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Tuesday, December 6, 2022

A Year Ago, Facebook Pivoted to the Metaverse. Was It Worth It?

The internet was not happy about the legs.

Earlier this month, the company formerly known as Facebook unveiled its new virtual reality headset, the Meta Quest Pro. The $1,500 headset offered many new features, including crisper graphics, new mixed reality capabilities, more emotive facial expressions—and the addition of avatar legs. Previously, Meta’s virtual humans existed as floating torsos. Now, Meta’s engineers were giving them bottom halves. To celebrate, Meta released a video of virtual Mark Zuckerberg jumping up and down, as a crowd behind him cheered and threw confetti as if he had just won the Super Bowl.
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The video was immediately and widely mocked. “Congratulations Meta for finally catching up with The Sims (2000),” one tweet read.

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The legs were soon revealed to be an animation, and not yet a working feature.

It was perhaps not the reaction Meta was hoping for. Over the past couple years, Mark Zuckerberg has staked his legacy on the development of the metaverse: new virtual spaces which he believes will be as transformational to the world as smart phones were 15 years ago. Zuckerberg and other Meta executives argue virtual worlds will possess immense economic and social value, shrink borders, and reduce online toxicity.

Over and over, executives have argued that in the metaverse, unlike on a video chat, users feel a sense of “presence” with others who are physically far away. “Presence” is a subjective, ephemeral quality that may be hard for a data-obsessed company to quantify. But Meta executives believe it is something we deeply crave—and that we’ll spend money and time to achieve it.

They’re also hoping this uncharted journey into the metaverse can revive the company, which shed the Facebook name and rebranded itself a year ago as Meta. Perhaps not coincidentally, Facebook is losing ground fast to TikTok, and Meta’s longtime central business model—ad revenue on Facebook’s News Feed—is faltering. So the company has changed its name, invested $10 billion this year alone in VR and AR, and forged uneasy alliances with tech competitors and global governmental agencies, all in an effort to become the company that ushers in a new virtual era.

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The world isn’t yet convinced. On Wednesday, the company reported a quarterly loss of $3.67 billion in its Reality Labs, the unit responsible for delivering on Mark Zuckerberg’s metaverse plans. Those losses, in part due to lower sales of the Quest 2 virtual-reality headset, added to Meta’s overall disappointing financial performance and sparked a stock selloff that saw its shares tumble. Since the beginning of the year, Meta’s stock has declined 70%, compared with the S&P 500’s 20% drop over the same period.

Many of Meta’s virtual spaces are all but ghost towns, with reports alleging that even Meta’s own employees are reluctant to spend time inside them. When Mark Zuckerberg posts something new about Meta’s metaverse, public sentiment is overwhelmingly negative. And the next year will likely bring about both increased competition—as Apple reportedly preps its own VR headset—and regulation, with the Federal Trade Commission continuing to push against Meta’s aggressive acquisition strategy.

So while Zuckerberg and his team are looking decades into the future, it is how their metaverse efforts are received over the next couple years that will prove make-or-break for the company— and for Zuckerberg himself. “This is a company that’s in trouble. And if the economic outlook deteriorates even more quickly than people are anticipating, then investors are probably going to demand a change in leadership,” says Edward Moya, a senior market analyst at Oanda, a financial services company.

To gauge how far Meta has come and how far it is from reaching its vision, TIME spoke to company executives, privacy and technology experts, and spent some time inside Meta’s own virtual reality spaces. Here’s what we learned.

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Fun and games can be a free-for-all

Andrew ChowThe author’s view from a poker table in the metaverse

On one autumn afternoon, I strap on my Quest 2 headset and find myself transported to a poker game in the ruins of a medieval castle. As I look at my cards, a man with a pink beard emerges from within the felt and proceeds to swing a lightsaber at my head. On my right, a bearded avatar who sounds like a child is tussling for control of a cigarette, yelling, “that’s my smoker!” over and over again.

