The Metaverse: How Mark Zuckerberg Lied To The World

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2:00Welcome to Better Offline. I'm your host, Ed Zitron.

2:15Today's episode is about how one man tricked the entire tech industry into burning billions of dollars based on nothing. You may remember a time in 2021 when everybody was talking about the metaverse, the so-called successor to the internet that was used by Mark Zuckerberg to rename Facebook, taking the heat off of a name associated with abusing its customers and misusing their data. It was meant to be a completely digital world we lived in. Maybe it was a VR space that we socialized in. Was it a VR space we worked in? Was it a virtual world? Wasn't there something to do with crypto? So, if you're finding all of this confusing, we have something in common.

2:54We need to go back to 2021 to really work out what the hell went on, though. Interviewing Mark Zuckerberg for The Verge in July 2021, Casey Newton referred to the metaverse as a maximalist, interconnected set of experiences straight out of sci-fi. Again, that means nothing, but nevertheless, that's what he chose to publish. A few months later, when renaming the company Facebook to Meta, Mark Zuckerberg referred to the Metaverse as a more immersive, embodied internet where you're in the experience, not just looking at it. In the multiple interviews he's given since, Zuckerberg has spent thousands of words vaguely suggesting the Metaverse is everything from a chatroom to virtual reality to, and I quote, a hybrid between the social platforms that we see today, but in an environment where you're embodied in it.

3:47In fact, at one point, Mark Zuckerberg said that Meta would transition from being seen as a social media company to being a metaverse company, all without ever saying really what the metaverse was. And his descriptions veered from saying it was a social network to a virtual reality game to something that was part of Web3, which was a term used by cryptocurrency con artists to sell you some sort of decentralized blockchain-based thing. In reality, Meta's metaverse was far more boring. They would only ever release two mediocre virtual reality experiences for their Quest and Oculus headsets. One for socializing, called Horizon Worlds, and another for work called, inventively, Horizon Workrooms.

4:31It all kind of felt like a con, yet the media and the tech industry crystallized around it with this strange, frenzied excitement. Look, at the time, I didn't know you. You weren't listening to this podcast. But if you felt like you were being swindled, you should have been. Believe your ears. Believe your eyes. Mark Zuckerberg renamed a trillion-dollar company and hyped an idea that he could not describe. And then he sent the entire tech ecosystem into a years-long panic attack that resulted in billions of dollars being wasted on non-existent ideas. At the time, I was one of the lone voices decrying the made-up metaverse.

5:14I was screaming into the void that despite all of this press, all of this hype, nobody, not the journalists, not the investors, not Mark Zuckerberg, could actually describe what the metaverse was. Zuckerberg would go on to burn tens of billions of dollars investing in research and development, allegedly building the metaverse, and multiple startups would claim that they'd now entered the metaverse, only to end up ditching the idea toward the end of 2022 and early 2023, as interest rates tightened and tech stocks began to suffer, eventually entering what Zuckerberg would call the year of efficiency, which was code for laying off thousands of people and refocusing meta on artificial intelligence after seeing how well ChatGPT was doing.

6:02I've always been an anti-metaverse. Mostly because nobody could tell me what it was. In fact, in May 2023, I wrote a piece for Business Insider declaring the metaverse dead, something which pissed off Tim Sweeney, the CEO of Epic Games, the developers of Fortnite, who then quote tweeted it with this kind of sarcastic indignation. I will now attempt to do Tim Sweeney's voice. The metaverse is dead, wrote Sweeney, who was definitely not upset with me. Let's organize an online wake so that we 600 million monthly active users in Fortnite, Minecraft, Roblox, PUBG, Sandbox, and VRChat can mourn its passing together in real-time 3D.

6:39I think that's how he sounds. Look, Tim, you're wrong, I'm right. The metaverse was dead. And by metaverse, I mean the ugly, butchered, usurious scam perpetuated in public where companies, like Epic, slapped a new logo on something old and tried to claim it was the future. What Sweeney is describing are actually video games. Video games that have existed for upwards of a decade, that were never once referred to as part of the metaverse, despite this being a 90s term from a book. And it's just ridiculous because these people never used this term before until it helped them sell crap to investors.

7:20Whether or not the metaverse may actually exist one day is immaterial to the fact that this was one of the largest and most conspicuous cons I've ever seen. And nobody has been held accountable. Nevertheless, the metaverse does actually mean something. It's just kind of a pain in the ass to explain. Even for the truest of metaverse believers, it isn't really an easy thing to define. In 2022, I, of my own volition for whatever reason, decided to travel to Santa Clara, California to attend the Augmented World Expo, a tech conference about mixed and virtual reality, and of course now the metaverse.

