoft cases show how antitrust action can distract or discourage tech companies from new markets; in those cases, personal computing and the mobile internet, respectively. It’s still too early to say if Meta will be similarly impacted.
The cases also show the gap between the fast-moving technology industry and the government’s response, which is notoriously slow. It can take decades for antitrust cases to be resolved. Attempts to reform legislation can take even longer.
“There’s a real problem in Washington where we’re always fighting the fight from five years ago, or sometimes we’re fighting the fight from 10 years ago. And it makes it really difficult to ever get ahead of things,” Charlotte Slaiman, competition policy director at Public Knowledge, said.
The FTC isn’t ignoring the metaverse, either. When the agency re-filed its complaint against Meta last year, it included a new section about the metaverse. The agency noted that Meta’s pattern of cutting off access to its platform for developers who work with competitors, or whose apps directly compete with Meta’s services, is “likely” to occur whenever the company faces competition from new technologies. The metaverse was cited as an example of one of those new technologies.
That doesn’t mean the agency can do something about Meta and its metaverse ambitions anytime soon. Antitrust cases are tough enough to prove in established markets, let alone emerging ones. But that may be a fight the FTC or the DOJ’s antitrust division — which was reportedly looking into Facebook’s VR acquisitions back in 2020 — wants to take on, now that both are led by vocal critics of Big Tech’s power over the economy.
“The argument that the VR market is too new [or] unknown could have worked a few years ago, but today, it could provide an enticing test case for agencies intent on showing that they will vigorously enforce the antitrust laws against ‘nascent competitors,’” Carrier explained.
The FTC may get some help from lawmakers. Bipartisan antitrust bills specifically targeted at Big Tech companies and digital platforms are making their way through Congress. One bill, the Platform Competition and Opportunity Act, would forbid dominant companies from acquiring competitors — or potential competitors — in order to reinforce their monopoly power. If it passes, Meta may not be able to continue to make acquisitions in certain markets, including the metaverse, according to Stacy Mitchell, co-director of the Institute of Local Self-Reliance.
But the Platform Competition and Opportunity Act seems to have stalled in Congress, which has yet to give any of the Big Tech antitrust bills a floor vote in either house. The bill’s Senate co-sponsors, Sens. Amy Klobuchar and Tom Cotton, didn’t comment to Recode on its progress. Advocates have become increasingly worried at how little time is left in this session.
In the meantime, the FTC and the DOJ are currently working on new merger guidelines that the agencies said will better address modern markets and what they will consider when deciding whether to approve mergers. But it will be at least a year before those guidelines are complete.
There are other hurdles when it comes to regulators’ plans to rein in Meta. Without increased funding from Congress, the FTC has limited resources and has to pick its battles, especially when it comes to fighting massive companies, including the other Big Tech companies, that can afford an army of lawyers to fight back. FTC chair Lina Khan may decide an emerging market like AR/VR isn’t the hill she wants to die on.
There’s still a lot we don’t know about how exactly the metaverse will shake out. It’s possible that Meta’s plans may fail not just due to regulation, but business realities.
Putting aside the debate about competing tech giants in the metaverse, the masses may not want to engage with this alternate reality at all. Zuckerberg’s announcements about the metaverse have been met with a good deal of confusion and skepticism. And let’s not forget that, a decade ago, Google Glass — that company’s early attempt at an augmented reality headset — notoriously flopped because it just wasn’t popular with everyday users, many of whom found it privacy-invasive and uncool. Only about a quarter of Americans have ever used an AR or VR headset, and just 28 percent say they’re excited by the technology, according to a July Morning Brew-Harris poll.
And let’s not forget Meta’s history of privacy problems and content moderation issues that have contributed to users losing trust in the company. That means people might be reluctant to give Meta more access to even more personal data that AR/VR headsets can collect, like our eye movements and facial expressions.
Regardless of how successful or not Meta’s business plans in the metaverse are, having the looming threat of regulation hanging over its head isn’t helping. Regulation could slow Meta during a critical moment for the company when it needs to reinvent itself. What’s clear is that no matter what happens, regulators are trying to get ahead of the metaverse, and Meta won’t be able to skate by as easily as it has in the past.
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Metaverse Crypto Index Fund Launched by Matthew Ball, Multicoin, and Bitwise – Decrypt