There are top hats, giant sunglasses, liquor poured into delicate China teacups, insults and ammo blasted every which way. I carefully count out chips from a pile under my left hand and throw them in the middle for a raise. But there’s a full sword fight unfolding on my right, and barely anyone seems to be paying attention to the game itself.

It’s a fitting opening foray into the metaverse: just as saloons of the Wild West proudly boasted debauchery-filled, freewheeling gambling games, so too does this new virtual frontier. Many of the most popular apps in the Quest store lean into color, fantasy and childlike whimsy: Beat Saber, Smash Drums, Ancient Dungeon.

Meta itself is well aware of the importance of games to this nascent ecosystem. Games were the entire purpose of the VR company Oculus, after all, when it was co-founded in 2012 by the 19-year-old Palmer Luckey. As word about the technology spread around Silicon Valley about its 2014 prototype, Mark Zuckerberg sensed an opportunity and bought the company for a cool $2 billion. “Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,” Zuckerberg said in a statement at the time.

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Meta’s Oculus headsets—the Quest 2 is priced at $400—have been selling steadily, and they boast plenty of games that do quite well. One of the most popular is Walkabout Mini Golf, a disarmingly simple but effective iteration of Putt-Putt. According to the game’s creators, it hosts hundreds of thousands of weekly players weekly in over 40 countries. When I enter the game, I’m paired up with an avatar who goes by “kennypowers,” speaks in a Southern accent and cheerfully walks me through the mechanics of the game. Kenny has clearly spent a lot of time playing, excitedly describing all of the possible trick shots at each juncture.

Our pseudo-blind date starts awkwardly, but we both loosen up after a few rounds. When I tell him that I’ve never felt like I’ve been able to afford to play real golf, he responds: “Hey, I’m poor as hell too, brother. You can do a lot more without money in here than in the real world.”

It’s interactions like this—of VR making the world feel a little bit smaller—that Meta hopes to facilitate en masse in the coming decade. “If I could be with you in a physical room right now, that’s going to be better than this,” Vishal Shah, the vice president, metaverse at Meta, says to me as I sit across from his avatar in a virtual meeting room. “But this is far better than a video call. As humans, we do crave this social connection—and this is the best way to experience that in a digital form.”

In order to entice would-be gamers, Meta has spent the last eight years buying up a slew of virtual reality app makers—including the maker of the Viking combat game Asgard’s Wrath and several first-person shooter and sports games—to develop a deep, robust library.

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Mark Zuckerberg has explained his interest in gaming in near-humanitarian terms: he told Joe Rogan in August that he dislikes how much time the modern world spends “passively” watching TV, and that a transition to more active gaming could result in a “net improvement in well-being for people overall.” Of course, Meta stands to gain financially quite a bit from becoming a gaming hub. According to Meta CTO Andrew Bosworth, one-third of all Quest store apps are making revenues “in the millions”, and the company currently pockets a 30% hardware platform fee for sales made through Meta Quest Store.

An infinite office awaits, if employees want to be there

Courtesy MetaThe author, far right, interviews Mike LeBeau, the founder and product lead of Horizon Workrooms at Meta, left, inside Horizon Workrooms

But Meta doesn’t intend to just dominate your leisure time: it wants you to work in the metaverse, too. At the company’s Connect conference in October, Zuckerberg and other executives painted a vision in which employees can work anywhere in the world but sit at a virtual table with their colleagues, brainstorming ideas on a virtual whiteboard. They believe that virtual workspaces will be a huge upgrade over our Zoom, Slack and Microsoft Teams workflows that currently dominate the professional landscape.

So while previously I’ve used VR to enter fantastical settings, the one I’m sitting in today could hardly be more sterile. I’m in Horizon Worlds Workrooms—Meta’s VR office recreation, and am sitting in a sleek, corporate office overlooking a green mountain. Across from me is the avatar of Mike LeBeau, the founder and product lead of the effort. LeBeau, who is physically in Amsterdam, appears as a happy, mobile floating torso with expressive eyebrows. He teleports over to a whiteboard to scribble down some notes, post a couple sticky notes, and point at a picture he’s just uploaded from his own computer.

