The Daily - Microsoft and the Metaverse

Episode Date: January 20, 2022

Microsoft announced this week that it was acquiring Activision Blizzard, the maker of video games such as Call of Duty and Candy Crush, in a deal valued at nearly $70 billion.Microsoft, the owner of Xbox, said the acquisition was a step toward gaining a foothold in the metaverse.But what exactly is the metaverse? And why are some of the biggest companies in the world spending billions of dollars to get involved?Guest: Kevin Roose, a technology columnist for The New York Times.Want more from The Daily? For one big idea on the news each week from our team, subscribe to our newsletter. Background reading: Does the metaverse even exist? Here’s what you need to know.Video games are not merely entertainment anymore. They have become weapons that today’s technology titans wield to try to shape our future.The deal for Activision Blizzard would be Microsoft’s biggest ever, and one that places a major bet that people will be spending more and more time in the digital world.For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday. 

From The New York Times, I'm Michael Barbaro. This is The Daily. Today. Why so many major companies are now investing in the metaverse, and whether that means those companies will control what the metaverse becomes. I spoke with my colleague, technology columnist Kevin Roos. It's Thursday, January 20th. Michael, hello. Hello, Mr. Roos.

Happy New Year. Is it too late to say that? I mean, if you didn't say it in a card that came into my mailbox 10 days ago, I think so. I'm sorry. I meant to put you on the card list this year, but, you know, things happen. Well, I left you off my card list, too. I forgive you. It's good that we're still talking. Kevin, as you know, we turned to you when we need to translate the digital universe, whether that's cryptocurrency or social media platforms. And today, it's a mega merger in the gaming world.

So tell us about this deal that was just made public. Well, earlier this week, Microsoft announced that it was acquiring the gaming studio Activision Blizzard, maker of such hits as Call of Duty, Candy Crush, World of Warcraft, lots of games like that, in a deal that was valued at nearly $70 billion. And this was a monumental deal in the world of gaming. It's the biggest acquisition ever in the gaming industry.

And on one level, this isn't all that surprising. Microsoft has been investing in games for years. It owns the Xbox, produces some of the most popular video games like Halo. It owns the Xbox, produces some of the most popular video games like Halo. It also owns the company that makes Minecraft, the enormously popular video game, especially among kids. So it's already a big force in the gaming industry, but this will make it an even bigger force. And what stood out to you about this deal? Well, aside from just the size of the deal and the impact it will make in the gaming industry,

what caught a lot of people's eye was that Microsoft framed this as not just another acquisition of a big gaming studio. It framed it as a step toward establishing a foothold in the metaverse. Right, the metaverse. And this is a word we hear a lot. And I feel like when I hear that phrase, I nod along and I pretend to know what it is. And everybody I know pretends to know what it is, but we don't.

So let's once and for all settle this question. What is the metaverse? Well, here's the thing. Like, it's not really clear yet what the metaverse is. It's not really all that well defined, and it means a lot of different things to a lot of different people. So I think it's okay, for the record, that everyone is kind of faking it, because even the people who profess to know what the metaverse is are also faking it. Well, to the best of your ability and the ability of those faking it, can you begin to define what this still-being-defined thing actually is? Sure.

So let's just start with the term itself, metaverse. start with the term itself, metaverse. This term dates back to the early 1990s, to a science fiction novel written by Neal Stephenson called Snow Crash, which is this story set in this futuristic 21st century world. It's not a very sunny picture of the future. It's, you know, basically the economy's collapsed. The earth is sort of crumbling, and society is shifting from living in the physical world into this thing called the

metaverse, this digital world full of immersive experiences where basically instead of logging into the internet or going on the internet, the internet sort of just becomes the world. It's the air we breathe. You're always plugged in. You're always online. All of your experiences, your social interactions, your work, your family time, that all takes place inside the metaverse. And for a long time, this idea of the metaverse persisted basically in science fiction. It was, you know, the premise of books like Ready Player One, movies like The Matrix. There was this sort of idea that this was kind of a far off future. And then a couple years ago, some of the most influential people in the tech industry began trying to build the metaverse for real.

