Meta takes another subtle step towards a much-hyped metaverse

Meta Platforms Inc. took another subtle step toward its reinvention when it changed its stock ticker symbol to “META” from “FB” this week.

The Facebook parent company META,
-4.62%
has in recent months shifted the focus of investors towards its long-term strategy, particularly its pursuit of the metaverse, a much-hyped network of virtual reality worlds. According to Meta, by using 3D technology, the metaverse will allow users to socialize, learn, collaborate and play.

In fact, Meta Chief Executive Mark Zuckerberg has touted the metaverse as the next era of social technology.

But at this stage, the metaverse is still a long way from widespread adoption. Last year, when the tech giant morphed into Meta, it described the metaverse as a “hybrid of today’s online social experiences” that can be expanded into three dimensions or projected into the physical world.

Shades of “The Matrix”? Or a belated attempt to gain market share from Alphabet Inc.’s GOOGL,
-3.26%
Workspace, MSFT of Microsoft Corp.,
-3.91%
Teams, and Zoom Video Communications Inc., the big video conferencing winner of the pandemic? zm,
-2.11%

Facebook’s aging, albeit massive, user base and intense competition from rivals like TikTok mean Meta needs to revive its business. By providing users with countless new ways to interact socially and professionally, the metaverse could achieve this, but it can take years to build an ecosystem.

And who will use the metaverse? The virtual reality worlds are a perfect fit for the gaming community, but Meta wants to bring in a wider range of consumers and businesses. To entice users, Meta plans to launch a version of their Horizon virtual reality platform this year that will allow access to the metaverse without a headset.

Meta isn’t the only tech heavyweight targeting space. Microsoft, with its massive presence in the business computing space, has its eye on the metaverse.

Microsoft’s metaverse strategy was in the spotlight this week when it emerged that Alex Kipman, leader of the company’s augmented-reality headset project, is stepping down. The departure of Kipman, who oversaw the development of the HoloLens headset, was detailed in an internal email from The Wall Street Journal.

Augmented and virtual reality products are seen as key to the drive to bring metaverse to the masses, so Microsoft’s next HoloLens moves will be closely watched.

Microsoft is already working with Japan-based Kawasaki Heavy Industries Ltd. 7012,
-1.34%
on an “industrial metaverse” that uses Microsoft’s cloud computing platform Azure and HoloLens to troubleshoot robotic equipment. Pennsylvania-based food and beverage company Kraft Heinz Co. KHC,
+0.31%
also works on metaverse projects with Microsoft.

Microsoft has also discussed the technology infrastructure that will support the broader metaverse.

“Among the buzz comes the metaverse in both predictable and unexpected ways,” Charlie Bell, Microsoft’s executive vice president of Security, Compliance, Identity and Management, wrote in a blog post earlier this year.

Because there won’t be any metaverse platform or experience, he added, interoperability is crucial. Bell also pointed out the importance of security in this new network of virtual worlds.

There are clearly great opportunities in the metaverse for the likes of Meta and Microsoft, but the game is still in its infancy. During the first quarter, Meta’s Reality Labs segment, which includes the metaverse, reported a loss of nearly $3.0 billion, from $1.8 billion a year ago.

Even Meta CEO Zuckerberg has acknowledged that the metaverse is a long-term game. Meta is laying the groundwork for the 2030s to be “very exciting,” he said during the company’s first-quarter earnings call in April.

Against this backdrop, investors may have to wait for the promise of these virtual worlds to become financial reality.

Meta’s stock is down about 10% in the two days since the ticker change. It is down 47.5% so far, while Microsoft shares have lost 24.1% and the S&P 500 index SPX,
-2.85%
has lost 17.9%.

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