“We’re trying to build something for everyday people who don’t have any pre-existing love for VR and are just trying to figure out the best way to get their job done,” he says.

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There are aspects of Horizon Workrooms that are undeniably intriguing. I can see the notes I’m taking on my actual laptop as I interview a man gesturing animatedly across from me, even though he’s 3,600 miles away. I can improve my surroundings so that I’m sitting either on the beach or in a futuristic city skyscraper—or I can set up a workstation with three giant virtual monitors, which are far larger than my ho-hum setup at home.

But those virtual monitors are blurry and laggy. The longer I stay inside the headset, the more it throbs upon my temples and pinches my glasses onto the bridge of my nose. When I take off the headset, I experience a wave of nausea and find a dull red streak across my forehead. And it’s nearly time to recharge it—the battery lasts only two to three hours.

“This is early days,” says LeBeau. “Most people are not yet going to spend eight hours a day in a headset.”

At Connect, the company announced partnerships with other corporate entities like Microsoft, Zoom and Accenture, the last of which will work specifically to onboard all sorts of companies, from architecture firms to design studios to engineers, into virtual work. Workrooms is a free app, but if a sizable mass of companies invest in the headsets and start working inside them, Meta would count that as a win.

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Before Meta can convince other companies to use the headset, however, they’ll have to convince their own employees. Meta is a notoriously tight-lipped and NDA-heavy company, but reports have trickled out about dissatisfaction and confusion about the company’s new direction. A May poll of 1,000 Meta employees found that only 58 percent of them said they understood the company’s metaverse strategy, according to the New York Times. And according to a more recent Verge report, Meta’s employees have been resistant to spending time in Horizon Worlds. “Why don’t we love the product we’ve built so much that we use it all the time?” Vishal Shah wrote on an internal message board in September. “The simple truth is, if we don’t love it, how can we expect our users to love it?”

In our interview, Shah says he stands behind the message, and acknowledges that Horizon Worlds has to improve in many ways. “We are early in Horizon Worlds: it’s a pre-product-market fit product,” he says. “But it’s something we promised to build out in the open. And that’s why we launched it as early as we did.”

LeBeau similarly concedes that the technology has a long way to go before users can make a seamless transition from what they’re accustomed to. “Making the desktop experience really high quality, and the resolution good—we’re going to be chipping away at these things over the course of years,” LeBeau says. Meta’s new headset, the Quest Pro, is also designed to feel lighter on your head and more comfortable to wear over long periods of time.

But some experts feel that the company’s whole emphasis on work is misplaced. “I’m yet to see any signals that there’s a willingness to engage with this,” says John Egan, CEO of L’Atelier BNP Paribas, which conducts research on cutting-edge technology. “There is a high level of public reluctance for VR landscapes that are facilitating work environments.”

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LeBeau argues that much of the bad press and reluctance arises from 2D screenshots on social media, and that people need to try the headset on before they fully understand it. “It’s hard for you to realize how much your brain is willing to believe that the people next to you are real when they’re clearly not,” he says. “They do not look totally like real humans, but your brain fills in the gaps and is so willing to sort of humanize other human-behaving things.”

Safety will be a major challenge

But while Meta is desperate for its users to perceive Horizon Workrooms as their reality, this sort of leap of perception is precisely what worries many experts of privacy and human rights. Over the years, Meta has faced a bevy of criticism about the way it’s handled—or failed to handle—misinformation and hate speech on its social media platforms. One report, for instance, showed Instagram, which Meta owns, knew it made teenage girls feel worse about themselves; another showed that Facebook helped to incite a genocide in Myanmar.

