We are at the beginning of a new era of the internet. A generation of tech companies founded in the 2000s now dominate the market and are looking for the next trend, while younger rivals are eager to get a foot in the door. For the past 15 years, a smartphone- and platform-driven cycle has remained the dominant paradigm for the development of new products. In 2021, two concepts emerged as competing visions for the future of tech: the metaverse and web3.
The first was popularized by Facebook’s rebranding as Meta, while the second emerged through the mainstreaming of cryptocurrency, non-fungible tokens (NFTs), and calls to decentralize the web. Enough money has been invested in each idea that they are likely to remain important organizing concepts despite already appearing outdated. It’s worth noting at the outset that both concepts are essentially rebrands of existing unpopular products: the metaverse is based on virtual reality (VR) headsets which were first sold to consumers for gaming in the mid-90s but never took off. Web3 is primarily about using digital tokens as the basis for software development, gaming, and online communities, all of which rely on cryptocurrency and blockchain technology first launched in 2009.
However, why did excitement for them reach fever pitch at the end of 2021? Wealthy investors have staked a lot of money in products they are hoping to sell through popularizing these concepts. Meta has a new range of VR/AR hardware and web3 boosters, its own cryptocurrency, digital tokens, and shares in new web3 companies. The issue is that both concepts are designed to intensify current trends geared towards the monetization of online communities. Each vision of the future imagines a world in which advertising and consumer products are ubiquitous in digital environments and every aspect of our online existence is ready to be packaged for companies. Neither really aims to meaningfully redistribute power or to offer a fundamental shift away from a venture capital-driven development of new products. To conclusively break from this underlying movement towards commodification, we need to develop public investment in digital tools that are free for all to use. This essay will examine key developments in the metaverse and web3 and show how we can move towards an alternative future for the web through public and commons-based digital tools.
1. Meta’s Moment
Meta’s move into the metaverse couldn’t have come at a more fortuitous moment for the company. Soon after its rebranding, the company announced Facebook’s first-ever decline in daily users, with half a million daily users lost in the final three months of 2021 alone. Facebook had been losing users in its North American market for years, but this was the first time its overall users had fallen just shy of 3 billion. Meta executives are worried that the social media platform could be at the cusp of a rapid decline in user base and eventually turn into the new MySpace. Unlike other major tech brands that still offer very popular services, Facebook has struggled to compete with new rivals that are more widely used by younger audiences.
Meta also faces a tough time ahead in Europe with Google’s announcement that it will bring a privacy initiative to Android phones. Although Google has positioned this as an ad-friendly move, it could still potentially threaten Meta’s advertising revenue. Furthermore, Meta is wary of how a dispute over the application of the General Data Protection Regulation (GDPR) will affect its operations in Europe, a dispute which threatens a quarter of its global revenue. Following these bumps in early 2022, Meta’s share price sank more than 45% from a peak in September 2021.
Against this backdrop, comes the metaverse, which venture capitalist Matthew Ball claims, “Will be a place in which proper empires are invested in and built, and where these richly capitalized businesses can fully own a customer, control APIs/data, unit economics, etc.” In Zuckerberg’s own words, “You can think about the metaverse as an embodied internet, where instead of just viewing content — you are in it.” The metaverse opens new revenue streams for Meta, which has historically relied almost exclusively on advertising revenue. Fortunately for Meta, in 2016, Goldman Sachs forecast that the overall VR/AR market could be worth USD 80 billion by 2025.
Accordingly, the first important shift is Meta’s move into the hardware market. One important point for the metaverse’s success will come down to how many people it can convince to adopt VR technology. In the first quarter of 2021, Meta’s VR headsets occupied an estimated 75% of the total market. Over the 2021 Christmas weekend, Meta’s Oculus VR app became the most popular download on Apple’s App Store, surpassing TikTok and other large social media companies. Data from the online gaming platform Steam also indicates that Meta’s headsets account for 67% of all VR hardware used on the platform. Meta Quest 2 caused a huge upswing in sales because it doesn’t require a computer and is the least expensive VR headset on the market.
