Adventures in the Metaverse: The Potential (and Potential Problems) for Brands
Since computing entered our individual lives, we are by turns astonished and blasé about each succeeding wave of technology innovation. These waves have been characterized by personal adaptation, industry consolidation and standardization, followed by renewed bursts of innovation. Each burst sends forth dozens of proprietary solutions that gradually evolve into the handful of models or single standard we then come to use. This model of diffusion is not just characteristic of information technology. In the years following the arrival of the Duryea Brothers’ motor wagon in 1896, almost 1,900 automobile companies were formed, gradually shrinking to the handful we know today. In 2022, we stand at the dawn of the metaverse, purported to be the next technology to transform our lives. It brings with it once again all the questions of standards, access, privacy, security and ethics that have accompanied each successive wave of technology innovation, yet another Pandora’s box for our time. In this case, however, Pandora should perhaps go by the name Kardashian.
Its arrival was formally announced by Facebook founder Mark Zuckerberg in 2021, at the same time he changed his company’s name to “Meta,” following the playbook of Google’s founders to dissociate their evolving company from its signature product by renaming their company Alphabet. According to Zuckerberg, the metaverse is the “natural successor to the mobile internet,” a description that hardly does justice to the transformational claims that have been made for it. Venture capitalist and metaverse sage Matt Ball has said that the metaverse is a new “platform for human leisure, labor and existence at large”. While many other hyperventilated descriptions of the metaverse have been published, it appears reasonable to describe it for now as a constellation of 3D virtual worlds which will be accessed through various forms of extended reality.
The underlying technologies and social and economic construction of the metaverse to date come from the world of online games such as Fortnite, Roblox and Minecraft and the scale of interactions on these platforms is staggering. According to JP Morgan, $54bn is already spent annually on virtual goods. Approximately 60 billion messages are sent daily on Roblox alone. Further complicating the story is the entanglement of the nascent metaverse with both crypto currencies and non-fungible tokens (NFTs). NFTs are built on the same kind of programming as cryptocurrencies such as Bitcoin or Ethereum, but, unlike cryptocurrencies, they are not exchangeable (fungible) but discretely existing and owned digital properties. NFTs have most frequently been created and sold as art objects but also for video sports highlights, video game “skins,” sneakers and other collectibles. Twitter founder Jack Dorsey sold his first ever Tweet as an NFT for $2.9m. The natural relationship with cryptocurrencies, NFTs and the metaverse is that they collectively constitute what is being called web3, the successor to web1 (the internet) and web2 (social media).
While the term metaverse first appeared in Neil Stephenson’s scifi novel Snowcrash in 1992, 2021 was the year that consumer brands and their attendant celebrities made their first significant outings in virtual worlds. Gucci was one of the first into the metaverse with a two-week partnership with Roblox called Gucci Garden in which consumers could buy virtual Gucci products with Robux (Roblox cryptocurrency). One bee-themed Gucci handbag sold for 350,000 Robux worth roughly $4,115, more than its real-world equivalent. Gucci is following up this successful experiment with a permanent “installation” on Roblox where consumers can show off their virtual fashions and interact with like-minded peers. Hyundai Motors has created five theme parks on Roblox where consumers can create their own avatars and experiment with the company’s virtual mobility products (they used to be called cars). Meanwhile, McDonald’s has applied for ten metaverse-related patents with the US Patent and Trademark Office. Among the different virtual offerings in their filings is one in which hungry players (genuinely hungry) in virtual games can have their avatars stop by a virtual McD’s and order a Big Mac with virtual currency. The result? An actual Big Mac arrives special delivery at their real-world front door.
Not surprisingly, the ever-alert world of omnichannel celebrities has easily found its way through the wardrobe into the metaverse. On “Paris World,” fans of reality TV star Paris Hilton can explore a virtual version of her Beverly Hills estate and its dog mansion and pay for virtual jet skiing off her real-world Ibiza vacation home. Fans of Snoop Dogg can purchase any one of 10,000 Doggie NFTs. According to The Sandbox website – Snoop Dogg’s chosen platform, the Doggies are “programmatically-generated Snoop Doggs playable in the Sandbox. Each Snoop is completely unique, handcrafted (sic) from over 150 traits by The Sandbox’s skilled voxel artists.” Kim Kardashian’s appearance at the 2021 Met Gala dressed in an all-black Balenciaga gown was immediately likened to a not as-yet unlocked street fighter character in a video game.
