With Facebook Inc deciding to rebrand itself as 'Meta', the internet is abuzz with its futuristic version- 'metaverse'.
The hyped launch of 'Meta' even led to the soaring shares (jumped 26% in after-hours trading on the Nasdaq and up 5% at $4.79 in premarket trading on Friday) for the lesser known and completely unrelated Canadian industrial materials company Meta Materials Inc.
What does this transition imply?
For starters, on December 1, Facebook Inc shares will start trading under a new ticker symbol, MVRS. But more importantly it means that the world's largest social media company is diversifying.
While keeping its social media services like 'Facebook' , 'Insta' and 'Whatsapp' intact, the company plans to take a plunge into the the next possible big thing- 'metaverse'. Anticipating a spike in metaverse related services in near future, the company has already heavily invested in augmented reality (AR) and virtual reality (AR).
To quote Facebook CEO Mark Zuckerberg "Right now, our brand is so tightly linked to one product that it can't possibly represent everything that we're doing today, let alone in the future."
What is the Metaverse?
Coined in Neal Stephenson's dystopian novel "Snow Crash", the term was first used in 1992.
It refers to the idea of a shared virtual realm which can be accessed by different people through different devices.
The term itself means 'beyond the universe'. Metaverse indicates a virtual world where humans as avatars can interact with each other in a three-dimensional virtual space. It also allows one to buy and sell properties, engage with your peers and visit places. Not very different from the avatars in the virtual space seen in online games.
Moreover, it has a fully functional economy that allows digital assets to be carried across platforms.
Most of these platforms are based on blockchain technology and are instituted using AR and VR. Since Cryptocurrency and Non-Fungible Tokens are used to build digital assets it opens up the world of the decentralised digital economy.
What are Zuckerberg's plans for 'metaverse'?
Facebook said this week that its hardware division Facebook Reality Labs, which is responsible for AR and VR efforts, would become a separate reporting unit and that its investment in it would reduce this year's total operating profit by about $10 billion.
The division will now be called Reality Labs, its head Andrew Bosworth said. The company will also stop using the Oculus branding for its VR headsets, instead calling them "Meta" products.
The division which already has more than 10,000 will be employing 10,000 more in Europe as part of its expansion activities.
Why announce the change now?
Facebook Inc has been embroiled in multiple controversies recently facing criticism from policymakers and regulators over its market power, algorithmic decisions and the policing on its services.
In the latest controversy, whistle-blower and former Facebook employee Frances Haugen leaked documents which she said showed the company chose profit over user safety. Haugen has in recent weeks testified before a US Senate subcommittee and lawmakers in the UK's Parliament.
In another instance, in a 7,800-word departure message, Sophie Zhang, a former data scientist at the company laid bare Facebook's failure, or reluctance, in checking political manipulation campaigns, despite them being flagged. Read full interview with Zhang here.
The US Federal Trade Commission has also filed an antitrust lawsuit alleging anticompetitive practices.
The economic angle
The move can be compared to the abrupt change of Google to Alphabet in 2015.
The transition to Alphabet allowed it to explore avenues outside Internet search and advertising to robotics, life-sciences, self-driving cars, high-speed broadband and so forth.
The redefinition also helped it recover from the arrival of Facebook and the social media brigade. It helped assure investors that Google was capable of diversifying into profitable ventures and also divert the negative glare associated with the search engine and anti trust scrutiny.
And six years down the lane, Facebook plans just this.
With youngsters switching to other apps in the blink of an eye, Facebook is struggling to stay relevant. The metaverse could help with the company’s demographic crisis encouraging youngsters plugging in Oculus headsets and hanging out in the virtual world of Horizon.