The data privacy war between Meta (Facebook) and, well, the rest of the world has been brewing for over a decade. However, over the past year, Meta has taken a number of substantial hits.

To start, Apple rolled out a series of new data privacy policies that limited Meta’s ability to collect user data and, as a result, caused the company to lose a reported $10 billion in revenues. Secondly, EU regulators are currently drawing up new legislation that could potentially restrict how the personal data of EU citizens is transferred across the Atlantic. Depending on the outcome, these new guidelines could significantly impact Meta's global operations.

As Facebook explained in a statement to CNBC, “If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs (standard contractual clauses) or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe.”

Though the company is likely bluffing, the proliferation of increasingly strict data privacy regulation around the globe spells serious trouble for Meta, a company whose business model is built on the aggregation and exploitation of personal data. Meta's solution to getting around these data laws? The Metaverse. 

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What is the metaverse?

When most tech execs talk about the “metaverse,” they’re describing the creation of new, immersive and interconnected virtual worlds. As venture capitalist Matthew Ball describes it on his website, “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 with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”

Inspired by the virtual wonderlands described in sci-fi novels such as Ready Player One and Snow Crash, visitors to this cyber realm could do everything from play games to attend concerts to participating in virtual meetings. Though, at this time, people primarily use VR and AR hardware to access the metaverse, eventually, a variety of ambient computing methods such as IoT, sensors and cameras will be used to facilitate an expanded set of digital interactions. 

Sound a lot like a video game? That’s because that’s essentially what the metaverse is, a vast, interconnected network of video games and virtual experiences. 

How does the metaverse make money?

The economics of the metaverse are similar to those of the gaming world. The most obvious form of monetization is through microtransactions, a business model where users can purchase virtual items for small amounts of money.

In a video game a player might purchase extra lives or a new weapon, in Facebook’s metaverse it might be virtual clothing for one’s avatar or tickets to a virtual event. It’s even possible that it will leverage the increasingly popular “play-to-earn” business model whereby players use crypto tokens instead of a regular in-game currency. 

However, like Meta’s existing flagship product, Facebook, advertising and user data will play a pivotal role in its profitability. In fact, the Metaverse was not only designed to circumvent Apple and Google’s evolving data privacy policies, but global data privacy regulation in general. 

Not only are VR, AR and IoT devices essentially unregulated, they have the capacity to collect significantly more data than traditional social media applications. By steering users towards Meta-owned devices, such as Oculus VR headset, Meta would have unfettered access to one’s personal data with little to no regulatory oversight over how it would be used. 

For example, let’s say you attended a company meeting in one of the Metaverse’s conference rooms. Not only would Meta have full access to whatever was discussed during that company meeting, by tracking your eye movements, facial expressions and body languages, they could report back to your boss as to whether or not you were paying attention. They could also use the insights collected during this meeting to create targeted advertisements for you and your work colleagues. 

Data privacy as a business imperative

While this approach could be Meta’s ticket to immense profits and world domination, success is far from guaranteed. Regulatory roadblocks, increased competition, technological setbacks, and antitrust lawsuits all stand in the way. 

Though Meta was able to bounce back from its recent $232 billion stock market plummet, the fact that this market turbulence was seen as a “reckoning” by the general public shows how wary people have become of “surveillance capitalism.” 

In fact a recent KPMG study found that, “ 86% of the respondents said they feel a growing concern about data privacy, while 78% expressed fears about the amount of data being collected. Some 40% of the consumers surveyed don’t trust companies to use their data ethically, and 13% don’t even trust their own employers.”

In all likelihood, as the metaverse expands, so will the laws governing the data it collects. Not only that but many experts predict that data privacy and security will become a key competitive advantage amongst the dozens of companies building out their own vision of the metaverse. In other words, the company that users trust the most will come out on top. 

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