The Metaverse: The Next Wave of the Internet

The metaverse is more than just a sci-fi fantasy or a talking point for futurists: real technological innovations, investments and changes in consumer behaviour are happening right now. In this series, released over the coming months, we will share our insights on this predicted next wave of the internet and its very real legal challenges. We will look beyond the hype and offer some simple guidance to help you navigate this complex, constantly evolving space.

TLDR

"The Metaverse is the Internet, enhanced and upgraded to consistently deliver 3D content, spatially organized information and experiences, and real-time synchronous communication."
Tony Parisi, co-creator of VRML & glTF

The rise of the metaverse

The term ‘metaverse’ was catapulted into the popular lexicon when Mark Zuckerberg announced in October 2021 that Facebook was rebranding to ‘Meta’ and aiming to become a metaverse-focussed company. Since then, the word ‘metaverse’ has been used and abused in so many ways that it is sometimes difficult to distinguish what is really happening from the hype.

Hype and novelty may generate clicks. But the constant fixation on sci-fi visions, the prognostications of futurists and some of the weirder aspects of a predicted metaverse obscure an important point: real technology innovations, investments and changes in consumer behaviour are happening right now. 

To cite a few examples of developments in this space in the last year:

• Meta and Reality Labs: Not only has Facebook rebranded to Meta, but it has also announced its intention to spend more than US$10 billion a year on Reality Labs, its VR/AR businesses. Meta recently reaffirmed this commitment to the metaverse and its intention to increase its investment in this area.
• Microsoft and the US Army: Microsoft entered into a deal with the US Army to deliver over 120,000 AR headsets worth up to a staggering US$21.88 billion over 10 years. The first shipment was recently delivered.
• Roblox and kids: During the pandemic nearly 75% of US kids aged 9-12 regularly used Roblox and at least half of US kids aged 16 and under were on the platform. Daily users continue to grow and in Q2 2022, players spent US$639.9 million on the site’s virtual currency, Robux.

In light of some of these figures, the descriptions of the metaverse as ‘the next wave of the internet’ or ‘the successor of the mobile internet’ begin to seem more than just hype. 

What exactly is the metaverse?

There is no single generally accepted definition of the metaverse, and its numerous proponents in the tech industry all have different ways of describing it.  For example, it has been variously described as:  

• ‘an even more immersive - an embodied internet where you’re in the experience, not just looking at it’ (Mark Zuckerberg, Meta)
• ‘a real-time, computer-powered 3D entertainment and social medium in which real people would go into a 3D simulation together and have experiences of all sorts’ (Tim Sweeney, Epic Games)
• ‘the internet in 3D - a network of connected, persistent, virtual worlds’ (Jensen Huang, CEO of Nvidia)

The mix of descriptions is unsurprising given that the term is generally used to refer to a future state of the internet and those describing it all have different perspectives and goals. But this should not prevent us from attaining a good understanding of the underlying technology and concepts. While the high-level definitions and descriptions vary, there are many commonalities. 

The metaverse in four trends

Rather than attempting to find one perfect definition, a better way to conceptualise the metaverse is to focus on the common concepts underlying the various visions.  In our view, the metaverse (as the term is currently being used within the tech industry) is best understood as referring to a predicted next wave of the internet that is characterised by the following key trends or themes:

• 3D computing: At the core of the concept of the metaverse is the importance of 3D computing, both in terms of content (like 3D graphics, artificial 3D worlds, augmented reality and digital twins) and in terms of simulations.
• Immersive technology: Immersive technology such as VR headsets, AR glasses, spatial audio and haptics are part of many visions of the metaverse (though we should note that these are not always essential to all implementations).
• Interconnection: For the metaverse to live up to the hype and to become the next iteration of the internet, it will need a significant degree of interconnection and interoperability. Users will want the ability to bring their assets, currencies and identities (including how their avatars look) between different experiences. Without a significant degree of interconnection and interoperability, the metaverse may end up being no more than a series of walled gardens.
• User-generated experiences: The metaverse is a wave of the internet where interactions will increasingly become real-time (through speech, gesture and behaviour), experiences will foster a sense of presence and togetherness (eg, VR concerts and sporting events) and users will become involved in building virtual worlds and creating the assets that populate them, giving rise to economies of virtual-only goods.

Of course, much more can be said on each of these topics, which we will return to in future insights in this series. 

Why should I care?

Numerous consultants have tried to put a dollar figure to the size of the potential market. A report by McKinsey in July 2022 found:

• More than US$120 billion has flowed into the metaverse space between January and May 2022 — more than double the US$57 billion of 2021
• By 2030 the metaverse could generate US$4-5 trillion across consumer and enterprise use cases

While some of these figures may seem impressive, McKinsey itself acknowledges that potential value is ‘inherently hard to predict’ and their estimates ‘will almost certainly be incorrect in 2030’.

So perhaps a more useful way to get a sense of the potential significance of the metaverse is to consider some of the key technologies associated with the metaverse and their potential uses across different industries.

Potential consumer and enterprise use cases

What about the law?

The scope of legal issues impacting the metaverse is as broad as the issues impacting the internet and digital economy today. It will include such issues as online safety, data privacy, financial services regulation, competition law, consumer protection and intellectual property, among many others – far more than we could possibly cover in a single introductory article.  

Over the coming months we will explore some of the legal issues associated with the metaverse. Subscribe by selecting ‘Tech & Data’ as your area of interest here. 

"We’re 15 years into the social media era, and there are a lot of problems from exactly that transition which remain unsolved. Data rights, data security, data understanding, radicalization, disinformation, platform power, platform regulation, unhappiness."
Matthew Ball, CEO of Epyllion Co and author of ‘The Metaverse: And How it Will Revolutionize Everything’