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There's a wide array of crypto builders working to bring the metaverse to life, whether it's via platforms, tools, assets, or infrastructure. Now one of the leading voices around the metaverse has launched an index fund focused on crypto assets tied to the next-generation internet.
Today, writer and venture capitalist Matthew Ball announced a partnership with Multicoin Capital and Bitwise Asset Management to launch the Ball Multicoin Bitwise Metaverse Index. Bitwise has also made an associated fund available to qualified purchasers.
"We developed the Ball Multicoin Bitwise Metaverse Index Fund because, prior to today, there was no easy, expert, and methodologically diversified way for investors to have broad-based exposure to bona fide metaverse-focused crypto assets," Ball told Decrypt.
"To this end, the Index doesn't exist to time Event A or Market Conditions B. It exists so that investors can participate in what we believe is a multi-trillion dollar transformation, which will unfold over the coming decade," he continued. "If blockchain is relevant to the future of the metaverse, and our approach is sound, we believe the opportunity is significant—today, tomorrow, next month, and so forth."
The index will feature up to 40 crypto assets chosen by the partners, but a list of included assets was not provided to Decrypt by the time of publication. Bitwise's associated fund is available to qualified purchasers with a $100,000 minimum investment.
Ball described the Ball Multicoin Bitwise Metaverse Index as a "rules-driven index that combines the best of institutional indexing approaches with special adaptations to the crypto and metaverse spaces. That includes various risk screens, such as analyzing liquidity, developer activity, tech and regulatory risk, and "relevancy to the metaverse," said Ball.
"The ultimate goal is to curate the crypto assets that will be outsized contributors to the creation and success of an open metaverse," he added.
The metaverse refers to a future version of the internet that many believe will be built on blockchain technology. It's expected to be a more immersive and interactive experience that people navigate via 3D avatars and use for work, play, shopping, and socializing. It may also use NFT assets for user-owned items like avatars, apparel, and virtual land.
Ethereum-based games like Decentraland and The Sandbox are seen as early examples of the metaverse.
Facebook also showcased its own vision for the space and even rebranded its parent company to Meta last fall. However, it's not entirely clear whether Facebook's plan is for an open platform that is interoperable with others.
Ball is a leading writer on the metaverse whose work has been published in The New York Times, The Economist, and Bloomberg. His book, "The Metaverse: And How It Will Revolutionize Everything," is due out from W.W. Norton in July.
He's also a managing partner at EpyllionCo, which has invested in crypto startups such as Dapper Labs and Mirror, as well as a venture partner at Makers Fund. Ball is also behind the Roundhill Ball Metaverse ETF, which focuses on metaverse-centric stocks and trades on the New York Stock Exchange.
"Our objective was the creation of a diversified, balanced, and expertly-designed crypto Metaverse Index," explained Multicoin Capital co-founder and managing partner, Kyle Samani.
"This required a similarly capable team," he continued. "Matthew Ball is the definitive thought-leader in metaverse strategy and investing. We specialize in crypto assets and are one of the preeminent crypto investment firms. And Bitwise Asset Management is the proven leader in crypto indexes and index funds."

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Meta's losses show the metaverse's costly risk – Insider Intelligence

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Facebook parent Meta launches startup accelerator with India’s IT ministry in metaverse push – TechCrunch

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Meta Platforms is looking at India’s burgeoning startup ecosystem as it bolsters its bet on the metaverse. The social juggernaut has partnered with the Indian IT Ministry’s startup hub to launch an accelerator in the country to broaden innovation in emerging technologies, including augmented reality and virtual reality, officials said Tuesday.
MeitY Startup Hub and Meta’s effort, called XR Startup Program, will work with 40 early-stage startups and help them in research and development and developing workable products and services. Each startup will also receive a grant of over $25,000, the American giant said.
The program, supported by Meta’s $50 million XR Programs and Research Fund, will initially hand pick 80 startups to attend a bootcamp. It will also help startups with finding customers, inking relationships and raising funds, Meta said.
Rajeev Chandrasekhar, Minister of State for Electronics & Information Technology and Skill Development and Entrepreneurship, said the program is especially aimed at helping encourage technology innovation in smaller cities and towns.
The XR Startup Program is the latest of Meta’s growing participation in the South Asian market’s upskilling efforts. The firm, whose Facebook and WhatsApp services identify India as their largest market by users, partnered with Central Board of Secondary Education, a government body that oversees education in private and public schools in the country, to launch a certified curriculum on digital safety and online well-being, and augmented reality for students and educators in the country.
The program — to be implemented by four Indian institutions, including IIT Delhi — will also host a “grand challenge” for innovation in categories including education, healthcare, entertainment, agritech, climate action, sustainability and tourism, the American giant said.
“India will play a pivotal role in defining future technologies. Decisions and investments made here in India now shape global discussions on how technology can deliver more economic opportunity and better outcomes for people. It is critical that we help to create an ecosystem that will enable India’s tech startups and innovators to build the foundations of the metaverse,” said Joel Kaplan, VP of Global Policy at Meta, in a statement.
Meta’s interest with working with startups in India is also not newly found. The company has backed three startups in the country, including social commerce platform Meesho and online education group Unacademy.
3 views: Is the metaverse for work or play?

“India’s rapid tech adoption combined with a vast pool of tech talent puts the country in a vantage position for shaping the future of the internet,” said Ajit Mohan, VP and MD of Facebook India, in a statement.
“For this future to be equitable, it will require active participation from all stakeholders, including developers, businesses, creators, policymakers, and entrepreneurs. We are excited to collaborate with MeitY Startup Hub and hope that the XR Startup Program will act as a catalyst to unlock the use of immersive technology across sectors like education, healthcare, agritech and tourism, not only in India but across the globe.”

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