the tech industry began trying to build the metaverse for real, that they actually thought that we had the technology or we were on the verge of having the technology that would allow us to have an actual metaverse. People like who, Kevin? You talked recently about how it was possible to create the metaverse. Well, the first big tech person I heard talking seriously about the word metaverse was Tim Sweeney. Who is the CEO of Epic Games, which is the gaming company that makes Fortnite. You're seeing the beginning components of the metaverse actually coming together now, where multiple people are being put together in an interesting social scenario and hooked up individually. And Fortnite, for those who don't know or haven't spent a lot of time around preteens recently, is one of the most popular video games in the world. And Sweeney

was basically making the case that Fortnite was not just a game. It was the beginnings of something that he thought would eventually become the metaverse. that Fortnite was not just a game. It was the beginnings of something that he thought would eventually become the metaverse. On one level, like Fortnite is a game, it's, you know, you run around shooting people and building things and trying to win the battle royale. But it's also become so much more than a game. It's a place where you can spend real money on costumes

for your virtual avatar, on dance moves. You can customize your look and your items. And it's got modes where you can just go and hang out. It's become kind of a social space. You can even attend concerts inside Fortnite. So what Sweeney started talking about a few years ago was the idea that Fortnite and games like Fortnite were sort of the on-ramp for people to the metaverse, to this thing, this sort of immersive vision of the internet that we would all eventually be living in. Okay, so what's the next phase of all this? So the term metaverse sort of kicked around the tech world for a while, but it really amped up last year.

I believe the metaverse is the next chapter for the internet. And it's the next chapter for our company, too. When Mark Zuckerberg announced that he was renaming Facebook, his company, to meta. Meta. Now, the best way to understand the metaverse is to experience it yourself. And he released this kind of funny, weird video that got a lot of people's attention.

Imagine you put on your glasses or headset and you're instantly in your home space. Where you saw the real Mark Zuckerberg and then Mark Zuckerberg's cartoon avatar and... Hey, are you coming? Yeah, just got to find something to wear. All right, perfect. He was exploring this virtual world.

Oh, hey, Mark. Hey, what's going on? Hi, Mahog. What's up, Mark? Whoa, we're floating in space? Hanging out with his friends, going to a work meeting, attending a concert, basically living a pretty normal life just in the metaverse. This is wild.

So this video by Mark Zuckerberg goes totally viral, becomes a huge topic of conversation, lots of jokes, lots of memes, lots of like, you know, see you in the metaverse references. But it also sets off this sort of gold rush among other big tech companies who say to themselves, basically, how do we get in on this? How do we make sure that we are building things for this metaverse that will position us to be a big player in it

if and when it arrives? Well, my vision is to use Disney Plus as the platform for the metaverse. Disney talks about creating its own metaverse. Without boundaries, without borders, without constraints. Nike expresses interest in being part of the Metaverse with virtual sneakers. And eventually Nike's going to sell you a pair of digital Air Jordans that you're going to wear around the Metaverse or any game that you want, or maybe even to a virtual sporting event. Even Walmart decides it's going to get into the metaverse and explore ways to create new shopping experiences for people inside these immersive digital worlds. And so people are starting to accept that this idea of the metaverse is not total science fiction, that some parts of it may actually come true.

Right. Which I think brings us back to this $70 billion Microsoft deal for Activision Blizzard, because there is nothing sci-fi about $70 billion on a company. Yeah. $70 billion, that's real money, even to a company as big as Microsoft. And on one level, you don't need the metaverse to make this deal make sense for Microsoft. The games that Activision Blizzard makes are very popular and make a lot of money, and they're betting on that.