If similar dynamics play out in the metaverse, the level of harm could increase significantly, some experts worry. Early VR spaces have already been plagued by racism and harassment, with one employee posting in an internal message board that the company’s “lack of integrity requirements lets racism thrive in VR” in January 2021. Women have faced virtual groping and harassment. (Meta, in response, has implemented a feature in which users can place themselves in a sealed bubble.)

Rand Waltzman, an adjunct senior information scientist at the RAND Corporation, is extremely concerned about VR as a vector for mass misinformation and emotional manipulation. “Virtual reality environments turn out to be really ideal environments for doing emotional manipulation of all sorts,” he says. “I can induce anxiety in people to make them more susceptible to one kind of messaging or another.” He points to a study conducted this year which found that a VR app was just as effective as psychedelic drugs in helping people reach transcendence. If that sort of mental manipulation is possible, what could bad actors achieve?

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To stop bad actors, Meta will continue to rely heavily on artificial intelligence to moderate its new platforms. Moderation in the metaverse will be even harder than on traditional social media: you won’t be able to text-search or perceive harassment as easily. Andrew Bosworth, Meta’s chief technology officer, even admitted as much in an internal memo leaked by Frances Haugen last November, acknowledging that virtual reality can often be a “toxic environment” especially for women and minorities and that moderation “at any meaningful scale is practically impossible.” In February, a Buzzfeed reporter found that misinformation about COVID-19 that is supposed to be banned in Facebook and Meta was able to remain unchallenged in Horizon Worlds.

Meta declined to make Bosworth available for an interview. A representative noted that the company has 40,000 people working on safety and security and invested approximately $5 billion in this area. (It’s likely that many of those people are not full-time employees, although Meta declined to clarify.)

Read More: How the Facebook Whistleblower’s Team Forced a Reckoning

Then there’s the looming problem of privacy and data collection. Waltzman says that would-be manipulators will be abetted even further by the massive amount of biometric data recorded by the headsets. If data isn’t kept securely, businesses would theoretically be able to see how long you look at an ad; a political strategist might be able to gauge your facial expressions when encountering different candidates. “You’ll be able to construct pretty accurate psychological profiles of people in real time,” Waltzman says. “And you can real-time monitor how your target is reacting to what you’re doing and adjust accordingly.”

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Meta says that the biometric data taken from eye tracking is stored locally before being deleted completely. But there’s a pervasive lack of trust in the company due to their extensive history of misleading the public about data protection, which led to the FTC dinging the company with a record-breaking $5 billion penalty in 2019.

“Based on the fairly well-documented history of Meta and other social media companies, there are easily observable discrepancies between the promises the senior management have made and the reality of what they’ve done,” says Paul Barrett, deputy director of the NYU Stern Center for Business and Human Rights. “They have demonstrated a tendency to vigorously seek growth and advertising revenue first and worry about all the details second. It would be foolish to assume they’re going to do a better job because they were negligent last time around.”

Perhaps because of the negative public perception of the company in recent years, executives are quick to stress that your online identity and digital goods will belong to you, no matter which company’s virtual world you enter. Meta is working together with many of its would-be competitors—including Microsoft, Zoom, and Adobe—in an effort to make experiences interoperable.

Meta is also part of an ongoing initiative spearheaded by the World Economic Forum that aims to establish basic rules for the metaverse around privacy, security, and safety. “There are major risks, and most of them are not new to a new version of the internet, says Cathy Li, head of media, entertainment, and sport at the WEF. “It’s not easy to drive consensus—but I appreciate that different partners in the public and private sector are willing to discuss the possibility of putting guardrails in place from the very beginning, which is something a lot of us didn’t see in the web 2.0 era.”

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There’s trouble in Menlo Park

While Meta is working with many collaborators, it has at least two marked rivals in this space. The first is Apple, which Mark Zuckerberg described as being in “deep, ideological competition” with Meta in the race to build the metaverse. (Rumors have circulated that Apple will release a VR headset of its own as early as next year.) The second is regulators. In July, the FTC sued to block Meta’s acquisition of the VR company Within, arguing that the merger would be anti-competitive. The legal battle is ongoing.

