Ethics and Economics in the Metaverse

Exploring Mark Zuckerberg’s frightening vision for a new technological frontier

In October 2021, Facebook dominated global headlines as the social media giant announced it was changing its name to Meta—short for ‘metaverse’.

But what is the metaverse? Mark Zuckerberg, Meta’s CEO, described it as “an embodied internet where you’re in the experience, not just looking at it”. He wants you to be able to experience video games as if they were real-life, meet friends virtually as if they were right in front of you, and attend events in entirely virtual spaces.

Zuckerberg believes the metaverse is the future of the internet. He believes in it so strongly that he revealed Meta would be shifting its efforts from social media to developing his immersive virtual reality.

Meta has already developed part of the technology required to realise Zuckerberg’s vision. Oculus, which Meta owns, sells virtual reality headsets which let users ‘see’ the metaverse. The strap-on headsets contain screens that line up with your eyes to display a realistic, computer-generated world. Although originally designed for playing video games, Zuckerberg views the headsets as portals to his metaverse.

However, from an ethical standpoint, there is growing concern that Meta is looking to pivot too quickly. Facebook and Instagram, owned by Meta, have long been fraught with hate speech and violence, allegations of political interference, and dangerously poor content moderation. With these concerns remaining unaddressed, it is reasonable to believe they will reappear and likely worsen in the more immersive metaverse internet.

Meta’s new virtual reality spaces are already under scrutiny due to reports of harassment. According to a December 2021 article from the New York Times, users have been groped and subjected to reenactments of sex acts by other users. Experts are worried about the safety of children on Meta’s platforms, wrote The Washington Post just days ago. Without strong restrictions and moderation, Meta “is inadvertently creating a hunting ground for sexual predators”. Safety concerns in the metaverse are unlikely to disappear soon.

There are also questions surrounding Meta’s controversial business model which is in almost direct conflict with user privacy. Meta primarily profits by collecting troves of personal user data to optimise the delivery of other companies’ advertisements. In the past, this data has been limited to specific interactions — liking or commenting on a post, for example. In the metaverse, Meta will potentially have the ability to listen in to your conversations, observe your every interaction, and even analyse where your eyes are looking.

Ethics and Economics in the Metaverse — Metaverse Ripple

You’ll stop meeting up with your friends. You’ll stop going out to concerts and events. You’ll stop heading into the office during the week, stop driving and flying places—for the most part, you won’t leave your home. This is a strange vision for the future and one that probably makes you uncomfortable. But in the casino known as capitalism, companies have already bet tens of billions of dollars on this vision. Meta is just one of them. More startling is that these companies aren’t just gambling that this is how the future will turn out: they’re gambling that it’s a future you’ll want and even help them to build. This future will be driven by a new technological platform—the metaverse.

The metaverse, according to Zuckerberg, will be an immersive virtual reality where you can socialise, work, and most importantly, transact. It doesn’t yet exist, but the hope is that the metaverse will be a place very similar to reality but with greater freedom of expression, less discrimination, and without the physical barriers of reality. Think of it as turning real life into a video game, but with two key differences.

Firstly, the metaverse will be entirely immersive—you won’t see it through a screen but will instead experience it in 3D. With special glasses or a headset, virtual life will look entirely real, not computer-generated.

One example Zuckerberg offered in his keynote address was ping-pong. You’ll be able to play with a friend on another continent, holding a paddle that isn’t really there, feeling the tap of a ball that isn’t really there either as you lob it over the net to score a point. Your body is the game controller. Your retinas are the game display. If everything goes to plan, the metaverse will be indistinguishable from reality — apart from the fact that it will probably look better.

The second deviation from traditional video games is that the metaverse doesn’t aim to be a fun diversion from your critical activities. It aims to be (almost) your entire life. You might normally play a video game to relax after coming home from work, or to socialise with friends on the weekend. But that’s probably only for an hour or two. Most of your life happens outside the game—working, shopping, meeting up with friends and family. The metaverse seeks to duplicate these experiences in its virtual reality. So unlike in a video game, you won’t be chatting with the computer’s pre-scripted dialogue. You’ll be speaking with your friends, actually seeing their faces and hearing their voices as if they were right there in the room with you. By creating different spaces for socialising, work, shopping, and gaming within the metaverse, there could be very little reason for you to leave.

