Compilation/Youya
Summary:
1. As implied by the company's new name, Meta hopes to win in the meta universe market, as before Facebook Win in social media.
2. Meta's loss of "relevance" in the social media market is a very real threat to the company. This is why the potential meta universe regulation, rather than social media regulation, may become a long-term threat that Meta is more worried about.
As Facebook's advertising business is struggling, Meta has to embark on a risky and expensive path, namely, the meta universe. The results of its latest quarterly financial report also highlighted its urgency, but in the face of the "early action" of regulators, can Meta still monopolize the meta universe market this time?
As early as 2014, when Meta acquired Oculus, it was not clear what Mark Zuckerberg could do for this VR head display manufacturer. But now, these plans have surfaced and become the focus: Facebook has changed its name to "Meta", and is no longer a pure social media company, or a metauniverse company.
The company's ambition to enter the metauniverse market is obvious to all. As the company's new name implies, Meta hopes to win in the meta universe market, just as Facebook has won in the social media field before.
However, more and more regulators, politicians and rights groups are worried about Meta's meta universe plan.
Facebook has spent nearly 20 years consolidating its position as the world's largest social media company. This was largely achieved through the acquisition of other social media start-ups, such as Instagram and WhatsApp. Critics have long questioned Zuckerberg and Facebook's "copy buy kill" strategy, saying that it forced potential competitors to sell their companies, or they might be destroyed by Facebook.
Now, some people worry that Meta may adopt the same strategy in the meta universe market. For the metauniverse, Zuckerberg described it as "an immersive Internet. It is a virtual space where people wearing AR/VR headsets can interact with each other's avatars, play games, hold meetings, and so on.
Although Meta is still in the early stage of developing such "futuristic" hardware and software (making the "metauniverse" possible), it is already a market leader. According to data, in the first quarter of 2021, Meta's VR head displays accounted for 75% of the overall AR/VR head display equipment shipments. It is also reported that Meta has been quietly acquiring companies in the field of Meta Universe, and at least five AR/VR related companies were acquired last year.
At the same time, regulators have begun to pay attention to this issue. In January this year, it was reported that the Federal Trade Commission (FTC) and the attorneys general of several states were investigating whether Meta used monopoly practices in the AR/VR market.
It is reported that FTC is investigating Meta's acquisition of Within, the developer of the popular VR fitness game Supernatural. In addition, the anti-monopoly rights organization "Tech Insight Project" said that Meta is using "the same strategy as in the past to suppress potential competition".
Critics of Meta are even more suspicious of the company's acquisition of MetaUniverse, because Facebook has made controversial acquisitions in the past, especially the Instagram and WhatsApp transactions. For these acquisitions, FTC and 48 states and regions filed lawsuits against Facebook at the end of 2020. The cases of the states have been dismissed (pending appeal), while the FTC proceedings are still ongoing. In response, Meta said that the government is going back and chasing the transactions approved several years ago.
Antitrust regulators have always believed that Meta is an incomparable social media giant. However, in recent weeks, Meta has encountered a series of setbacks, which makes this statement of regulators seem difficult to hold water. The financial report of the fourth quarter of 2021 shows that the growth rate of Facebook application users has begun to slow down, and the company's share price has also suffered a historic decline. The market value has lost more than 250 billion dollars in one day, the largest one-day decline in history. Meta executives blamed it on the competition from TikTok, which is popular with young users.
Meta's loss of "relevance" in the social media market is a very real threat to the company. This is why the potential meta universe regulation, rather than social media regulation, may become a long-term threat that Meta is more worried about. Therefore, when Meta needs to reshape itself to succeed, this may drag down the development of the company.
Another question for users to consider is: who will control the metauniverse. Many leading technical experts said that the rise of the meta universe is similar to the invention of the mobile Internet or the Internet itself. If this new alternative product (metauniverse) is really so powerful, whoever controls it (Meta, several other large technology companies, or some small companies) may become a future technology giant.
Stephanie Llamas, founder of VoxPop, a metacosmic market research company, said: "If other companies are unable to compete with Facebook and its cash, then it is actually giving Facebook the opportunity to create virtual reality alone. This means that we may miss something very cool."
It is unclear whether Facebook will monopolize the metauniverse, because the metauniverse does not yet exist completely. The only existing AR/VR ecosystem is only one part of the many technologies supporting the metauniverse. It is reported that, Apple and Google Head display devices that can compete with Meta Quest are being developed, and Microsoft and Sony Other major participants are also expanding the existing AR/VR product line. For example, Microsoft recently invested 68.7 billion dollars to acquire one of the world's largest game companies“ Kinescope blizzard ”This transaction may have a significant impact on the development of the metauniverse.