Metaverse visionaries who previously worked at the company have had plenty to say. Palmer Luckey, an original co-founder of Oculus, called Horizon Worlds “terrible today” at an October conference. John Carmack, Oculus’s former CTO who stepped down in 2019 but still serves as an advisor, said on the Lex Fridman podcast this summer that he felt “sick to my stomach thinking about that money being spent.”

The outward facing numbers are not good, either. The Wall Street Journal reports that Horizon Worlds currently has fewer than 200,000 monthly active users, a long way off from Zuckerberg’s target of 500,000 he hoped to reach by the end of 2022—and that he revised the projection down to 280,000. (A Meta representative declined to comment on whether the figures were accurate.) In September, the company announced that it would freeze most hiring.

And early reviews for the Quest Pro in October were lukewarm. There are many who believe that its pricey $1,500 tag will keep it solely in the realm of hardcore gamers or specialists, and that it may not help in bringing the masses into their vision.

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But Meta is already looking even further out—past VR and into augmented reality (AR). Meta needs the Quest Pro, and the next Quest device slated to arrive next year to be successful, because Zuckerberg and his executives have huge ideas for the next two decades: smart glasses that render smartphones obsolete; AI language apps that let you hold conversations with anyone speaking any language in the world; microcomputers controlled by motor-neuron signals, allowing you to check texts with the flick of your thumb; open ecosystems that let amateur developers create any sorts of games or experiences they wish.

Whether shareholders will let them continue investing heavily toward reaching this future is another question entirely. Reality Labs lost a whopping $3.67 billion in the third quarter of 2022, with Zuckerberg predicting on the earnings call that losses would “grow significantly” in 2023. Altimeter Capital, a long-time investor of the company, just published an open letter calling on Meta to rein in metaverse spending.

These types of complaints are likely to grow louder in the coming years, says Egan, at L’Atelier. “As capital becomes more expensive, there’s going to be a lot of pressure for them to deliver, and the technology is not yet ready,” he says. “I think that is going to lead to more and more resignations.”

Is the metaverse just a desperate ploy to pivot away from an advertising-first revenue model that they were rapidly falling behind in? And if it truly is the future of human existence, how can we trust a company that has repeatedly prioritized growth over all else, in the process promoting misinformation, emotional harm, and genocidal dictatorships?

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As I talk to Meta spokespeople and employees for this article, I keep hearing a familiar refrain: Just spend more time inside the headset, and eventually, you’ll get it. So the last experience I sign up for is a guided meditation from Anuma, a “digital therapeutics” startup. Anuma promises a transformative experience by turning the user into a wispy blob suspended in space. The users are then guided through breathing and thought exercises as they interact and eventually meld with other blobs, to break down their ego and barriers to emotional connection.

It seems to embody the metaverse’s top selling points: to forge new social bonds, explore new worlds, and to feel truly present and free no matter your physical limitations.

I put on my headset while sitting in my parents’ living room and feel undeniably silly as I talk to my headset while they putter around the kitchen, taking trays out of ovens and turning off timers. About 20 minutes into the meditation, however, I forget where I am. I feel my breathing become deeper and calmer, and become completely absorbed in watching a bright white light, which represents my breath, jump in and out of my chest gracefully, as stars twinkle around me in every direction.

The reverie only lasts for a couple minutes, though. The headset starts to drag upon my temples, and when I walk gently toward my virtual blob partner who is matching me breath for breath, my headset alerts me that I’m getting dangerously close to my parents’ bookshelf. I end the session with my head throbbing, wishing the stars didn’t look so blurry.

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A version of this article was published in TIME’s newsletter Into the Metaverse. Subscribe for a weekly guide to the future of the Internet. You can find past issues of the newsletter here.

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