Everything you were afraid to ask about the metaverse

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Christian Koch is a journalist and editor who writes about business, culture and societal trends for magazines and newspapers such as the Evening Standard, the Sunday Times and the Independent.

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This article first appeared in ICAS’ CA Magazine.

It recently hosted its first wedding, with a guest list of thousands. It may soon see CAs send digital avatars to clients’ virtual offices. But will the metaverse really reshape business or be just a niche preserve of gamers? Christian Koch investigates.

The metaverse is coming…

“Who made this place? It’s awesome!” So exclaimed Mark Zuckerberg to a visor-wearing robot in a video released last October that simultaneously heralded Facebook’s rebranding as a “metaverse company” and offered a glimpse of what the virtual realm might look like. Right now, a make-believe land where avatars play poker in space – as the clip revealed – might not seem like the Zuckerberg-envisaged “successor to the mobile internet”. Yet big business is taking it seriously. In recent months, “metaverse” has become a boardroom buzzword, with Microsoft, Disney, Nike, the Big Four and others all scrabbling to get involved.

Best described as a cluster of virtual worlds, the metaverse will be a place where our digital avatars can hang out, attend concerts, try on clothes with augmented reality (AR), go on dates and even work. Or so Meta imagines. And, within that, there are huge opportunities for businesses to create, buy, sell and advertise digital assets, from property to fashion.

The metaverse isn’t a new term, though. Thirty years ago, author Neal Stephenson coined the portmanteau in his sci-fi novel Snow Crash. Stephenson’s metaverse described a computer-generated virtual world where gig economy workers flee to escape a humdrum existence dominated by mega-corporations and sinister franchising.

Big business has caught the bug

Big tech may struggle to articulate what the metaverse will look like, but they all agree it will make money. Last year saw virtual goods go mainstream, with the non-fungible token (NFT) goldrush and video game Fortnite’s 350 million monthly users. Meta, which is spending $10bn (£7.3bn), creating 10,000 new jobs in Europe, is not alone. Microsoft paid $70bn for gaming company Activision Blizzard, with CEO Satya Nadella hailing the metaverse as “essentially the next internet”.

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In February, JP Morgan became this new realm’s first bank, opening a lounge in the Decentraland virtual world, joining Samsung and the Barbadian government, who have opened a store and embassy respectively. Elsewhere, Disney is considering a metaverse theme park (naturally), while McDonald’s is looking to design a (virtual) restaurant that delivers to customers’ (actual) homes.

You might soon work in an infinite office

Monetising the metaverse extends further than brands selling virtual trinkets. Many organisations view it as a place to train new recruits and collaborate with remote employees, hinting at a future where every worker is assigned their own avatar to work in an immersive “infinite office”. These businesses may want to buy digital furniture or ostentatious NFTs to hang on office walls: yet more opportunities for on-the-ball entrepreneurs.

Deloitte is currently experimenting with the metaverse via its “virtual campus”, a simulated world full of offices and conference centres, where future employees could be onboarded and collaborate with colleagues worldwide. Ed Greig, Chief Disruptor at the firm, says: “Training people in soft skills can in certain instances be done far more cost-effectively in VR. They can also make serendipitous connections they wouldn’t make in the office. It’s different from holding a Zoom meeting with 600 people, which isn’t the most personable experience.”

In Deloitte’s virtual campus, staff can ride on speedboats and let off pyrotechnics. Greig observes that the metaverse isn’t a “bet that Deloitte is making that will take ages to work – we already have clients seeing real-world benefits”.

You should start thinking about it now

Ignoring the metaverse could make your organisation obsolete. “In the same way mobile should have been part of your strategy in 2007, and social media in 2010, it’s important to look to the metaverse and have a hypothesis of what you want to do,” says Greig.

“I absolutely think firms should have somebody looking into this,” says Ian West, Head of Technology, Media and Telecoms at KPMG. “Not in a ‘Sunday afternoon’ way, but as part of their core jobs. Look at the risks and opportunities, maybe talk to other organisations for advice. Otherwise, it could creep up on you and be like, ‘If only I’d thought about this two years ago!’”

“If you don’t have a strategic approach [to the metaverse], your business could face digital counterfeits and copycats,” warns Emily Nuttall-Wood, Director at Deloitte Legal, whose clients are currently “looking at their registered IP portfolios: their patents, trademarks and other intangible assets – both for IP law and the balance sheet – and repivoting those so that they’re metaverse-ready”.

