William John Market Report 03-11-21
William John takes a look at Facebook’s transition to Meta as it combats its largest public relations crisis since the Cambridge Analytics scandal.
William John, Facebook, Meta, Metaverse, Big Tech, Technology, Markets, Equities
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William John Market Report 03-11-21

William John Market Report 03-11-21

Category: Reports

What is the metaverse? It has been a buzzword over the past couple of weeks, with Facebook announcing a company rebranding to Meta on the back of another ethical scandal, with a whistle-blower from the company accusing Facebook of putting user metrics and profits before user safety and misleading investors. The question is, is this a ploy to distract the public from bad publicity? Or a genuine evolution for one of the world’s largest companies? 

The answer is mixed. Speaking at Facebook Connect on 28/10, Facebooks annual virtual and augmented reality conference, Mark Zuckerberg had said the transition to Meta reflected the fact that Facebook is “an iconic social media brand but increasingly, it just doesn’t encompass everything we do”. The fact is that the Facebook corporation goes far beyond Facebook the social media platform. The corporation owns several more businesses, including Instagram, WhatsApp, Messenger, and Oculus (A Virtual Reality company) and perhaps the bad publicity that Facebook attracts does not reflect the entire operations of the business, just as the activities and operations of “Google the search engine” did not reflect “Google the business” when it transitioned to Alphabet in 2015. 

But, it also represents much more. The Metaverse was first proposed in Neal Stephenson’s 1992 novel “Snow Crash” as a place where humans (as virtual avatars) could interact with each other and pieces of software in a virtual location. This concept should be familiar to most. The Matrix film series, which depicted humanity in a virtual world, or games such as Grand Theft Auto or World of Warcraft, are early protypes of the potential of the Metaverse. 

Facebook is indoctrinated to the belief that virtual worlds have a capability far beyond their current states in video games. Using augmented reality and virtual reality, over the coming years it is seeking to develop a virtual world as a platform for e-commerce that is capable of generating “hundreds of billions of dollars of digital commerce a day” for users across multiple devices to socialise, game, shop and more in a shared virtual space. Since the announcement of the news, the price of Facebook, already rebranded as Meta Platforms, Inc. has slightly crept up from $324 on 25/10 to $326 on 01/11. Given it has been only a few trading days since the announcement, it will take time to judge investor response to the announcement of the company’s transition. 

However, since the Wall Street Journal started reporting on Facebook’s internal documents and ongoing investigations with U.S. government departments since September, the price of Facebook has slumped:

Source: William John Analytics, Yahoo Finance

Clearly, until tangible effects of Facebook’s rebranding start to come to fruition, investors are likely to concentrate on the Meta’s ongoing legal issues and ethical concerns. On the contrary, with Microsoft, Google and an array of other Big Tech companies introducing their own Meta services, such as “avataring” Microsoft Teams as recently reported in the Financial Times, this is more than a ploy to uplift the company’s image and polish public relationships – it is indicative of the fact that the future of human interactions, transactions and ultimately relations, will be virtual. 

This will have its own ethical considerations – how will children or vulnerable people be protected? How will criminal activity be monitored and policed? What are the privacy and data concerns? The Big Tech metaverse that balances socio-technological revolution with ethical standards and good governance is likely to have the highest adoption rate. Meta may be the first dedicated Metaverse provider as of now, but whether it will be the last Metaverse provider (the dominant Metaverse company of the future) remains unknown – but the markets will be watching closely. 

Any opinions expressed in these documents are those of William John and are provided for information only. E&OE.