Facebook’s Metaverse Explained: Meta Reinvents the Creative Economy

An interview with Voices of VR podcast host Kent Bye, who explains what Meta’s vision of the future means for everyone else.

Facebook dropped a bombshell at Facebook Connect this week, with CEO Mark Zuckberg announcing that his company would rebrand as Meta to signal its key investment in the metaverse. For those whose relationship to Facebook starts and ends with a news feed, the announcement sounded like a joke — or, a series of them, as Zuckberg unveiled a series of happy-go-lucky videos that showed him transitioning into avatar form to take advantage of metaverse technologies (which, it should be noted, don’t yet fully exist).

His company has been heading in this direction for years. After its $2 billion acquisition of the Oculus VR headset in 2014, Zuckerberg launched Facebook Reality Labs (now Reality Labs) to amp up its investment in VR and AR technologies. More recently, the founder has been talking up the metaverse, an interconnected online experience that merges work and life across a wide array of platforms, from VR headsets to AR implementations. While Facebook has been accused of this before, the metaverse is a blatant attempt to fundamentally change the way most people interact and behave on a daily basis. 

One person unsurprised by the Facebook announcement was Kent Bye. On his Voices of VR podcasts, the former radar engineer-turned-journalist has interviewed thousands of VR and XR creators over the last seven years and created an exhaustive oral history of the XR space. One week, he’s parsing the programming of Sundance’s New Frontiers; the next, he’s doing a deep-dive on biometric data. 

Bye understands the potential of new technologies to push society and culture in exciting directions even as he realizes the dangers of corporations angling to control the big picture. When I called him Thursday afternoon, he was in the midst of posting a sprawling Twitter thread documenting all the nuances of the Facebook announcement. “I may have been the first person who realized that the Oculus brand was killed today,” noting that the company’s flagship headset is now called Meta Quest. 

Given the recent scandals of the Facebook Papers, press surrounding the Meta announcement assumed it was a cynical ploy. “A lot of people see this as a PR move to distract people from the larger PR crisis they’re facing,” Bye said. “But they’re leaning into a lot of things here.” Over the course of our conversation, we gradually started referring to Facebook as Meta and Bye detailed the many ways that creators could be affected.

A lot of people looked at the video of Zuckerberg’s avatar playing poker and assume he’s lost his mind. How would you say this impacts creators?

My take is that we have been on this shift from 2D to 3D for a while and that this is in some ways a further commitment from Facebook to keep that going. On their earnings call, they said they’d taken $10 billion worth of profit and invested it toward Facebook Reality Labs. It’s their vision of the metaverse, which is something that is widely debated. I recently had a conversation with Tony Parisi, who laid out his seven rules for the metaverse. It’s encouraging to see that one of Facebook’s principles is interoperability. They haven’t typically leaned into that. It was Valve that made all those games on Steam interoperable with Oculus headsets. Oculus wasn’t interoperable. Even now, it requires a bit of a workaround to play things that are Oculus exclusives without an Oculus headset. 

For creators, it’s a shift. VR encompasses all these other media. You can sit in a VR experience and watch a 2D film, but there are aspects of film and game design that are really being added together with the future we’re leading into. Spatial computing has the affordances of film, game design, theater, architecture, and the affordances of the web we have now. You’re actually blending all these things together. 

VR creators have worked within a rarefied side of the industry. Will greater attention to this field caused by Meta overcrowd the market?

Zuckerberg referred to a 30 percent tax that will create new economic opportunities. But those economic opportunities are going to be supported by ads. Who knows what degree of surveillance will happen within those ads? There are a lot of ways this is creating new economic opportunities for these creators. A lot of the rhetoric you hear from Facebook now is about how they’re supporting small businesses. The challenge has been that Facebook has been trying to get the user base up to 10 million in order start having viable ecosystems. They’re close to that now. But if you look at how many apps they’ve released for Oculus Rift and the Go before that, it’s in the thousands. So far, they’ve only released in the order of hundreds for the Quest. For the people who get into their store it can be great, but those who don’t are regulated into the app lab — which is like a shadow store — and they end up having to do their own marketing. They’re enabling these markets, but also creating a big bottleneck by saying you have to reach a certain standard to be able to get distribution. The upside is that they have alternatives like webXR, and they’re emphasizing that they are now allowing progressive web apps to be a part of this.

In Zuckerberg’s video, some friends call into the VR hangout and share some AR street art. When it starts to vanish, they “tip the artist” to keep the art in the VR room longer. That seems to hint at how Meta expects to lure creatives with an organic financial incentive. 

This is where it gets unclear. The confusing thing about this keynote was that they were talking about the 10-year plan for this. They even mentioned things about NFTs, but when I looked through the press release notes, they never said they were launching an NFT marketplace. What they’re saying is that they want to have a big ecosystem where they are able to create new economies. Because of that, they’re saying they want to move away from the model where they take a cut of anything and move more towards a model where they have other ad ecosystems.

