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Microsoft vs. Meta: Who’s got the upper hand in the metaverse?

Two metaverse front-runners have emerged, and they have very different ideas of what our tech future might look like.

Microsoft vs. Meta: Who’s got the upper hand in the metaverse?
[Images: PerfectVectors/Getty Images; Facebook, Microsoft]

For the past year or so, we’ve been told the future of the internet is in the metaverse: a persistent, immersive, multiplayer, interoperable world that blurs the lines between the physical and digital. In reality, this vision of the metaverse is likely a long way away. According to Intel, realizing its potential will require an overhaul of the “entire plumbing of the internet.”

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While it’s uncertain to what extent we’ll achieve a metaverse akin to the world of Spielberg’s Ready Player One, it’s clear that the internet of the future will be far more immersive than that of the past. Two front-runners to define this vision of the future have emerged, with very different ideas of what it might look like: Meta and Microsoft. But who will come out on top?

This immersive vision of the internet—with whole new worlds to get lost in that continue to evolve even after you’ve quit—is not a novel concept. Gamers have been building, exploring, and playing in these worlds for decades. Big Tech’s attempts (and failures) to break into gaming have been well documented, from Google Stadia to Amazon’s Amazon Game Studios. Such efforts have looked to apply best product-building practices to game development, without a deeper cultural and behavioral understanding of gamers and what it takes to make a game “fun,” according to a Wired report.

Meta, with Horizon Worlds, risks going down the same path as Amazon and Google, attempting to build this new experience without the pedigree to back it up. Microsoft, on the other hand, has built a legacy for itself among modern gamers through Xbox and recent strategic acquisitions. From Halo to Minecraft to Age of Empires, they’ve created and supported some of the world’s most iconic games, and with the acquisition of Activision, the brand has placed itself in the driver’s seat to provide engaging and entertaining immersive experiences in the future.

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Meta believes that we’ll move more and more of our physical lives into the digital realm, and ultimately “live” in the virtual reality. We’ll begin to hang out with friends, go to the cinema, and even attend concerts virtually rather than physically. However, it’s unclear what problem this solves. Post-lockdown life has taught us that given the opportunity, people will always prefer to go out into the “real” world. (With one clear exception: the office.)

According to Kastle Systems, which tracks building access across the U.S., office attendance is at just 33% of its pre-pandemic average. Additionally, companies are beginning to use VR for meetings, product demonstrations, hiring, 3D modeling, training, virtual showrooms, and more—applications that provide a superior, efficient, and more cost-effective option to the real-world alternative. Therefore, the real opportunity for day-to-day virtuality in the future lies in the realm of B2B, not B2C.

And for enterprises, trust, safety, and security are critical. Through Windows and Microsoft Office, Microsoft has built its business on enterprise sales. Most companies rely daily on its software for their operations, and it is a market leader in data privacy. In comparison, scandal after scandal has left Meta reeling, with Facebook ranked as the least trusted social network in an Insider survey. There already have been safety issues in Horizon Worlds, with reports of a user being groped by a stranger. With its business built on selling its users’ data and whistleblower claims that the company prioritizes “profit over public good,” it’s hard to imagine many IT departments approving the use of Meta’s enterprise tools.

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On the flip side, Meta currently has the edge on Microsoft when it comes to hardware sales. Almost 80% of VR headsets sold in 2021 were an Oculus Quest 2, while Microsoft has had limited success with sales of its HoloLens. But headsets are expensive (the cheapest Oculus Quest 2 costs $400) and not a prerequisite to access a more immersive internet. Microsoft Mesh, the brand’s mixed-reality software, is already included with Microsoft Teams, and is designed for use through a headset, computer, or smartphone. Thus, integration into their existing customers’ day-to-day functioning would be seamless. Meta has recognized this, and in April, announced the development of a web and mobile version of Horizon Worlds. Still, this gives the impression that currently, they’re behind.

Realizing this, the future of the internet will require collaboration with other organizations. Here, Microsoft will benefit from its long history with enterprise partnerships. Historically, the brand has provided the rails for other companies to build products and services and enabled new types of tools and technologies to grow. Meta has operated primarily in isolation, with Facebook and Instagram its only previous successes in integrating two distinct products. As a single platform, Meta, Horizon Quest, and its services are more easily replaceable.

So far, all signs point to Microsoft dominating the metaverse. The largest obstacle in Microsoft’s path is perhaps itself. Effecting change in organizations the size of Microsoft requires communication across all areas of the business to be efficient and streamlined. For example, will Activision truly be able to influence Microsoft’s operations, or will it continue to be embroiled in bureaucratic challenges that cause a lack of agility?

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Overall, success in the internet of the future will likely be better propelled for Microsoft, due to its existing foundations. But regardless of the winners, it will be important to remain vigilant. The risks of misinformation, identity theft, harassment, and bullying are even further heightened in a 3D world. The potential of progress is limitless but so is the possibility of harm. So, Microsoft must not rest on its laurels, and instead learn from the mistakes of the past to ensure history doesn’t repeat itself.

Siddharth Seth is a senior strategist at Superunion.

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