Christopher Sgro, a Meta spokesman, said: "Investing in and creating the products consumers want is the key to success. We cannot build a 'metauniverse' alone, and cooperation with developers, creators and experts will be crucial. When investing in the 'Metauniverse', we should know that at every step of this journey, we are faced with the challenges from Microsoft, Google, Apple Snap , Sony Roblox And Epic. "
The universe causes antitrust concerns
Some people in Washington hope to take action before Meta has a chance to monopolize this emerging market again. This may require amending the existing anti-monopoly law, which critics say is too narrow. Previously, the anti-monopoly law had always focused on the cost of goods for consumers, without taking into account the modern digital economy. In the modern digital economy, services such as Facebook and Instagram are free. No matter what action regulators and legislators decide to take against Meta, it will have significant repercussions in the entire Silicon Valley and may lead to the controversy of "splitting large technology companies".
Some competitors have complained that Meta has unfair competition in the new meta universe market. Zuckerberg once said that he hoped other companies could also enter the meta universe market. However, some independent developers said that Meta was not as open as it said.
A big problem is that some AR/VR hardware companies say that Meta is selling its VR head displays at a discount, which makes it difficult for smaller start-ups to compete. The current price of Meta's Quest 2 head display is $299, hundreds of dollars lower than any other similar devices on the market.
It is reported that FTC is investigating the possibility of Meta selling Quest at a loss and trying to drive them out of the market at a price lower than that of competitors. This practice is called "predatory pricing".
Stan Larroque, founder of French AR/VR startup Lynx, said: "No other company can put its products on the market at the same price." Lynx plans to sell its first consumer product at a price of 700 dollars. This head display will have more advanced functions than Quest 2. "I'm not Zuckerberg. I can't sell my products at a loss," LaRoque said
La Roque also said that Meta tried to poach his engineering team with higher salaries, but his employees stayed. LaRoque said that he has talked with regulators and legislators in the United States and Europe about Meta's business practices. Meta declined to comment.
Of course, Meta's sale of its head display device at a discount does not necessarily violate antitrust regulations. In fact, the case of "predatory pricing" is difficult to prove. According to the current law, pricing below cost is illegal only when a dominant company makes a competitor fail. The court usually holds that low prices are beneficial to consumers, even at the expense of competitors.
Another topic of great concern is whether Meta's metauniverse is really open to third-party software developers. At present, Meta operates an AR/VR application store, similar to Apple's App Store or Google's Play Store, for which developers can develop software. Like Apple and Google, Meta takes a 30% cut from any purchase of these applications. In addition, Meta also requires users to log in using Facebook accounts, which has raised concerns about the company's creation of "walled gardens". Later, under the strong protest of many game players, Meta said that it planned to cancel the Facebook account requirements..
In addition, developers also raised concerns about how Meta operates its app store. Some people accuse Meta of preventing competitors' applications from running on its Quest AR/VR App Store, or directly copying competitors. For example, Meta's Horizon Worlds social space is similar to the popular game Rec Room; The "Horizon Worlds" virtual work conference software looks like the collaborative application of Spatial.
Meta also acquired some of the most popular third-party games for Quest Head Display, including Super Natural and Beat Saber. Beat Saber is one of the most popular games in the VR field, and currently ranks among the best selling games in the Meta Quest app store.
Lamas, the founder of VoxPop, a metacosmic market research company, said: "I talked to many developers and they felt that they might not have a chance to enter this market because Facebook is buying up the technology they are trying to develop." Of course, Lamas also pointed out that, on the other hand, Meta's AR/VR efforts may be beneficial to the industry, because it can invest a lot of resources in developing related products to expand to a wider audience.
In response to the concern of the outside world about whether its "AR/VR platform is really open to third-party developers", Meta pointed out that it will continue to allow its acquired games to run on third-party game systems.
As AR/VR becomes a more mainstream technology, and Quest displays occupy a larger market share, whether Meta will give its own products specific advantages or not, this will be a major battle.
Meta becomes an antitrust target
At present, the metauniverse is only a part of this hypothetical future to a large extent, which makes it difficult to prove the accusation that Meta monopolizes this market. Although Meta has had some problems with FTC in the past, including being fined a record $5 billion for violating privacy a few years ago, the agency still approved some of Meta's acquisition transactions, so that Meta is in a leading position in the market today. Now, FTC is reconsidering these transactions.
In the lawsuit against Meta, the FTC and the state attorneys general said that the company's acquisition and anti competitive behavior helped it dominate social media and protect it from competition in emerging areas such as mobile and messaging services, which it could not do by itself. Other companies have found that if they cooperate with Facebook competitors or are competitors themselves, their access to the Facebook platform will be restricted.
Now, FTC is demanding to withdraw its acquisition of Instagram and WhatsApp. Analysts said that this would effectively split Meta's business.
Meta said that FTC has not yet proved that Meta has a monopoly on social media. Jennifer Newstead, Meta's vice president and general counsel, said: "FTC approved these acquisitions several years ago, but now it wants to do it again. This sent a chilling warning to American enterprises that any sale is not final."