8:01This conference had existed for quite a long time. I had been before, but before it was around things that existed like AR and VR augmented reality, meaning that something you put over your face perhaps like the Vision Pro or VR like the Oculus headsets and Quest headsets that meta was already selling without mentioning the metaverse. And I remember, despite spending days surrounded by people discussing the metaverse, talking about the metaverse, walking around boots that said metaverse on them, trying products that were apparently the metaverse, and having dreary conversations about what the metaverse could be, I couldn't get a consistent or compelling definition of what a metaverse actually was.

8:45Okay, let me give it a go though. Depending on the person, the metaverse is a virtual space where you live, or it's a video game, or it's a virtual reality experience, or it's a filter on your camera that makes you look like a dog. This is how varied the media's description was of what the metaverse was. It was basically anything that involved the real world being kind of masked by digital things. If you watched Mark Zuckerberg's October 2021 video, you might believe it's a virtual world that encompasses your senses. A fully sensory experience of the kind you'd find in Ernest Cline's horrible book Ready Player One.

9:26Now, you may be thinking, Ed, that's not technically possible, and you'd be completely and utterly right. The conceptual ambiguity, of course, and the fact that a lot of the stuff people were talking about just wasn't possible and still isn't today, didn't stop many, many companies from cashing in, raising hundreds of millions of dollars from investors to build products that did not, and probably could not, exist in an industry called the metaverse that nobody, not the investors, not the founders, could actually describe. Let me give you some examples. Bud. They're a company that raised over$60 million that, according to TechCrunch, did so to create a metaverse for Gen Z to play and interact with each other.

10:14I've downloaded Bud. I've looked at what Bud is. They don't mention the metaverse anymore. It's actually a microtransaction-riddled iPhone app that lets you visit other people's very generic looking spaces. I used to review massively multiplayer online RPGs, like World of Warcraft and things like that. I've seen a hundred million of these things. Versions of what Bud does have existed for a long, long time. Then there's another company, Trip, that's T-R-I-P-P, because why name things normally? They raised$26.3 million to create apps that, and I quote, power a mindful metaverse, and said metaverse is community-driven.

11:00In practice, it's a virtual reality app that shows you these weird, trippy visions that you would imagine seeing in a PSA for drug abuse in the 90s. They cost$10,$20. It's very strange that this company raised that much money, and nobody has done the due diligence to actually follow up with them and ask them what the hell the metaverse was and why it justified these massive valuations. Each one of these pablum-filled, multi-million dollar metaverse companies was incapable of describing themselves outside of using concussion-grade buzzwords. They had good reason to, though. If they used real words that meant things, you might catch on, and indeed their very stupid investors might catch on, that they were trying to sell you things that already existed.

11:51And I think that that is really at the heart of the metaverse boom, and why everyone is so, so vague about the definition of the metaverse. Because being specific reveals that it's a huge con used by the tech industry to pretend that they're innovating. For starters, for any definition of the metaverse to make sense, or to have any actual value, you really have to remove gaming entirely from the conversation. otherwise you're kind of cheating. If you're gonna consider Fortnite or Roblox, quote, the metaverse, you kind of have to consider World of Warcraft and Ultima Online or any other avatar based game that's ever existed part of the metaverse, at which point, isn't the metaverse just chat rooms?

12:43Isn't the metaverse just computer games? If that's the case, How is this a multi-trillion dollar industry? The metaverse isn't the future if it's just different iterations of talking to people using a digital avatar. That's the actual present. Sure, maybe it's worth a trillion dollars or three trillion dollars or however much the video game industry is. But that's a ridiculous way of looking at this. If the metaverse exists in the way they say it does, it already existed decades ago. what's interesting about this is despite all of the conversation about the metaverse being this giant interconnected world where people can get together and they don't look like themselves maybe it's pseudonymous despite all of that rosy mckinsey grade bullshit there's been worries about the massively multiplayer online rpg industry which is world of warcraft and its ilk declining for quite a while.

13:48In fact, it has been. It's slowing down, overtaken by a number of different free-to-play games on phones and consoles. It's still going, though. There are still tens of millions of players playing these games. But if you're saying the metaverse is talking to friends on Fortnite, then really, Twitter and Blue Sky are the metaverse, too, because I talk to friends on there all the time, and some of them have pictures that aren't of their actual faces. And that's the thing. If your definition of the metaverse is whatever's useful at the time, you're just a politician. You're not a software developer.

14:24You're not a tech founder. You're a fucking liar. In early 2022, people were calling Microsoft's$75 billion acquisition of Call of Duty and World of Warcraft developer Activision Blizzard, quote, metaverse related. now this was really frustrating because it's kind of like saying that piss is a competitor to diet coke because both of them are liquids you can't just say something is like the other thing because you want it to be that way you actually have to prove it the existence of interaction in a virtual world wasn't the metaverse before but it got termed as such because and really only because billions of dollars got invested in the metaverse and they needed something anything to point at and say, look, look, this exists, this is real, it worked before, please don't ask too many more questions.