Yet in early 2022, the metaverse seems little more than a far-off dream. Do we really need to worry about it now? What makes the metaverse different from other technologies of science fiction like flying cars, robot butlers, and holograms?

At some point or other in the past, we were told to believe these innovations may have been just decades away—then we were disappointed. But like any bold gamble, the metaverse demands to be taken seriously not because it’s an exciting idea but because it has big money behind it. This year alone, Meta has planned to invest US $10 billion in building the metaverse. The actual figure is expected to be much higher. In the past, science fiction technology has remained just that—fiction. With the metaverse, companies like Meta are now pledging to throw enormous sums of money at a distant vision until that vision is our reality.

As an immersive hybrid between reality, social media, and video games, the metaverse will draw in problems from all three of these spheres.

Even if in a decade we’re not all partying on the meta-beach and the metaverse has become a relic of technological failure, it will have undoubtedly made an impact on our world. Meta is taking it that seriously.

If the metaverse arrives, it will bring with it many exciting opportunities and experiences. Where mail, email, and video chat revolutionised the way we connect with others over distance, the metaverse will provide an immersive way to spend time with those we love but cannot be with. Zuckerberg wants us to be able to chat with family and friends as if they were right in front of us and have shared virtual experiences that wouldn’t otherwise be possible.

Beyond communication, the metaverse will unlock many opportunities when it comes to leisure. Gaming is currently a large focus, as it is the only industry in which the metaverse really exists at present. Virtual reality games are highly immersive and invite a new level of physical interaction and involvement. Fitness is also a focus, with Zuckerberg looking to reimagine workouts as games.

Supernatural is a company that has already done just that. Compatible with Meta’s Oculus platform, it provides a series of immersive virtual workouts that feel like video games. Users can box above a volcano, avoid cannonballs in the desert, and stretch by a serene lake. A journalist from The Cut described feeling like “both a warrior and an amazing rock god drum soloist” when working out with Supernatural.

Finally, there’s the potential for remote work to be made more productive and attractive for both employers and employees. Meta is working on a product that allows teams can meet in virtual spaces and even conduct work there, too. By reducing the need to travel to the office, the metaverse could help ease traffic congestion and improve the happiness of employees.

However, the nature of the metaverse raises several serious concerns. As an immersive hybrid between reality, social media, and video games, the metaverse will draw in problems from all three of these spheres.

Despite Meta’s virtual reality platforms being relatively new, several users have already reported being virtually harassed. Late last year, the New York Times reported the story of a female player who reported being groped by another player’s avatar. Then just days after Meta launched its new Horizons platform, an employee was virtually groped by another user. After countless more reports of harassment and an alleged “virtual gang rape” caused a stir in the press, Meta was forced to create safety barriers around users in virtual reality.

Zuckerberg had earlier acknowledged the importance of “safety and privacy” and committed to “building [the metaverse] responsibly from the beginning”. He seemingly views social concerns as engineering problems that can be avoided with careful design. That approach has clearly failed.

Bullying is another prominent issue on social media and one that Meta is yet to properly address. Given this lack of legitimate concern, it is reasonable to expect that bullying will become a problem in the metaverse, too.

Yet the most serious unaddressed concern is for users’ mental health. Studies have shown sites like Facebook and Instagram, especially for teenagers, are highly detrimental to mental health. Social media can decrease self-esteem, exacerbate body image issues and eating disorders, and serve content that encourages acts of suicide. The metaverse will only make this problem more significant.

Ethics and Economics in the Metaverse — VR Headset Stamped

Although you may use Facebook for free, it costs parent company Meta roughly US $74 billion per year to operate. Facebook isn’t Meta’s only free to use platform, either. Instagram, Messenger, and What’s App are other examples of popular but costly platforms that Meta provides to consumers at no cost. 

This may sound like a terrible business plan, but it’s incredibly effective. Meta can only offer its platforms for free because it’s making money elsewhere. Where, you may ask? In the business of collecting and exploiting your personal data.

