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The metaverse's kumbaya moment

Presented by Comcast: How the next wave of technology is upending the global economy and its power structures
Jul 27, 2022 View in browser
 
POLITICO's Digital Future Daily newsletter logo

By Derek Robertson

Presented by Comcast

Just before we finalized this newsletter, the FTC sued Meta in an attempt to block its acquisition of Within, the developers of a VR fitness app. It's Lina Khan's first lawsuit against one of the big tech companies as FTC head, and a significant setback — and possible portent — for Meta's metaverse plans, at a moment where economic conditions make them more vulnerable than ever.

POLITICO's Josh Sisco reported that the FTC said the acquisition "would be one more step along that path toward dominance," removing Meta's incentive to develop their own competing products, while the company fired back that the suit was "based on ideology and speculation."

Modeler Image by Joshua Eiten (Photo: Business Wire)

Adobe's modeling technology it touts for metaverse world-building. | Business Wire

Building the metaverse is a massive undertaking — far too massive for any one company to tackle in-house.

That explains why a group of heavy hitters including Meta, Microsoft, Epic Games and Sony announced the formation of the Metaverse Standards Forum last month, meant to "foster the development of open standards" for a future 3D-based internet. "Interoperability," or the idea that digital identity and property will be portable and usable across different private platforms, is more than just a buzzword — it's the fundamental principle that distinguishes a metaverse from a suite of glorified virtual chatrooms.

That warm-and-fuzzy sentiment, of course, runs up against a truism of American industry: there's only one top dog, and everybody wants to be it. At least for now, however, the companies building the metaverse see cooperation on the rough outlines of virtual-world-building as the best way to guarantee a fair shot at winning that status.

The internet as we know it didn't start this way. The technology that backs it was built largely by public-private partnerships and the government itself, from the Defense Department's role in developing TCP/IP protocols to Tim Berners-Lee's invention of the web at CERN in the late 1980s. Today a mature tech industry mostly writes its own rules, moving too fast for American lawmakers to keep up.

That means that whatever the standards-setting process for the metaverse ends up looking like, it'll have to be profitable for the deep-pocketed companies building it.

"In order to do what we're doing, for an open or a closed metaverse, either way the technological investments are going to be massive," said Tony Parisi, who was involved in the Metaverse Standards Forum's founding and is the co-creator of numerous 3D graphics standards . "You could have a nice little closed-system economy, but history has taught us those are limited in how they can scale, versus open marketplaces where there's more influx and diversity." (When I spoke last week with Matthew Ball, co-founder of a metaverse-focused ETF, he sounded largely the same note .)

It's easy even for competitors like Meta and Microsoft to get on the same page when they're talking about basic technological tools. But what about the worlds that get built on top of that technology? When the president threatens another head of state via Tweet, or a teenager gets radicalized on a forum before going on a shooting rampage, nobody curses the TCP/IP protocol. Who will set the standards that directly impact how actual users interact with the metaverse?

"The problem with the metaverse is that we are building technical standards for how it will build on the internet without having solved the problems on the actual internet yet," said Tom Wheeler, a fellow at the Brookings Institution and former FCC chairman.

That's why regulators like Wheeler, who has argued extensively for a new federal agency that would set standards for tech, believe the government should be directly involved in the process.

"The agency would say, we're bringing this group together because there needs to be interoperability, you guys figure out how to do it, and we're going to sit with you at the table and participate in that process," Wheeler said. "And we're going to decide whether or not you're giving us something meaningful or something that's BS."

But for now that fantasy scenario is, well… just that — and the Metaverse Standards Forum provides another venue through which the industry is getting ahead of it.

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watching the watchdog

Consumer Financial Protection Bureau Director Rohit Chopra testifies.

Consumer Financial Protection Bureau Director Rohit Chopra testifies before the Senate Banking, Housing and Urban Affairs Committee April 26, 2022. | Win McNamee/Getty Images

Today POLITICO's Katy O'Donnell interviewed CFPB director Rohit Chopra , the pugilistic Elizabeth Warren protégé who's increasingly turned his agency's skeptical eye toward the crypto world.

Although Chopra didn't discuss crypto explicitly, the conversation provides a direct look into the mind of one of Washington's top tech watchdogs as politicians clamor for regulation on hot-button topics like stablecoins, AI and safety in the metaverse.

In describing how his tenure differs from that of his predecessor Richard Corddry, Chopra said "The highest-stakes issue for us to deal with is, what are we going to do about Big Tech entering financial services?" (A congressional report released in May detailed regulators' concerns about Big Tech-driven financial products when it comes to privacy, protection from scams, and even algorithmic bias.)

"Increasingly, big tech companies have even richer data than even the credit reporting companies have," Chopra continued. "...especially when it comes to payments and those firms integrating their technologies into their own mobile devices and mobile operating systems, being able to collect, monetize our transaction data in a very detailed way."

Chopra also said that one of his top priorities for the agency is its rulemaking around personal financial data rights, something that could become massively important in the metaverse as companies compete to dominate the payment methods that will link various virtual worlds.

afternoon snack

Minecraft's decision to ban NFTs from its platform last week was met with mostly cheers from gamers eager to keep their preferred platform from becoming overtly monetized.

With one notable dissent: NFT Worlds, a "play-to-earn metaverse gaming platform" that used Minecraft as its base for its planned multiplayer role-playing games, music venues, and more , all linked by the virtual tokens. NFT Worlds said this week that the move shows "no regard for creators, builders and players" and that it's working on a new platform with "many of the core mechanics of Minecraft" (one that, they say, will skirt any potential copyright infringement).

While NFT Worlds' anguish is particular to this one platform, it gets at a major tension within the gaming and tech community writ large over blockchain and NFT technology: freedom and independence vs. profiteering.

That technology's boosters promote it as the key to "openness" in a digital world, enabling users to authenticate themselves independent of any company like Minecraft-owner Microsoft that might regulate or revoke their accounts or digital goods.

Opponents, like those in Minecraft's leadership, view it as a vehicle for scams and predatory financialization. If NFT Worlds wants to prove them wrong, they'll have to do it on their own platform, from the ground up.

 

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Stay in touch with the whole team: Ben Schreckinger ( bschreckinger@politico.com ); Derek Robertson ( drobertson@politico.com ); Konstantin Kakaes ( kkakaes@politico.com );  and Heidi Vogt ( hvogt@politico.com ). Follow us on Twitter @DigitalFuture .

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