15:16Tim Sweeney of Epic's argument, the one I previously referred to, that the metaverse isn't dead because people play Roblox or Fortnite, only makes sense if you define the metaverse in the broadest way possible. And it's an argument that, I hate to say, kind of has some weight considering the definitional fuzziness of the metaverse, but that also allows people who back the metaverse to point to literally anything and call it the metaverse and then use that as proof that the metaverse is destined for greatness is iMessage the metaverse was IRC the earliest chat room function of the internet the metaverse was aim AOL instant messenger was that the metaverse

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18:08What the hell is the metaverse? It just all kind of feels like bullshit. Fortnite and Roblox have succeeded not because they're both enjoyable spaces to hang out in, but because they're accessible. They're easy to play. You don't need a convoluted tutorial. Your friends can tell you how to play, or you can just work it out, as kind of demonstrated by their extremely young demographics. Now, it's kind of hard to find verifiable age data for these titles, but one survey published in 2021 said that the 10 to 20 age group has the highest percentage of people that have played a proto metaverse game which includes titles like minecraft fortnite and roblox now you may hear stats like that and think gee whiz this might be the future this is the present this shit has existed for five to ten years anyone telling you the metaverse is the future is just trying to pretend they were part of the past laughing their faces and give them the finger.

19:05And I fully disagree that Fortnite is a space for hanging out. It's a game. It's a game that's simple enough to play that you can play around in it and have a conversation. And if you weren't playing it, you'd probably call the people or FaceTime them or some other form of thing. There were some spurious articles around the time in the metaverse about Fortnite being the new place where kids hang out and play together. And what pissed me off about that is the same thing that pisses me off about the metaverse in general, in that kids have been playing video games online a while, they've been using headsets a while.

19:43These things already existed, and Mark Zuckerberg and his cronies, Sachin Adela of Microsoft, as I'll get to, Tim Sweeney of Epic, all of these people trying to claim that this was the future and that they were part of it, they were doing so to pump up their stock values, to make it easier to sell their stock in a case of Epic. It's all quite laughable, and it's extremely cynical. Now, Fortnite, of course, had a concert in it from performer Travis Scott. And when I say it's a concert, I kind of mean it's this weirdly rendered 3D version of Travis Scott. Looks like an Xbox 360 game, and it was performed to 12.3 million players at once.

20:26It was defined as a breakthrough moment for the metaverse, and allegedly was a demonstration of its potential in the entertainment space. Except that's really just an online game. An online game with instances. Because you didn't have 12.3 million people in one place, you had groups of them. In the same way that Fortnite did the announcement of a new Star Wars movie, involving a plot point that you needed to make sense of the third new Star Wars movie. It's quite messy. But in both of these cases, these were just 3D art exhibits. watching this live kind of had no point to it you weren't interacting with travis scott you weren't flipping off the emperor i guess you could but it didn't do anything these were just rolling demos where you happened to be surrounded by other people who didn't know what the hell to do with themselves these things these experiences are immersive in the same way that most video games are you're focused on a point and you're not really doing anything else.

21:24And past that, it's just fucking drab. This is the future? Going through a weird warp hole to watch Travis Scott with a bunch of people jumping up and down, trying to work out what the hell they're doing there? This is the future? This is the metaverse? Being able to watch weird stuff fly around you in a video game? Cool, I guess. Kind of feels like the present though. Kind of feels like shit. And the problem was that the majority of these metaverse companies just seemed totally lost as far as what the metaverse was and why a consumer should use it and in many cases how they should use it. Yeah, in 2021 and 2022, these companies got billions of dollars of funding by slapping metaverse or decentralized on everything.

22:16Decentralized in in this case referring to using a blockchain decentralized to do a thing usually worse. This is how companies like Sky Mavis' Axie Infinity raised$152 million at a$3 billion valuation for a cryptocurrency-powered browser-based Pokemon clone that cost hundreds of dollars to play. And then they invented a new kind of loan shark where people would loan you the money to buy your Axie to start the game, and then you'd be some kind of servant for them. They then got hacked by North Korea. This will be a future episode, don't worry. Companies like Sky Mavis are not the only ones. This metaverse boom started in October 2021, which was the thick of the post-lockdown cryptocurrency boom, and they took advantage of the metaverse's general fuzziness to con people into investing in more cryptocurrency bullshit.

