Not to be excluded from an US$8 trillion market opportunity, China’s technology giants begin to mobilize investments in preparation to develop a highly-state-regularized metaverse. If China is to successfully replicate its internet censorship apparatus in this new digital space, it will likely require tech companies to build a metaverse independent from the international community’s.
“The sheer diversity of metaverse applications means developing a ‘one-fits-all’ set of policies will not be feasible for Beijing,” Hanyu Liu, Market Analyst, Daxue Consulting, told CNBC. In this unfamiliar digital terrain, it is almost certain that each application will receive its own unique set of regulatory guidelines branched from the existing legislature. This legislative pressure will likely force Chinese tech companies to build a metaverse infrastructure independent from the international community.
Unlike their western competitors, Chinese tech companies have approached this market sector cautiously and in step with state legislation that has sought to put additional controls on the country’s tech sector. Last year, the Chinese legislative body passed a series of new laws regarding anti-monopoly, personal data protection, recommendation algorithms and user time-limits. It is likely that these legislative pieces, and future ones, will include metaverse applications.
China’s technology giants Tencent, NetEase and ByteDance will foreseeably be limited to the metaverse’s presumed gaming and social media potential, at least initially, other possible avenues include e-commerce. This constraint falls in line with the market fit of Tencent, one of the world’s largest gaming and social media companies, which implied its intended market entry in an earnings call in November. NetEase, another gaming giant, has gone as far as setting up an independent base to focus its ambitions towards metaverse deployment. ByteDance, TikTok´s parent company, made an aggressive horizontal expansion into China’s multi-billion-dollar gaming market. Alibaba, the world’s largest wholesale company, explores its market entry with the planned launch of augmented reality glasses.
“Metaverse is the future of social network. All China’s tech giants have to embrace it to find new ways to engage the youngest generation of internet users, which is critical at the time when their business models on smartphones and mobile internet are matured,” Winston Ma, managing partner at CloudTree Ventures, told CNBC.
As frenzy surrounding the metaverse grows, the Mexican government could take lead from China’s anticipatory regulatory response to establish user protections and anti-trust laws and regulate its intersection with adjacent industries such as fintech.