Despite this growth, Meta still made a loss in 2021 on its VR/AR products, which generated only USD 2.27 billion in revenue even as USD 10.2 billion was sunk into development and operational costs. Zuckerberg hopes that something within his line of hardware will replace the smartphone as people’s main communication device for the next decade. Meta has over 10,000 people working to make this dream become a reality, but it could just as easily turn out to be a flop. The company has also been buying up several metaverse-adjacent companies to expand their AR/VR technologies. It’s still too early to say for sure whether we will look back on this time as the beginning of the end for Meta or as a successful maneuver into the next generation of tech products.
2. The Political Economy of Virtual Worlds
The metaverse is an attempt to pull together more than just a new line of hardware. It also hopes to be a concept that will integrate the worlds of gaming and online communities. At an estimated USD 150 billion a year, gaming is big business, but its user base is still limited compared to the number of social media users. Free-to-play games have been changing this, lowering the entry cost for new users and increasing the need for developers to create new monetization strategies with in-app purchases, which currently drive 43% of mobile gaming revenue.
With the rising popularity of gaming platforms like Fortnite and Roblox, the boundaries between gaming and social media are becoming increasingly blurred. Many young people log in to games to spend time with friends in virtual worlds. The metaverse is a push to further monetize these spaces and maximize the opportunities for platform owners to make money from players’ interactions.
Rather than limiting transactions to only goods sold by developers to gamers, the hope is to create functioning virtual economies in which digital goods can be created and traded just like in the real world. Skins, avatars, weapons, and merchandise would be available to be bought and sold. Platform owners could monetize this through taxes on all transactions undertaken in the marketplace and by charging people for season passes to enter this world.
Gaming spaces and online communities which were previously free or simply required the purchase of the game could then become thriving ecosystems in which players are creators, service providers, and entrepreneurs. Users could own assets and create goods for other gamers to trade with each other. NFTs allow for a new system of digital ownership in which players feel like they have some tangible sense of property rights over the goods that can then be transferred — potentially even across platforms. Much of this was already possible without NFTs, but they have been instrumental in the push towards these new economies. This also allows developers to bring the gray market of some video games back into a system of taxation and regulation. There are gamers who make a living by leveling up characters and equipping them with valuable goods that are then sold by (illegally) transferring the account login details to buyers.
The metaverse, thus, promises to open new markets for digital goods. This is one of the reasons why Microsoft acquired Activision Blizzard for a record deal of USD 68.7 billion. The idea is to continue to pump out entertainment platforms with immersive digital worlds. Roblox, Minecraft, and Fortnite are current examples of what game makers and social network companies could emulate and build on. But even other games such as Call of Duty, World of Warcraft, and GTA could expand their own games and add on additional social networking elements to create a more immersive world. If the community is large enough, platform owners take on a position similar to that of a regulator of macroeconomic policy: they set the rules of the game and create the fiscal policy that will govern the in-game economy. The incentive, in such cases, would be to grow the economy as large as possible by setting fees at an optimal level to allow people to trade in the game.
3. The Metaverse of Everyday Life
Since Facebook’s announcement of its pivot towards the metaverse, a range of companies have considered how they could profit from this new trend. Given the hype around it, it’s worth considering the extent of Meta’s investment into the concept. As part of a new set of corporate values, Mark Zuckerberg announced that Meta staff would now be called “Metamates” and that over 10,000 of them would be working directly on bringing the metaverse to life .
Although we are unlikely to see anything like Zuckerberg’s fantasy, elements of the metaverse may spread beyond online communities into a range of other industries. Walmart’s trademark filings indicate plans for its own brand of NFTs and cryptocurrencies, suggesting that the company is looking into selling a range of virtual goods such as appliances, apparel, and other home sector items to customers who could use these to furnish their virtual homes. Samsung plans to develop a ‘smart’ television on which users could display their NFTs and create a branded marketplace where they can trade digital goods. Fitness and sporting apparel makers such as Nike and Adidas have begun offering lines of virtual sneakers, with the latter selling out of the Metaverse NFT pool.