It might create new roles for CAs

In January 2022, Deloitte launched its Dimension10 studio, which will help clients create “unlimited reality” experiences using AR, VR and the internet of things. It follows PwC Hong Kong snapping up virtual real estate in metaverse platform, the Sandbox, and US accounting firm Prager Metis, which opened a virtual three-storey property in Decentraland to advise clients.

By visiting clients’ virtual offices, CAs could develop a closer understanding of their organisations. “It’s useful for tax accountants when completing clients’ tax returns,” says Harvey Lewis, Associate Partner, EY. “Rather than looking at spreadsheets, trying to infer things from 15-word descriptions, you could experience their assets in situ. That could improve the work’s quality.”

CAs could also advise firms that are considering dipping their toes into the metaverse. “When companies build the metaverse, there’ll be governmental research and development credits that businesses can apply for – this will require advice from accountants,” adds West.

The issue of how cryptocurrencies can be integrated into the metaverse is a thorny one, which will require the expertise of finance professionals. At the moment, cryptocurrencies can only be spent in the metaverse they are linked to. According to Nuttall-Wood, such “siloed cryptocurrencies means there’s no portability and works against the metaverse’s accessibility-for-all aims”.

There could be opportunities for some fintech firms, too. Established companies such as PayPal or Stripe might flourish here. “If there’s a trusted fintech player that means consumers don’t have to hand over all their personal details when making a purchase on the metaverse, they could be very successful, especially when taking a small cut on each transaction,” says West.

“Intellectual property is something accountants will increasingly need to get their heads around,” adds Nuttall-Wood. “How do you provide for that on a balance sheet? Where does it sit within a business? Do you need a separate company? How do you make sure you’re maximising that asset for tax advantages? There’s a role in the metaverse strategy for accountants, for sure.”

It’s not just about business

For a taster of what the metaverse could become, it’s worth looking at what’s happening in online gaming platforms. In 2020, 36 million people tuned into a Lil Nas X interactive concert inside video game Roblox. Not only could they watch the US rapper’s digital clone strut around, but they could also stroll up to their hero as he belted out his hits, or even hover around his head like an annoying housefly. Lil Nas X pocketed a reported $10m in digital merchandise.

You don’t need to be a celebrity to stage a metaverse shindig. If your venue has a limit on guests, you could follow the example of Dinesh Sivakumar Padmavathi and Janaganandhini Ramaswamy, a couple from India, who invited 3,000 to their Harry Potter-themed virtual wedding in February. The bride’s father, who passed away in 2021, also “attended” in the form of an avatar.

In February of this year, Meta shares plunged $230bn in value as Facebook recorded its first-ever fall in user numbers. It was the biggest one-day loss in share value in US corporate history. With younger generations defecting to competitors, such as TikTok, embracing the metaverse could be seen as an attempt to woo them back.

It will need to be shaped with humankind in mind

The metaverse also throws up a cornucopia of ethical concerns. As Lewis says: “Think about the issues we have now with social media and magnify them. For example, how do I know the avatar in front of me is who they claim to be in the real world, or even a person at all?”

Regulation will also need to ensure discrimination and unintentional bias isn’t built into the metaverse and that there is appropriate representation of race, gender, sexuality and ethnicity. Meta has established a £36.5m investment programme to “build the metaverse responsibly” – and recently introduced mandatory distances between avatars to prevent harassment.

“Imagine if somebody had questioned whether the internet was good for humanity when it was being designed,” says West. “Nobody ever debated whether, say, phone notifications were a good thing for humanity. This could be an opportunity for big tech to design it in collaboration with the number one point: we’re doing this for humanity, rather than profit.”

Some commentators believe Meta’s ambitions in this new realm are a bid to detoxify its brand after recent controversies, which include damaging whistleblower leaks, the Cambridge Analytica scandal, accusations that its algorithms spread Covid-19 misinformation and amplified hate speech against Rohingya Muslims, among others, and concerns surrounding users’ mental health.

It might all be one giant gamble

The metaverse may remain technological hype, a sci-fi fantasy of VR games and cartoon avatars that perks up Zoom calls but never generates true commercial or public interest. After all, VR has been around for three decades, yet Oculus Rift headsets – cited as VR’s great hope and bought by Zuckerberg for $2bn in 2014 – are yet to escape novelty status. Will this be different? Time – real time – will tell.

Read April’s CA magazine now

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