Public Equities

Metaverse & the Disruption of the Internet

November, 2021 – 9 min read
The sci-fi inspired vision behind an idealized metaverse is clear—but the road to get there is uncertain. As the industry tries to adapt existing business models to fit this new (virtual) reality, which companies will be the winners?

While the term “metaverse” can be traced back to Neal Stephenson’s 1992 sci-fi book, “Snow Crash,” the ideas behind what will be the next evolution in the internet are finding their moment today—driven by the convergence of technology and societal trends that are demanding wholesale changes in how this reality works, and who controls it.
 

“The metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds, which can be experienced synchronously and persistently by an effectively unlimited number of users, and with continuity of data—such as identity, history, entitlements, objects, communications, and payments.” 1


As it stands today, the internet already meets most of the requirements for classification as a metaverse. But the history of the internet’s evolution, and its tendency toward centralized market power, is pointing to a path away from the idealized definition of a metaverse. The internet’s original purpose was to enable file sharing between academics. In other words, there were no explicit commercial drivers behind its growth. The internet and the infrastructure created to enable it ended up setting the conditions for the winner-takes-most digital advertising and social media power centers that are Facebook, Google, Amazon, Alibaba and Tencent. Crucially, this centralization of power makes it harder to meet the metaverse’s requirements for “continuity of data” and “unlimited numbers of users” due to inter-operability challenges. 

The hand-wringing and investor angst that followed the Chinese authorities’ insistence that the walled gardens of Tencent and Alibaba open their ecosystems to allow links into their competitors’ domains was evidence enough of how valuable the centralized nature of each of the aforementioned platforms actually is. The metaverse, inasmuch as it requires inter-operability and continuity of data and digital assets across environments, is a major threat to the status quo.
 

1. Source: MatthewBall.vc. As of June 29, 2021.

Want to read the full article?

View PDF

Matthew Ward

Managing Director, Global Equities—Technology

Colin Moar

Director, Global Equities—Technology

Any forecasts in this material are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Investment involves risk. The value of any investments and any income generated may go down as well as up and is not guaranteed by Barings or any other person. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

Any investment results, portfolio compositions and or examples set forth in this material are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this material No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments. Prospective investors should read the offering documents, if applicable, for the details and specific risk factors of any Fund/Strategy discussed in this material.

Barings is the brand name for the worldwide asset management and associated businesses of Barings LLC and its global affiliates. Barings Securities LLC, Barings (U.K.) Limited, Barings Global Advisers Limited, Barings Australia Pty Ltd, Barings Japan Limited, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, and Baring Asset Management Korea Limited each are affiliated financial service companies owned by Barings LLC (each, individually, an “Affiliate”).

NO OFFER: The material is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service in any jurisdiction. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This material is not, and must not be treated as, investment advice, an investment recommendation, investment research, or a recommendation about the suitability or appropriateness of any security, commodity, investment, or particular investment strategy, and must not be construed as a projection or prediction.

Unless otherwise mentioned, the views contained in this material are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Individual portfolio management teams may hold different views than the views expressed herein and may make different investment decisions for different clients. Parts of this material may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this material is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any service, security, investment or product outlined in this material may not be suitable for a prospective investor or available in their jurisdiction. Copyright in this material is owned by Barings. Information in this material may be used for your own personal use, but may not be altered, reproduced or distributed without Barings’ consent.

Related Viewpoints