But even as multiple companies compete for a slice of the metaverse, it would be difficult for competitors to displace Meta from its dominant position. Just as with social media, there would be a tendency towards natural monopolies as digital worlds with more people would be likely to grow faster and profit from network effects. Zuckerberg speaks of the metaverse as a collaborative project, but if Meta’s behavior in the social media space is anything to go by, it will more likely be a series of walled gardens rather than the fully open and interoperable set of systems that have been promised.
With the Metaverse, just as with social media, there would be a tendency towards natural monopolies as digital worlds with more people would be likely to grow faster and profit from network effects. Zuckerberg speaks of the metaverse as a collaborative project, but if Meta’s behavior in the social media space is anything to go by, it will more likely be a series of walled gardens rather than the fully open and interoperable set of systems that have been promised.
There is simply too much on the line for Meta to be ready to cede ground in this new space, especially given how its social media platform is struggling and how much it has bet on this new line of products. Bloomberg Intelligence estimates that the global metaverse revenue opportunity could approach USD 800 billion in 2024 across online gaming, hardware, social media, and live entertainment. How much of this will become a reality in the 2020s is still an open question.
4. Build it on the Blockchain
Much like the metaverse, web3 is marketed as the future of the internet. It’s based on a host of new applications built on the blockchain, the publicly-accessible distributed ledgers on which crypto networks such as Ethereum operate. They offer a way of storing transaction data in an immutable way that can be verified by all parties, thereby facilitating financial transactions that do not require the intervention of a bank or other financial authority.
Many web3 advocates see the project in fundamentally different terms than Zuckerberg’s plans for the metaverse. While Zuckerberg envisions the metaverse as the next generation of digital products, web3 proponents are insistent that there needs to be a fundamental shift in how these products are designed and governed. The metaverse can be seen as an embodied Facebook, whereas web3 promises a more radical transformation of how apps operate (as discussed in the following section).
There are nevertheless significant points of overlap between the two ideas. Both involve NFTs, digital tokens, and new payment systems integrated into apps. Both imagine new forms of community being enabled by a range of digital products that will allow people to be with each other in ways not possible through previous forms of the internet — either with an embodied presence or in new governance models.
The difference is that while the metaverse focuses on the hardware and virtual reality, web3 is more centered around apps and online communities. NFTs and digital tokens are important for the metaverse insofar as there is a desire to monetize digital worlds, but one could imagine them also functioning through traditional payment systems using credit cards and fiat currency.
5. The Promise of Web3
The underlying idea of web3 is that new apps can be built with a decentralized ownership structure through different stakeholders holding digital tokens that grant them governance rights in the community. It seeks to combine the benefits of the decentralized architecture of web1 with the monetization of web2. It is sometimes sold through the emancipatory rhetoric of decentralization and freedom, but there is already ample evidence to suggest that such concerns are secondary to investors’ desire to make money from the hype of a new concept.
The underlying idea of web3 is that new apps can be built with a decentralized ownership structure through different stakeholders holding digital tokens that grant them governance rights in the community. It seeks to combine the benefits of the decentralized architecture of web1 with the monetization of web2. It is sometimes sold through the emancipatory rhetoric of decentralization and freedom, but there is already ample evidence to suggest that such concerns are secondary to investors’ desire to make money from the hype of a new concept.
The narrative of web3 is built on a critique of a specific understanding of the problems of web2, in particular, its tendency towards platform monopolies and extractive business models. Web3 critics assert that platforms like Facebook and YouTube rely on exploiting the activities of their users while hoarding most of the value created on the platforms. They extract data, breach users’ privacy, and unilaterally control the platforms to maximize profits for their owners and investors. The key to change this is to address the underlying issues of ownership and control.
