What will building the metaverse mean for the European tech market and its funding?

Since the start of the year, visions of the metaverse have led experts and investors to debate how it will impact European and global markets. It looks like Europe isn’t ready for the Metaverse, which provides us with the opportunity to experience 3-D virtual environments online. 

Europe neither has the technology nor the funds to catch up and compete with the big three: Meta (Facebook), Google and Amazon. Should it let them take all the risks of developing this new technology, or is Europe missing out?

These considerations have become more prominent in light of social media giant Facebook’s recent announcement on October 28, 2021 to rebrand itself under the new moniker of Meta.

According to the press release, Meta aims to bundle its key communication platforms with the goal of creating and enabling “immersive experiences like augmented and virtual reality to help build the next evolution in social technology.”

Hybrid

Platforms included in this plan are the previously acquired WhatsApp, Instagram and Messenger, as well as other Facebook applications like virtual reality brand Oculus, which will form the centerpieces of Meta’s hardware and software blueprint.

Spearheaded by co-founder and CEO Mark Zuckerberg, Meta claims that it will deliver a hybrid between real life experiences, AR and VR-driven online environments. This plan aims to reel in up to one billion users over the next decade.

Key competitors, such as Roblox and Epic Games, have previously been busy working on their visions to construct and realize interactive 3D gaming universes.

Both firms have dedicated billions of US dollars towards their own versions of the metaverse: Self-proclaimed “shepherds of the Metaverse”, Roblox, now boast a market value of US$45 billion, whereas Epic Games announced an additional 1$ billion worth of funding in April 2021 to support growth opportunities in the future.

Among business experts, Mark Zuckerberg’s announcement to enter this virtual market has raised questions about Meta’s ability to overtake companies that have already gained a large global gaming community, according to the German business podcast Manager Magazin.

It is unknown whether Meta will be able to create a place in the market with similar success to its developments in social media of over a decade ago. 

Yet, the impact and implied necessary changes to be made to tech and innovation sectors across Europe may pose an even bigger problem for Meta to be achieved for all users in equal terms when it comes to transforming new gadgets into common household devices.

Monopolizing the device market

In the eyes of Telecooperation Lab head Prof. Dr. Max Mühlhäuser from the Technical University of Darmstadt, it is unclear whether key players in the field are aiming to monopolize the device market, or to create what he calls a device ecosystem.

“Surprise rises of new tech stars will be less likely due to the fact that the big five, including Amazon and Microsoft, have way more money to spend on innovations than even a [developed nation] like Germany is willing to invest – consequently, catching up will become increasingly difficult.”

“Asian companies may dominate that market again, while Europe will most likely lag behind even more,” he explains in response to a scenario in which key players decide against monopolizing the market.

Amidst a growing divide in European internet bandwidth, which is also causing concerns about the practical use and interaction among users in the metaverse, the lack of an adequate EU funding strategy could further complicate the process.

Mühlhäuser points out that while the EU is spending €100 billion for the Horizon Europe framework programme to foster innovation, these plans present a “serious design flaw” if faced with competition from the Big Five Tech Giants or the “innovation gene pool”, i.e., Silicon Valley.

“As a consequence, Pillar One, with the European Research Council at its core, produces world-class research results, but without EU backing for ‘turning inventions into innovations’. Pillar Two shuffles truck loads of Euros into companies and makes sure ‘poor’ European countries get their share, but does not have a form of governance that would foster innovation enough, even more so since the world-leading results from Pillar One are entirely decoupled.” 

Giga-risk

Zuckerberg’s push to create his hyper-connected digital universe could make the prospect of users working with colleagues from home, buying non-fungible tokens (NFTs), and gaming with friends and family in a virtual world with the use of haptic devices more accessible than ever. 

Despite its promises for increased investments into various forms of the internet that is to come, Mühlhäuser argues that AR especially will be a game changer and key enabler in converging physical and cyber worlds that might pose a danger if put into the hands of Meta. 

“It’s a giga-opportunity and a giga-risk,” Mühlhäuser concludes, “will there be any chance to distinguish real from virtual / fake any more, which is already so difficult today? If the Metaverse remains a VR effort, it will have quite an impact, yet AR is even more dramatic since it will be with us everywhere.”