Monday, July 15, 2024

Build trust first to harness Metaverse potential

Realising the potential of the metaverse, many organisations are investing billions of dollars to grow their capabilities. In today’s world, where trust and transparency are imperative, organisations must first create trust among their stakeholders by addressing some key issues

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Over two decades ago, the idea of a simulated world became mainstream with the science fiction movie The Matrix. A decade later, in 2009, Avatar again compelled us to imagine where virtual reality can take us. While we enjoyed these movies immensely, we possibly did not take the underlying concepts seriously. Today, with the emergence of the metaverse, these fantasies could converge with reality sooner than expected. The metaverse is possibly the next step in technology evolution that combines the power of digital and human intellect to build an animated virtual 3D ecosystem, a replica of our real world.

The appeal of the metaverse lies largely in the concept of an “embodied internet”—instead of just viewing static internet pages as we currently do, we will be able to exist in them. This opens doors to a world of opportunities. Executives at manufacturing companies could inspect their factory operations on the other side of the globe by simply putting on a VR headset and entering a digital twin of the factory. Employees could interact with clients and coworkers in a virtual representation of one’s office or any other place, where an avatar or a digital version of each person is present—a use case that possibly revolutionises coworking and remote collaboration. Online shoppers could virtually experience products before buying them, redefining window shopping. Fashion and apparel brands could do soft product launches in the metaverse by first releasing new outfits for metaverse avatars before releasing them on store shelves.

An entirely new media opportunity would emerge for marketing and advertising products and services. Training in the fields such as medicine and surgery could be taken to a whole new level. One could connect a stationary exercise bike or treadmill to a VR headset and go on an Amazonian exploration trail. Ancillary to this boom, a huge opportunity also arises for software, hardware, and consulting companies to help get organisations onto the metaverse.

Realising the potential of the metaverse, many organisations are investing billions of dollars to grow their metaverse capabilities. While these early adopters believe strongly in this new frontier, not all stakeholders share the same vision. Some believe that the concept is hyped and others say that it is ahead of its time. Even the big tech companies don’t seem to be on the same page. Some are heavily investing billions in the metaverse, some are watching from the sidelines, and some are investing in augmented reality (AR) instead of virtual reality.

This preference for AR stems from the fact that it “aids” or “augments” real-world vision and hence is more likely to be accepted by consumers than a completely virtual world. For example, the heads-up display of the car or eyeglasses that show you the time, directions, and your phone’s notifications on the side. This cautiousness extends to investors and shareholders, many of whom still do not agree with the pro-metaverse posturing of their investee companies. A case in point is when the stock price of a leading tech firm, which plans to invest heavily in the metaverse, took a nosedive after its quarterly earnings call earlier this year.

This begs the question, Are we ready for the idea of the metaverse? In today’s world, where trust and transparency are imperative, organisations must first create trust among their stakeholders by addressing some key issues.

The metaverse should emerge as a shared platform so that its latent potential can be unlocked. It should have cross-platform interoperability and thus, ideally, should be jointly developed. Yet, today, companies and developers are working in silos, competing intensely.

Data protection is another significant concern—protecting the privacy of users, building appropriate mechanisms to get their consent to collect data, being transparent about how their data is getting monetised. The threat of cybercrime is also likely to increase in the metaverse, be it theft, identity fraud, cyberbullying or cyberstalking.

The virtual nature of the metaverse can enhance user anonymity, which has the potential to be misused. We are also seeing rising levels of health concerns on the back of digital fatigue, with most of us already spending a large part of our day glued to our screens and devices. Are we truly prepared for a multifold increase in our immersion in the digital world? All of these issues could get compounded in the metaverse, given its immersive nature.

We must also weigh our bold metaverse ambitions against our green aspirations. The metaverse will require us to considerably grow our network of supporting data centres and cloud infrastructure, causing the demand for electricity to increase exponentially. As decentralised proof-of-work technologies such as blockchain—the basis for cryptocurrencies and NFTs—become popular, we will need more and more computing power to record, verify, and store each transaction.

Researchers at the University of Massachusetts estimate that training a large AI model (many of which would be required to build and maintain the metaverse user experience) can emit as much CO2 as five cars in their lifetimes! At a time when we are tackling an urgent climate change crisis, we must ask ourselves how we can sustainably accommodate a metaverse boom.

When I reflect on hype or reality debate around the metaverse, I am reminded of the mid-90s, when the internet had evoked very similar reactions—pockets of enthusiasm and skepticism. Yet as we have witnessed time and again, technological innovation sometimes does change the world for the better. The metaverse too could be one such example and possibly transform the dynamics of human interaction and commerce.

However, a lot needs to be done today to truly harness its potential. It could be said that what we’ve seen so far is only the teaser trailer, and the movie is yet to hit the theatres. All things considered, this could be a movie that business leaders should consider watching once for themselves, no matter what the critics say.

The author is Chairman of PwC India.

The thoughts and opinions shared here are of the author.

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