Even if you’re an independent creator, if you sell your work through Meta, presumably they’re acquiring data as a result, which they can monetize in other ways. Right? 

Facebook unveiled their new Meta sign outside the company headquarters in Menlo Park, Calif., Thursday, Oct. 28, 2021.


Once they scale up to a billion people, they want to continue their existing model of having ads served to different people. That implies we’re going to have a bunch of different ways we’ll be tracked in the metaverse. They’re relying on their responsible innovation principles that they launched last year, but they also launched 10 responsible innovation dimensions that have more nuance to them. One of those dimensions is creating more economic sustainability. Whenever you look at these ethical issues, there are tradeoffs. Surveillance capitalism is making it so that there is more access, which means there’s a moral argument for it. It makes technology like this more affordable to people. They’re leaning on that as a tradeoff. But to make the technology more accessible, they’re continuing to do surveillance capitalism, even if they’re not saying that. They’re saying that the ads are fostering new economic opportunities and not artificially stifling innovation. 

There have been a lot of allegations that Facebook has been doing anti-competitive practices by only focusing on gaming applications, which means non-gaming applications are going to be in direct competition with what Facebook wants to create. That’s still true. Different education or medical applications are competing with Facebook’s own internal priorities. YUR Fit was competing with Facebook’s own methods of tracking fitness. Facebook tends to be a little bit more hands off. But if you want to build e-commerce solutions, well, we haven’t seen any of those yet. Is that because no one’s working on it and they haven’t tried to submit it? No, I assume it’s because Facebook wants to own that. They are controlling different aspects of things you may not realize. 

How might this impact the kind of content consumption familiar to consumers right now?

I did an interview with Darshan Shankar, who started Bigscreen VR [a VR app that allows you watch movies on a virtual big screen]. Bigscreen was making it possible to rent movies, but because Facebook was refusing to back down on the cut that they needed, he was actually losing money for every film that they were showing. Facebook’s native app for showing movies probably isn’t going to have to pay the same cut to themselves. So that means there are anti-competitive practices going on. Whatever Facebook — well, really Meta — whatever Meta wants to focus on is going to the markets that they’re cultivating. If Meta wants to be a first-party app selling movies, then you’re not going to see a viable competitor come up. Anyone doing anything in XR is worried that they’ll be made irrelevant by whatever first-party application they start to create. 

What challenges might Meta pose for industries that don’t adapt to its vision of the metaverse?

FILE - In this Jan. 6, 2016, file photo, Peijun Guo wears the Oculus Rift VR headset at the Oculus booth at CES International in Las Vegas. Facebook CEO Mark Zuckerberg seems to be realizing a sobering reality about virtual reality: The headsets his company's Oculus division has been making to put users into artificial worlds are too expensive and confining to appeal to the masses. (AP Photo/John Locher, File)

Peijun Guo wears the Oculus Rift VR headset at the Oculus booth at CES International in Las Vegas.


There are certain whole industry verticals potentially being held back because the focus is on consumer VR. Their existing terms of service or privacy policy is not compliant with the federal law around privacy for education, called FERPA. Despite the fact that they’re launching a $150 million educational fund for AR, virtual reality headsets are not FERPA-compliant. So much of the educational apps are higher education apps for training for enterprise applications. They’ve also been resistant to promoting medical applications because they’re not HIPAA-compliant. So most of the big medical XR companies have been listing Pico headsets because they can’t really use Oculus headsets. It’s this weird thing where decisions they’ve made on the business level ostracize the education and medical communities. But it advances the gaming market. 

One thing the Meta presentation obviously didn’t explore is “mental rights.” But that’s something people should know about. 

There’s a lot of rhetoric from Meta saying that they’re prioritizing privacy, safety, and interoperability. However, their definition of privacy is from 1973’s Code of Fair Information Practices. The FCC is regulating privacy in that as long as you consent to having things shared then everything is OK. That just means they have a system where they disclose all these ways they’re going to use your data and then you sign this adhesion contract in the terms of service. Then they can basically do whatever they want. Well, that concept of privacy is almost 50 years old. They’re not really updating that. They’re saying that the information they’re using is going to be contextually relevant to what they’re doing. Because they’re leaning so heavily into making things economically sustainable, they’re actually trading your privacy.

Rafael Yusta, a neuroscientist, came up with these five properties of neurorights: identity, the right to agency, the right to mental privacy, the right to have fair and equitable access technology, and the right to be free from algorithmic bias. With mental privacy, eventually the technology is going to be so good that they’ll understand what you’re thinking because they’re aware of all these aspects. They’re essentially reading your mind and you’ll have no privacy in terms of disclosing what you’re thinking. If you can understand someone’s thinking and can hack their action patterns, you can undermine their own free will. You can experientially present something that leads them to an end goal. Now, your identity is who you are based on what you choose to disclose. Well, if they’re tracking all this information about who you are, they’re creating a digital twin of your identity. And they’re looking at all these with a concept from 1973….

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