Advocates of the metaverse have emphasized its accessibility as a platform for creative artists and developers to design and monetize a wide range of offerings, the latest hurrah for de-centralized democratization. In a spectacular and potentially faked intersection of this creativity and the apparently insatiable desire for celebrity attention, Kim Kardashian has already become one of the metaverse’s first victims. She threatened to sue Roblox and “burn it to the f. . .ng ground” after it was revealed that a game on the platform was advertising “Kim’s new sex tape.” The digital ad was allegedly discovered by Kardashian’s six-year-old son Saint. While the platform, originally targeted at younger children, says it has banned the developer, this was not the first time it has been accused of allowing sexual misconduct, such as the virtual sex parties known as “condos.” Whether this incident was real or not, users of metaverse platforms have documented numerous actual incidents of bullying, stalking and sexual harassment. Within a week of Meta’s Horizon Worlds virtual space being launched in late 2021, a beta user complained of being groped, stating that the experience was made profoundly more disturbing by the behavior of other users who egged on her abuser in real time.
With estimates such as those by JP Morgan suggesting that so-called iCommerce in the metaverse will eventually be worth $1tn, it is not surprising that consumers and even B2B brands are determined not to be late to the party. As attorney Josh Garren has pointed out, no one wants to be the next Blockbuster and many brands are still paranoid about their late entry into social media. This makes it especially important that they truly understand the financial and reputational risks of metaverse operations. Some advocates of metaverse platforms have touted the supposed protective elements of gated metaverse communities and others believe in the security of so-called “smart contracts” to provide trust and transparency through the blockchain infrastructure. However, the history of online gaming and social media suggests that determined miscreants and criminals will find a way to undermine the ethical uses of the metaverse.
In an environment that is still fundamentally volatile, companies need to think through some of the implications of life in the metaverse. Some of them are merely a translation of potential threats from other social realms. Others are genuinely new potential problems that will need to be carefully thought through. The best beginning is the creation of a cross-functional taskforcemcomposed of representatives from HR, legal, technology, communications and marketing and operations. This should include an internal or external resource with specific expertise in gaming, cryptocurrencies and NFTs. The work of the taskforce should encompass the following activities:
While consumer brand marketing in the metaverse has captured the most attention, this is only one part of a broad set of activities that could find a home in the virtual world. These might include:
- product innovation;
- commercial partnerships;
- recruitment, retention, training and employee engagement;
- operational testing and monitoring;
- supply chain management; and
- sustainability and ESG
Working through the potential risks and responses to those risks in all of these categories is
a critical prerequisite of functioning in the metaverse.
If accounts by metaverse advocates are to be believed, any corporate activity now taking place in the so-called real world will soon have a parallel existence in the metaverse or even have replaced it. With the avatars of customers, employees and business partners engaged in a full spectrum of activities in the virtual world, what new kinds of data will be generated and how should it be handled? Until now, only the most intrusive of companies have captured the real time speech and emotional states of its customers and employees. In the metaverse, everything that avatars say and do, even where they are looking at a given moment, is theoretically retainable. How can you ensure that this data is not being used/ sold to third parties and appropriately deleted? A comprehensive plan for data management needs to be put in place. This will need to be done well in advance of any regulatory obligation.
Intellectual property protection and commercial privacy
Metaverse providers have been at great pains to claim that their systems are secure, transparent and ethically managed. However, the small print, as usual, tends to place the burden of self-protection on their users, both corporate and individual. The corporate taskforce needs to scenario plan for a wide range of uses to uncover any unforeseen loopholes.
After two decades of social media, companies have grown used to monitoring carefully for any accidental proximities, such as their digital advertising media placement program unwittingly buying space alongside white supremacist content. The metaverse offers a vastly broader playing field and, as such, companies will need to be watching in virtual real time to ensure that similar embarrassments can be avoided. We have already seen how corporate chatbots have been programmatically inveigled into racist conversations. It is not too farfetched to imagine a CEO’s avatar finding itself innocently sharing a beer with a Neo Nazi, not necessarily in jackboots. How exactly this real-time monitoring will be accomplished remains to be seen, but it is not too early to be trying to figure it out.
Regulatory activity and compliance
Global companies are already finding that the increasingly stringent EU regulations governing social media are influencing their data privacy policies worldwide. We presume that a similar evolution will apply to the metaverse, even if there turn out to be some country-specific metaverses. Developing a global set of policy guidelines will be a critical component of metaverse strategy and planning. While the temptation to push the envelope prior to regulatory enactment will be strong, the best companies will take a cautious approach.
It will almost certainly take some time for us to discover whether the metaverse will be centralized or de-centralized, ruled by one technology infrastructure or many and monetized via one cryptocurrency or a replication of the fiat universe. As so often, especially in the 21st century, we need to take inspiration from the ancient world. The lessons of Pandora’s Box may still ring true, but so do those from Virgil’s Aeneid – “I fear the Greeks, even bearing gifts.”