Meta’s core business model is a type of “surveillance capitalism”, explains scholar Shoshana Zuboff. While you use its apps and services, Meta is constructing a detailed digital profile about your interests, preferences, and purchasing habits. Every like, comment, view, and perhaps even how long you spend looking at a post is analysed by a computer algorithm and stored in Meta’s database. This is a highly invasive data strategy, but it doesn’t stop there. Meta can even track you on millions of other sites and apps besides the handful it owns and operates. In 2018, Meta was discovered to be tracking and profiling users without accounts on any of its services. After damaging leaks and public pressure, Facebook eventually confirmed this practice in a post on its website.

Meta uses this data to sell advertisers highly targeted ad slots on its platforms. Traditionally, advertisers chose a platform based on the demographic they wanted to target. Then they would craft an advertisement to appeal to that audience. Despite having the power to reach tens of millions of people, this method could not account for audience individuality. With Meta, instead of crafting a single ad, companies craft tens to hundreds of ads perfectly suited to extremely narrow audiences. These ads are displayed to users selected by their digital profiles and Meta cashes in.

This highly targeted form of advertising has proved extremely valuable for companies. For example, KFC can create advertisements to specifically market its family boxes to users Facebook knows has young children. It could also target its chicken at audiences predicted by Facebook to have lower incomes — people statistically more likely to purchase fast food.

It’s not difficult to see how targeted advertisements can quickly transition from powerful tools to predatory exploits of inequality. This is one of the reasons Meta’s fundamental business model is so concerning.

Targeted advertisements on Facebook are so powerful that there are concerns they may have influenced the 2016 US election result. Politicians — and apparently foreign organisations, too — were able to target highly specific groups to communicate certain political messages.

It is important to remember that at its core, Meta is an advertising company. When Meta says it wants to build the metaverse, what it really wants to build is an extension of its advertising business. The unresolved issues that plague its current business will also plague the metaverse.

By nature, Meta and its products are not user-centric because the user is not the customer. Provided, Facebook and Instagram must try hard to keep user attention to maximise the number of ads they can show. Yet Meta’s business model doesn’t care what’s keeping a user’s eyeballs. Whether it’s images from a friend’s boating trip or a polarising video of an execution in the Middle East, Meta gets its ad money either way.

Translating this concern to the metaverse, it’s not unreasonable to expect that Meta’s lack of interest in content moderation will change. Like Facebook and Instagram, the metaverse is likely to become a platform plagued by hate speech, violent content, and radicalising views. In its almost twenty years of existence, Facebook is yet to figure out how to rid itself of harmful posts and comments. Before finding a proper solution, Meta has moved to create a platform where these same concerns will exist but are now strengthened and amplified.

Where before an execution video could be viewed on Facebook through a 2D screen, the metaverse provides the opportunity for this content to be experienced in immersive 3D with surround sound.

Although expensive to develop, Zuckerberg has determined that the metaverse is essential to Meta’s future. Having grown its current businesses well past the point of maturity Meta now needs even more customers and even more ways to squeeze their pockets. Facebook, for the first time in its history, lost users last quarter. Zuckerberg must be feeling the heat.

Zuckerberg has pitched the metaverse as a platform of egalitarianism. According to him, it will be a place where there is finally a level playing field. Users will be able to control their digital appearances, travel to exotic corners of virtual reality, and connect with users of all backgrounds from around the globe.

However, Meta’s business model is in direct opposition to Zuckerberg’s vision. Meta realised its new platform could provide the opportunity to sell to users, not just advertise to them. It plans to sell digital outfits, known as ‘skins’, which users need to customise their appearance. Additionally, users are going to be charged for access to certain experiences, property, and spaces on the metaverse — much like real life.

In that kind of market, there is no opportunity for egalitarianism. The rich have the most money to be exploited, so Meta can sell them more expensive digital appearances and outfits, more exciting virtual experiences, and better spaces. Just as companies do in real life, Meta will appeal to the desire of the wealthy to distinguish themselves from the general population.