Meta has won a victory in this case. At that time, a judge rejected the state's lawsuit and said that FTC needed to better prove that Meta had a monopoly on social media. Subsequently, FTC resubmitted a longer and more detailed indictment, which is still in progress.
At the same time, the rest of the world may have lost some appetite for the Meta acquisition deal. Although Meta's acquisition of Giphy was rejected by the UK regulatory authorities (Meta has filed an appeal), the acquisition of customer relationship management (CRM) start-up Kustomer for US $1 billion was approved by the UK, US and EU regulatory authorities. Therefore, not every transaction of Meta is blocked.
In any case, Meta insists that it has many competitors. The latest quarterly financial report seems to have proved this statement to some extent.
Michael Carrier, a law professor at Rutgers University, said: "If Facebook is losing its market dominance, it will be related to the FTC lawsuit. This lawsuit not only challenges Facebook's behavior during the acquisition, but also challenges its behavior until now."
History shows that the government does not have to win an antitrust case against a large subversive technology company to have an impact. The US Department of Justice has sued separately IBM Microsoft and Microsoft monopolized the mainframe and operating system markets. Although these two cases were eventually withdrawn or settled, during the period of technological change, these companies fell into chaos in litigation for many years, leading to the emergence of competitors.
Meta's future is unclear
The cases of IBM and Microsoft show that antitrust actions will distract technology companies from new markets or deter them. In these two cases, personal computing and mobile Internet are involved respectively. As for whether Meta will be affected similarly, it is still impossible to judge.
These cases also highlight the gap between the rapidly developing technology industry and the slow response of the government. The US government's response is notoriously slow, so an antitrust case may take decades to resolve. The attempt to reform the legislation may take longer.
Charlotte Slaiman, competition policy director of the consumer rights protection organization "Public Knowledge", said: "There is a real problem in Washington. We have been fighting for the struggle five years ago, even 10 years ago. It is really hard to let it go ahead."
For the metauniverse, FTC has not ignored. Last year, a new chapter on the metauniverse was included in the new lawsuit against Meta. FTC said: "Whenever developers cooperate with Meta competitors, or their applications directly compete with Meta, Meta will cut off developers' access to its platform. Such a strategy is likely to be used in the 'meta universe' market. "
This does not mean that FTC can do anything about Meta and its meta universe ambitions in the short term. In mature markets, antitrust cases are difficult to prove, let alone emerging markets. But this may be a hard battle that the FTC or the antitrust department of the US Department of Justice want to fight, because these two major regulatory agencies are currently led by large technology critics.
FTC may get some help from legislators. At present, the bipartisan anti-monopoly bill specifically for large technology companies and digital platforms is seeking congressional approval. One of them, the Platform Competition and Opportunity Act, will prohibit dominant companies from acquiring competitors or potential competitors, aiming to limit their market position. Stacy Mitchell, head of the Institute of Local Self Reliance Research Institute, said that if the Act is passed, Meta may not be able to continue to make acquisitions in certain markets, including MetaUniverse.
But at present, the bill seems to have stalled in Congress. In this regard, the Senate co sponsors of the bill, Senator Amy Klobuchar and Tom Cotton, have not commented on its progress.
At the same time, the FTC and the US Department of Justice are developing new merger guidelines. The two institutions said the guidelines would better address the modern market and clarify what factors they would consider when deciding whether to approve a merger. But these guidelines will take at least a year to complete.
To strengthen the supervision of Meta, regulators also face some other obstacles. The resources of FTC are relatively limited. Without more financial support from the Congress, it will be difficult for FTC to deal with powerful large technology companies, which have the ability to hire well-known lawyers to fight back. Therefore, Lina Khan, chairman of FTC, may decide that emerging markets like AR/VR are not the mountain she wants to conquer.
In addition, we do not know what form the metauniverse will take. In the end, Meta's plan may fail, not only because of regulation, but also because of its business reality.
Apart from the competing technology giants in the field of the metauniverse, Volkswagen may not want to participate in this "real world alternative" (i.e. the metauniverse) at all. Zuckerberg's statement on the metauniverse has been puzzled and questioned by many people. Don't forget that Google Glass 10 years ago ended in failure. Because it is not popular with daily users, many people think that it infringes privacy and is not very cool to wear.
Last July, a survey conducted by American communication media company Morning Brew Harris showed that only about 1/4 of Americans had used AR or VR head displays, and only 28% said they were excited about this technology.
We can also not forget that Meta has encountered some privacy and content audit problems in the past, which led to users losing trust in the company. This means that more personal data, such as eye movements and facial expressions, can be collected by AR/VR head displays, and people may not want to give Meta more permissions.
No matter how successful Meta's business plan in the meta universe is, the imminent regulatory threat is not good news. At this critical moment when we need to reshape ourselves, regulation may slow down the pace of Meta. Moreover, regulators have sent a clear signal that this time they hope to catch up with the meta universe. In other words, Meta can no longer slip away as easily as it used to.