23:14The blockchain and the associated Ponsai scheme nonsense that followed was a recurring theme within many of the first metaverse companies. Non-fungible tokens, NFTs as you might know them, were essentially a mechanism that claimed to demonstrate ownership of a digital asset, and they were touted as a way to handle virtual real estate during this metaverse boom. There were tons of articles about this, claiming that people were selling$50 million of metaverse real estate. Nobody cares anymore. It's all disappeared. And indeed, many other metaverse companies were also decentralized, quote, Web3 businesses, a spurious name for decentralized blockchain software that barely worked.

23:58And these companies just printed money. No, literally, they minted their own cryptocurrencies, which they then put Metaverse on top of, which conned retail investors into purchasing these things, things like virtual land and virtual homes and virtual items to put in their virtual homes. This all sounded stupid at the time, yet places like the New York Times and the Wall Street Journal were doing whole articles about how important it was. In reality, the metaverse was a cynical con that helped rich people get richer, at times off the back of retail investors that still believed that cryptocurrency was meaningful and would never crash again.

24:39Yet the entire tech industry worked to proliferate the term metaverse in a way that kind of echoes the empty hype you're seeing around artificial intelligence today. and it kind of operated in the same way too. They took a technology that already existed and then they massively overstated what it could do in the future. And I haven't even got to meta or the general state of virtual and mixed reality. Nowhere was the con more on, I guess until it wasn't, than at one hack away where I believe Mark Zuckerberg lives. In early February 2023, the Wall Street Journal pointed to meta's healthy Q4 numbers, where its stock price jumped by 20%, thereby reinstating its membership in the club of companies with a market capitalization over$1 trillion, as proof that Meta had, and I quote, finally figured out how to sell the metaverse.

25:33The journal pointed to Meta's Reality Labs division, which houses the company's metaverse efforts, which made over$1 billion in revenue for the first time, driven primarily by healthy holiday sales of Meta's Quest 3 virtual reality headset. That was the big sign that the Metaverse was fine. Except it wasn't. That's a 40th of Meta's$40 billion Q4 revenue. It's also roughly a sick of the amount of money that Reality Labs burned, with the unit making a$4.65 billion loss, which was its highest on record. And in the case of virtual reality in general, it's still a very early-stage technology. Most headsets, including the latest Oculus and Quest devices, which Meta of course makes, are still uncomfortable, clunky, and still buggy, more so than the Vision Pro.

26:27They're not immersive, and they routinely make people feel a kind of physical sickness, which is not ideal. And Meta's flagship metaverse title, Horizon Worlds, is still ugly and awkward, and nobody uses it. Multiple articles have now come up where people just can't find other people to meet in Meta's metaverse. It's all so confusing. And Horizon is so obviously inferior to Zoom or Microsoft Teams or any other form of modern communication that the only reason to use it is to be upset or get sick or nauseate your colleagues, which I can do for free using my webcam over Zoom. And of course, Meta obviously knows this, because in early 2023, leaked documents obtained by The Verge's Alex Heath revealed that only 1 in 10 Horizon Worlds users returned after trying the title for the first time.

27:24Since its launch, Horizon Worlds, and I reiterate, this is the flagship Metaverse title from the world's most vocal Metaverse company, called Meta, that renamed itself to Meta because of the Metaverse. Horizon Worlds has continued to shed its monthly active users To the point where it just kind of feels like a mass market open grave Nobody is there It's worse than an empty mall Because you can kind of see what people would buy there It's just negative space And all of this is just a stunning fall from grace Considering the capital, both reputational and monetary That Zuckerberg pumped into it When Mark Zuckerberg announced in 2021 that Facebook would rebrand to Meta, he claimed that the Metaverse would be the future of the internet.

28:14The glitzy, spurious promotional video that he used alongside the name change described this future where we'd be able to interact seamlessly in virtual worlds. Users would make eye contact and feel like they were in the room together. The Metaverse offered people the chance to engage in an immersive experience, and this was what Mark Zuckerberg promised. And these are bold claims that are, of course, totally unfulfilled. And I'd argue they're never going to be. A functional business proposition requires a few things to thrive and grow. First of all, a clear use case. Then a target audience. And then, of course, the willingness of customers to adopt the product.

28:56Zuckerberg waxed poetic about the metaverse as a vision that spans many companies and claimed it was the successor to the mobile internet. Yet he failed to articulate basic business problems that the metaverse would address. Absolutely nothing underpinned Mark Zuckerberg's promises about the metaverse. And it's still as ill-defined then as it is now. And yet executives and investors decided that it just didn't matter that the metaverse didn't mean anything. Because, of course, money could be made. Microsoft CEO Satya Nadella would say at the company's 2021 Ignite conference that he, and I quote, could not overstate how much of a breakthrough the metaverse was for his company, the industry, and of course the world.