On the other hand, capitalist markets have long known that the financially disadvantaged and/or vulnerable remain valuable consumers. A 2001 study of Chicago billboards found liquor and tobacco companies to be disproportionately targeting minority communities. Through targeted advertising, predatory companies sold alcohol and cigarettes to people who could barely afford the rent.

For Meta, the metaverse gives corporate advertisers even greater access to an individual’s needs, desires, and interactions. This leaves the potential for future advertisements to become even more powerful and even predatory, identifying and preying on an individual’s unique issues or concerns. Beyond advertising, Meta’s own digital products will be highly attractive to the vulnerable. Digital appearances can be a way to fit in and provide a level of acceptance unaccessible in reality. Real estate in the metaverse could also be attractive, allowing consumers space and a home they know they could never afford in real life.

Like the American dream, Zuckerberg’s metaverse creates a picture of opportunity and egalitarianism. However, both are undermined by flawed capitalist systems which accelerate inequality and prioritise profit over people.

Ethics and Economics in the Metaverse — VR Headset Twirl

A lot is riding on the success of the metaverse for a lot of people and a lot of companies. There are many financial and ethical concerns surrounding the platform, but these only matter if Meta — or anyone else, for that matter — manage to pull it off.

Despite what Meta may tell its investors, its metaverse is not a sure bet — economically, but also technologically. Much of Zuckerberg’s vision for the metaverse relies on technology that is either emerging or yet to be developed.

Most significantly, Zuckerberg wants the metaverse to be fully immersive. In other words, he wants to make it difficult for users to sensorily distinguish between their real and virtual realities. At present, if you want to access virtual reality, you need to put on a headset. This is a heavy piece of plastic equipment with a padded interior and two lenses that line up with your eyes. Think of the headset as a (very) bulky pair of glasses. When you put on the headset, you’ll see a computer-generated world in three dimensions.

The problem with current headsets can be summed up in a single word: pixels. The millions of tiny square pixels composing digital images normally aren’t noticeable nowadays on phone and computer screens. However, with headset screens so close to your eyes, you’ll notice the tiny squares composing the images you see. What Zuckerberg wants is magic, but first, he’ll have to deal with physics.

Real-life isn’t composed of millions of tiny square pixels. Putting on one of Meta’s headsets, I immediately knew what I was seeing wasn’t real. It didn’t look real — I could see the pixels. No matter how good the images they made with the pixels, they still felt fake.

If Zuckerberg wants to immerse us in the metaverse, he certainly has a long way to go with optical technology.

Interestingly, Zuckerberg thinks Meta has already found a solution. Project Cambria is the codename for Meta’s secretive new virtual reality headset. Proper images haven’t yet been released nor is the product going to be available to consumers any time soon. However, Zuckerberg says Cambria includes new display technology which can match the resolution of the eyes. In other words, no more pixel problems. The only issue is the price — Meta has assembled working prototypes but cannot figure out how to viably mass-produce Cambria at a reasonable cost.

Managing hardware costs is imperative for user adoption, one of the biggest challenges Zuckerberg will face as he rolls out the metaverse. The raw hardware cost for headsets and accessories will be prohibitively for most new users, especially casual ones. This challenge is new to Zuckerberg, who could previously lure in new users with his free apps. There was never any cost to joining Facebook or Instagram, part of the reason it was so easy to get users hooked in the first place. Now Zuckerberg must convince users to first purchase hardware before they can become part of his new platform.

Luckily for Meta, the video game industry faced a similar problem and arrived at a solution that has proved to be highly effective. Zuckerberg’s plan copies this model exactly.

Microsoft and Sony, the two dominant players in the gaming console market, sell their hardware at either razor-thin margins or a loss. Yes, the makers of Xbox and PlayStation sometimes lose money on their most important hardware products. However, this is a strategy designed to increase unit sales. Like Facebook, Microsoft and Sony realise the economic value in a large user base. The gaming companies know the real money is in selling games and subscriptions to their now captive customers.

No amount of visual trickery can change our physical reality.

