Morgan Stanley Is Worried About Facebook’s Pivot to the Metaverse



  • If a metaverse platform comes to be, the financial opportunity for companies will be enormous.
  • Getting people to actually use a metaverse is a major hurdle, influential internet analysts say.
  • Analysts wonder what consumer pain points a metaverse will solve for hundreds of millions of people.

An all-encompassing digital realm, or “metaverse,” built by Facebook and other companies has the potential to capture trillions of dollars in spending, but at least one group of influential internet analysts is questioning the social-media giant’s pivot to this emerging technology.

“We have to ask, what consumer pain-point(s) will a metaverse solve for hundreds of millions of people?” Brian Nowak and his colleagues at Morgan Stanley wrote in a new research note.

They said digital media and e-commerce markets “have never been more robust” and user-friendly, offering few good reasons for people to hop on a metaverse en masse anytime in the foreseeable future. For a metaverse to really take off, such a platform may need to be at least 10 times better than the internet currently on offer.

“We have studied multiple new broad offerings in recent years (5G, cloud gaming, messaging-based e-commerce and more) that as of now have not lived up to this high hurdle,” the analysts said. They added that “metaverse will have to be more additive.” 

Then there’s the issue of privacy, something social-media users on the whole have not seemed too concerned about, given that the use of these platforms has only increased despite continued evidence of how personal information is being used, or misused. Still, looking out a decade from now, by which time CEO Mark Zuckerberg sees 1 billion people using his company’s metaverse, Morgan Stanley was concerned that privacy may become more of a problem.

“We are admittedly less certain that hundreds of millions of people will choose to share even more detailed digital information on what they are doing and who they are doing it with,” the analysts wrote. “It is possible, but there will have to be some incremental utility to doing so, and it will also have to be more than enough to offset potential negative press/realities about the societal and psychological impacts of even less human-to-human interaction.”

With Facebook specifically, and its focus on business products such as Horizon Workrooms, Morgan Stanley wasn’t confident that the company could win in this space. The analysts again mentioned personal-privacy concerns and the potential for companies to not trust Facebook with their enterprise data, along with its lack of experience building corporate tools.

“The hurdles to clear are high,” the analysts wrote.

Still, should a metaverse come to be, the amount of money people could spend engaging with such platforms would be enormous. Morgan Stanley estimated that monetization of consumers in the US alone could be worth $8 trillion, assuming that, at least for the first few years of any metaverse, it would be an environment built around e-commerce and advertising, much as the current iteration of the internet is. Americans already spend what amounts to 11 billion days consuming digital media every year and 14 billion days watching TV, time that could be given over to a metaverse, Morgan Stanley estimated. 

But this possibility is many years off, as other analysts have said. And the idea that digital collectibles such as NFTs will replace physical items, driven by a metaverse platform, is even further away.

“Metaverse adoption,” the analysts said, “won’t be rapid or easy.”

https://www.businessinsider.com/morgan-stanley-is-worried-about-facebook-pivot-to-the-metaverse-2021-11