But they're insistent that they're not just betting on the popularity of these games, they're betting on this bigger idea, this future concept of the metaverse. And this deal and the way that this deal is framed is evidence that it's not just sort of this thought experiment anymore, that some of the biggest companies in the world are actually spending billions and billions of dollars trying to make the metaverse happen. We'll be right back. So Kevin, you said that with all of these companies

now officially rushing in, we're truly closer to some version of the metaverse becoming real. So what is it going to look like? And how will it, in theory, start to change our lives? Can you evoke it for us? So let's stipulate first that all of this is very theoretical. Most of it doesn't exist yet, and the parts of it that do exist aren't fully formed. But there are several views of what this could look like and how it could change people's lives. The more utopian view, the people who think the metaverse will be a very good thing for society, is a metaverse that looks basically like a kind of digital oasis. Like a place that is full of new and stimulating experiences and adventures.

And you can look any way you want to look. You can go anywhere you want to go. You could have breakfast at a Parisian cafe. Lovely. Lunch at a steakhouse in Brazil and dinner in Tokyo. And you could do that all without leaving your living room. That does sound nice. And it does sound utopian because nothing about that sounds bad. And I think that's the vision that a lot of companies want to be true and want to work toward. There's also a much more dystopian view of the metaverse that I think a lot of people have been talking about and that's become quite worrisome.

And so this basically becomes like an inescapable digital prison. I mean, you wake up, you put on your virtual reality headset, you get transported to this world where everything you do, every interaction you have with another person is being tracked and surveilled and used to target ads at you. Your virtual world looks less like a Parisian cafe and more like the Mall of America. You're just constantly being sold stuff. And the companies that build the metaverse,

whether it's Facebook or Microsoft or someone else, will have almost total control of our lives. And all of this will be happening at the same time that the world outside the metaverse, the physical one, is crumbling due to climate change and inequality because we're all just being entertained and numbed and distracted by this immersive digital world. It feels like option three,

which feels the most realistic to my ears, is some hybrid version of the two things you just described. Not utopia, not dystopia, but maybe, Kevin, you and I go have lunch in Paris, and on our way there, we get served with an ad from Facebook about things we might want to do in Paris. Something like that. might want to do in Paris, something like that. Yeah. I mean, as with most technologies, the real outcome is probably going to be somewhere between the dystopian and the utopian, and it will be piecemeal. I mean, like we won't wake up one day and find this metaverse just fully assembled and ready to visit. Instead, like pieces of it will emerge over time. You know, we'll have a more immersive way to play video games, a more immersive way to attend work Zoom calls, a more immersive way to talk with our friends and family. And, you know, some pieces of this will be very compelling. Other pieces will be

boring or lame. You know, we won't use those and we won't fully escape the physical world into the metaverse. It will just be something that we do for maybe a couple hours a day. Well, that leads me to the question of just how present the metaverse is going to be in our lives, whether we like it or not. Is this something we can kind of opt out of? Well, I think the mistake that we make is just not realizing the extent to which we already kind of live in an immersive digital universe. Like, people spend millions of hours a day playing video games where they are fully immersed and they, you know, go by a different name and they have an avatar and an identity and a community inside those games. and a community inside those games. But even things like Peloton, if you have a Peloton bike,

you're participating in kind of a proto-metaverse experience. You're not in the metaverse, but you're taking a virtual exercise class with people located all over the world. And I think a decade or two ago, that would have seemed pretty far out and futuristic to people, and now it's just Peloton. So in some ways, the way we use technology is already getting much more immersive. And a lot of people, especially young people, spend enormous amounts of time in virtual worlds, and also crucially spend enormous amounts of money in virtual worlds. You know, Fortnite users have spent billions of dollars on virtual goods for

their characters. The gaming industry is already huge, and it's got these sort of fully developed economies inside of them. And the vision of the metaverse isn't really all that different. It's just, it applies to more than games. Kevin, if the metaverse is already happening, but it's still early days, How much room will there be for people to shape it? How much agency will you or me or anyone have in creating the terms of the metaverse? What's allowed, what's not allowed, what we see, what we don't see?