Because Zuckerberg knows he has a highly effective advertising business, he can afford to lose money on hardware. The cost of user acquisition in the metaverse may be far higher than it was on the internet, but Meta believes the profit it can generate per user will also be far higher.

But some hardware issues will not be easily addressed, and will certainly not be addressed soon.

For one, there’s the issue of constrained physical movement. In the real world, you can’t run through a wall. That’s a property of basic physics. Yet in the metaverse, your eyes may show you a wall but that means nothing to you physically — if you want to, you could walk straight through it. Or at the very least, it’s not going to hurt if you take a run at it. Conversely, you may be strolling through a serene field in the metaverse but trip over your ‘invisible’ bed which exists in the real world. No amount of visual trickery can change our physical reality.

Similarly, taste, smell, heat, and the weight of touch are nuanced sensory experiences that will be difficult to emulate with technology. With enough graphics power and optical technology, we can be convinced of the presence of an object that isn’t there. But engineers have no idea how to suggest a certain taste or smell, or how to give us the experience of heat or cold. In the metaverse, we won’t be able to experience the taste of exotic foods (or any virtual foods), nor will we be able to warm ourselves in front of a virtual fire. There exist haptic vests that can make you feel certain sensations of touch in virtual reality, but they’ll never give you the fullness of a true embrace with another person.

Sensory brain implants are the only conceivable solution to this issue. Tricking the senses is ridiculously difficult, so directly altering the way the brain perceives reality would be the only way to authentically replicate real sensory experiences in the metaverse. But these implants are far from being a reality, and Meta doesn’t appear interested anyway.

These technological limitations are healthy news for the metaverse. As long as there is something unique about our experience of reality we will have reason to leave the metaverse and experience the real world. A real fear for the metaverse is that it will become a hyper-reality, one where every real experience has a virtual imitation designed to be more exciting and addictive. In that hyper-reality, the real world is mundane and pedestrian. Yet we can take comfort in knowing this is unlikely to occur. Despite Meta’s best technological efforts, we’ll have to leave the metaverse if we want to experience our favourite burger, the smell of fresh-cut grass, and the embrace of a loved one.

Meta desperately wants to replicate every part of the human experience, but some things will undoubtedly prove too unique — too human — to imitate. With many sensory experiences exclusive to reality, the metaverse will at most be a shallow cousin of reality.

This must frustrate Zuckerberg. It gets in the way of his vision.

Ethics and Economics in the Metaverse — Metaverse Shear

For almost twenty years, Zuckerberg’s social media platforms have dominated the market and generated his immense personal wealth. Now, with growth pushed to its limits, users beginning to leave for rival platforms, and Meta’s market value plummeting, Zuckerberg has been backed into a corner. To him, the metaverse is the way out.

Yet the metaverse, like the social media businesses Zuckerberg built before, relies on an ethically questionable business model. Meta primarily profits from services that exploit personal user data to serve highly targeted internet ads. Its metaverse will only provide a far more powerful, invasive opportunity to turn human experience into cash. Zuckerberg knows this is exactly what Meta needs. It can’t reach more users, so instead, it must squeeze even more profit out of the ones it has.

There are unignorable technological barriers that stand between Zuckerberg and his grand metaverse dream. However, many of these barriers may eventually fall given his persistence and deep pockets. He’s bet his entire business that this will work.

From all perspectives, it seems the metaverse is indeed imminent. We do not yet know how far Meta will be able to take it, how immersive it will become, and how much of our lives it will consume. We can only sit and wait. What we can be certain of is that the metaverse will be rife with ethical concerns — just as Facebook is now — and we will have to respond to them as they come. But it will also be a place where people can connect, where lives are enriched through exercise and play, and where new experiences are born. Examing the fragments Meta has already created, we can see both sides at play.

For all its shortcomings, Meta has brought billions of people together in a vibrant online community and will continue this with the metaverse. Zuckerberg wants his virtual reality to be perfect, but it can’t be. What he wants more is to make money. Ultimately, what Zuckerberg brings us will be a platform that’s very similar to reality, with all its beauty and unavoidable flaws.

Guest post by Michael Nixon. Nixon is student at Stanford University studying mechanical engineering and computer science.