The promise is that ordinary users of web3 platforms will be more empowered to take part in their decision-making and governance. This is in line with visions of social media and creator platforms that are collectively owned by users. Currently, so-called “community guidelines” on major platforms, including contentious questions of who gets banned and whose content gets promoted, are decided by executives. The appeal of web3 apps is that, in theory, the community of users decide on governance questions which adds a much-needed layer of democracy to the platforms.
Unfortunately, the reality of web3 looks remarkably similar to what came to pass with web2. Platform companies of the 2000s were launched with promises of democratizing the internet and allowing everyone to communicate, create, and become entrepreneurs. What was once called the ‘sharing economy’ turned out to be something entirely different, with unprecedented levels of concentration of wealth and power in a few hands. Today, crypto assets are similarly being increasingly monopolized by large investors, leading to rampant speculation.
There are also signs that interest in NFTs and web3s might be already starting to wane. Despite a huge initial surge in the popularity of both concepts, Google search trends and overall trading have declined in 2022 and the integration of NFTs into video games has been met with significant backlash from gamers. Predictions that blockchain-based games will be the future of gaming may have been too hasty, failing to account for potential negative reactions of gamers to further monetization of their hobby.
6. Decentralization
Decentralization remains a highly ambiguous term within the web3 space. It is unclear whether proponents use it to refer to digital architecture, organizations, or power. Much of this agenda appears self-serving and disconnected from real social movements and public institutions struggling for a better internet. As Evgeny Morozov has noted, “Web3’s calls for decentralization also seem to have taken no note of earlier, far more radical efforts to promote decentralization and democratization alike. Also absent is any serious engagement with the power of the state and with the role of public institutions in general; at best, they are seen as obstacles in the path of web3, not as enabling forces that could help achieve the twin goals of decentralization and cultural empowerment.”
In any case, irrespective of whether it is used to refer to architecture, organizations, or power, do web3 platforms deliver on their promise of decentralization? Cyber security expert and cryptographer Moxie Marlinspike, who is best known for creating the encrypted messaging app Signal, remains skeptical that distributed (or decentralized) apps (dApps) deliver on their promise of enhancing user privacy and control. Despite the use of a trustless consensus mechanism, many actual interactions users have with web3 apps rely on platforms to do most of the work. “In short,” he explains, “the blockchain has been built such that clients like MetaMask can’t interact with it. So like my dApp, MetaMask accomplishes this by making API calls to three companies that have consolidated in this space.” The only way web3 apps can be usable is for them to mostly run through OpenSea, Coinbase, Infura, among other platforms. He notes that this is how the ecosystem started evolving from the very beginning and that many people don’t seem to care that this is happening, calling into question how important decentralization is for most people in this space.
Web3 promises to redistribute value through a new ownership economy where people will not only have more control over digital services but will also get a greater share of the value from their networks. Rather than a corporate platform enriching itself off the data of its members, web3 communities would operate with digital tokens; as the value of the network increases so too would the tokens owned by members. The problem with this approach is that it doesn’t fundamentally change anything about who has all the capital in the space and who would end up with all the tokens through early investment. Cryptocurrencies have some of the most unequal distribution of wealth in the world and there is little in the web3 toolbox that would change this.
7. Social Ownership over Digital Platforms
On the surface, the web3 critique of platform monopolies is very similar to the one I offer in my book, Platform Socialism. Platform companies have become too big and too powerful and we would benefit from a different way of organizing the digital economy that provides greater rights to platform users. But simply creating a new digital token system for online communities will only continue the logic of monetization and further the capitalist drive of commodifying the web.
Platform companies have become too big and too powerful and we would benefit from a different way of organizing the digital economy that provides greater rights to platform users. But simply creating a new digital token system for online communities will only continue the logic of monetization and further the capitalist drive of commodifying the web.