So far, it sounds like companies are building the metaverse, which makes me think that they are going to control what it looks like, what it feels like, and that we are going to live in their metaverse, not the other way around. This is a big debate that's raging in the tech world right now because a lot of people are sort of scared and hesitant about the idea of a metaverse

that's controlled by a handful of giant companies, the way that much of today's internet is controlled by a handful of giant companies. And so they are talking about ways to build a more decentralized metaverse, a metaverse where Facebook and Microsoft and Walmart might have presences, but where they won't ultimately control the whole thing. And so I think that's a big question mark as this metaverse becomes more real and comes into focus a little bit. How successful will these companies be

at sort of claiming their land and building out the infrastructure and attracting people to their own version of the metaverse? And what kinds of experiments and projects might crop up to try to take back some of the control, to not have it turn into what this era of the internet has become, which is a very centralized, corporate-controlled experience. Right, and Kevin, you made an entire audio series

about what has happened on the internet when a few major companies control what so many of us consume on the internet, when it's their algorithms dominating what we see, when it's their systems rewarding conflict and partisanship. what feels indisputably true is that under the watch of these major internet companies and social media platforms, the internet went from a pleasant place where people shared baby photos to a pretty dark place where people share misinformation about COVID and election fraud and organize the January 6th attack on the U.S. Capitol. So the stakes of this feel very high. Who controls the metaverse and whether it follows that pretty awful arc of the internet? Yeah, I mean, I feel like to keep us somewhat grounded in present day reality, I should note that all of this might just turn out to be marketing. Like, it could be that the metaverse is just a buzzword that companies are using to make themselves appear futuristic.

This deal, this Microsoft acquisition of Activision Blizzard could turn out to just be one company with a large gaming division buying a big gaming company. It could just be a standard acquisition in the corporate world. But I think we all need to be paying attention to what's happening in this sort of realm of the metaverse now. Because if it does happen,

if the things that these companies are spending billions of dollars developing do become a kind of new version of the internet, then the decisions that they're making matter. Just as the decisions made 10 or 15 years ago by the people running companies like Facebook and Twitter and YouTube ended up having huge ripple effects, not just on our use of technology, but on our politics and our culture,

it's possible that the decisions that these companies are making today about the metaverse will impact our lives and that the worlds, the digital immersive worlds that are being built now could be the ones that we live in tomorrow. Kevin, thank you very much. Thanks for having me. We'll be right back. Here's what else you need to know today. Did you overpromise to the American public what you could achieve in your first year in office? And how do you plan to course correct going forward? Why are you such an optimist?

Look, I didn't overpromise. And what I have probably outperformed what anybody thought would happen. During a rare news conference on Wednesday, President Biden rejected the claim that his first year in office has been a disappointment now that both his social spending and voting rights bills have collapsed in Congress. But Biden said he had underestimated the opposition he would face from congressional Republicans, or how committed they would be to obstructing his agenda. I did not anticipate that there'd be such a stalwart effort to make sure that the most important thing was that President Biden didn't get anything done. Think about this. What are Republicans for?

What are they for? Name me one thing they're for. Asked about his most pressing foreign policy challenge, Russia's buildup of troops on its borders with Ukraine, Biden said for the first time that he expects Vladimir Putin to invade Ukraine. But I think he'll pay a serious and dear price for it that he doesn't think now will cost him what it's going to cost him.

And I think he'll regret having done it. Today's episode was produced by Daniel Guimet, Rochelle Banja, Eric Krupke, and Luke Vanderplug. It was edited by Michael Benoit and Lisa Chow, and engineered by Alisha Ba'itu, and contains original music from Marion Lozano and Dan Powell. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. That's it for The Daily. I'm Michael Barbaro.

See you tomorrow.