Metaverse Capitalism

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James Muldoon:

"The most lucrative businesses under digital capitalism were essentially advertising companies. Apple did still get away with selling high-end consumer products. But Google and Facebook’s surveillance-capitalism business model instead sought to offer people free services in exchange for their data, which would then be analyzed and sold.

Metaverse capitalism will see big tech firms shifting more toward hardware and infrastructure, as owning the framework within which other services can be offered becomes more valuable. This isn’t just about collecting data, it’s about owning the servers and the digital worlds. We have already seen Big Tech starting to spend big on undersea internet cables and data centers to reduce data transportation costs. Alphabet and Amazon have each spent close to $100 billion investing in infrastructure and other fixed-value assets. Increasingly, the idea of tech firms as lean business models following in the footsteps of Nike and other major outsourcing companies is becoming outdated.

A second core change is a diversification of revenue sources and a decentering of the role of data and advertising. In the first quarter of 2021, 97.2 percent of Facebook’s total revenue was generated through its advertising business. The metaverse presents a broader range of revenue streams, from the hardware on which it operates to the games, services, and content within it. Meta can start offering subscription-based content; it can sell virtual property and experiences; and it can charge other companies for access to its world. The data-to-advertising funnel will still exist, but it will be part of a larger portfolio of assets.

Platform companies that have offered a single service will now be more likely to branch out into offering a range of services within a connected world. How the metaverse will be divided up between competing tech companies remains to be seen. It’s hard to imagine that Meta will be willing to let its competitors set up shop in their part of the metaverse or compete with them on equal terms. But others will likely be keen to invest if there are signs that the hardware starts to pay off.

Large investments in VR and AR technology will also create a greater need for precarious and poorly paid “microworkers” to train the algorithms. The engine of the metaverse will be the physical and very real world of exploitative labor — predominantly of workers in the Global South. As Phil Jones has recently argued in Work Without the Worker, the “hidden abode of automation” is actually “a globally dispersed complex of refugees, slum dwellers, and casualties of occupations, compelled through immiseration, or else law, to power the machine learning of companies like Google, Facebook, and Amazon.”