An alternative to this system is to support the creation of digital tools as public goods, developed by public institutions and free for all to use. The underlying idea of platform socialism is about examining how we can create fairer alternatives to today’s digital platforms. It answers the question: what would a more just social media network or internet search engine look like and how would it be organized?
We need an exciting vision for what the world could look like with technology that is liberated from capitalism. It’s not enough to simply dig your feet in and dismiss the latest inventions and ideas in the tech world.
The framework of platform socialism involves setting up a pluralist approach to democratic platform governance. This means that there would be no single model for how every platform would be governed. Instead, we should cultivate an ecosystem of alternative social ownership structures from the local level right up to the national and international levels. The likes of on-demand courier services, domestic work, and care work could be run by workers because they don’t require many overheads or huge amounts of investments in digital infrastructure. They could also be supported by municipal associations through accessible spaces to rent, low-interest loans, training programs, and support services.
In cases where the organization would need a much larger budget, such as a city ride-hailing app or managing housing stock for short-term rentals, a municipal or city association could provide the infrastructure and simultaneously set up a governance structure that would enable the communities who use the service to have a say in how it is operated. The goal is to organize platforms more democratically by examining their functions and tailoring a democratic governance structure to suit the needs of the community.
For example, a distributed social media network built on these principles could resemble a free and open source ecosystem of platforms that are decentralized and interoperable. We already have examples such as Mastodon – a service which offers microblogging features similar to Twitter. The benefits of this type of social media are that it does not rely on advertising, gives users more control over how their data is used and allows communities to decide on their own moderation policies for their groups. The social network may end up looking less like Facebook’s giant, centrally-controlled apparatus and more like Reddit’s sub-communities, with different rules and norms in different groups.
8. Scaling Public Alternatives
This system could operate based on the principle of subsidiarity, which helps us work out how to govern different types of platforms. According to this principle, services should be delivered by the most local-level body that would be able to undertake the task efficiently and sustainably. It is driven by the insight that democracy works best at a more local level where individuals can have a more immediate impact and influence on the organization. Where possible, the organization should also be governed. This would be a radical change from the kind of multinational corporations that currently rule the digital economy.
Imagining democratic digital platforms on a global scale is both absolutely necessary and incredibly difficult. When you think about questions of global supply chains and the international scope of social networks and digital services, you realize these aren’t problems that can be fixed within the boundaries of a single nation state. We also need to be attentive to relations of digital colonialism, whereby a few mainly American tech firms dominate the tech world and plunder the Global South for tech resources and use them as markets for their products. When it comes to digital services such as social media and internet search engines, we should explore options of international organizations.
But envisioning a version of democracy that would work for the digital economy at a global level is not an easy task. And this is partly because democracy operates so imperfectly and sometimes not at all in our current international institutions. While nationalizing Amazon or Google exists as a concept, there is no vocabulary for what needs to be done to internationalize them. Our whole language of social ownership comes from a late 19th and early 20th century form of national industrial production. Therefore, it is important for us to think more about what international examples could look like.
9. Alternatives for the Web
To do this, we need an exciting vision for what the world could look like with technology that is liberated from capitalism. It’s not enough to simply dig your feet in and dismiss the latest inventions and ideas in the tech world. I think we should be skeptical, because most of them are designed to exploit communities, but at the same time we shouldn’t let this skepticism devolve into a generalized cynicism that assumes we could never do any better and that the only response we could have is refusal.
Many of the most potentially transformative ideas for 2030 and beyond, such as the metaverse, VR, web3, and cryptocurrencies, are deeply flawed. But there aren’t clear alternatives for what progressives believe should take their place. If you look back in history, every transformative leftist project has come to power based on a radical reimagining of how society should be organized. The most successful projects were often those with the most inspiring vision and the boldest agenda. Universal suffrage, universal health care, abolitionism, racial equality, women’s liberation, and jobs and housing for all – these ideas were about creating a new common sense. This is what we urgently need for the tech world to ensure that we regain control over our digital future.
