The Epic Fight About The Metaverse

Do you play Fortnite? If not, like me, there’s still a high likelihood that you will have come across the game in recent weeks. Epic Games, its developer, is currently embarking on a fight against Apple

The narrative Epic is trying to push was brilliantly illustrated through a short clip the company released in August: Apple, once the start-up intent on breaking IBM’s monopoly of the PC world, has now become Big Brother: controlling the way we access information, consume entertainment, and pay for services.

What happened? Epic attempted to add its own payment system to Fortnite, circumventing Apple’s 30% fee for in-app purchases. As this breached Apple’s standardised rules, Apple responded by banning Fortnite from the App Store. Further, Apple threatened to impede access to Unreal Engine, Epic’s developer ecosystem.

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The conflict fundamentally revolves around the “railroad” problem. Back during the Roosevelt era of trustbusting, half a dozen US rail companies controlled 90% of the market for coal. This led to high prices for buyers and made it difficult for smaller coal companies to transport their goods. While history doesn’t repeat itself, it certainly rhymes. Today Big Tech today controls entire markets. Their platforms have become essential to how the world communicates and conducts business.

There have been complaints for years that Big Tech puts its own products and services at an unfair advantage. More recently, a “Coalition of App Fairness” (incl. Spotify & Match-Group) has formed to protest against Apple’s alleged anti-competitive behaviour. Spotify has been fighting against the “Apple tax” for years. Microsoft, also a major games developer, backs Epic’s efforts to isolate Unreal Engine from the Apple lawsuit. Meanwhile, Tencent & Sony have a minority stake in Epic. Suddenly, Apple, once America’s favourite tech company, seems under attack from all fronts.

In late August, a judge upheld Apple’s Fortnite ban for breach of guidelines, but ruled that Apple cannot cut off Unreal Engine, as it would harm innocent third parties. For both companies there’s a lot at stake. An Epic win would threaten Apple’s App Store ecosystem. Meanwhile, a pushback against Epic would derail the company’s grand vision for the Internet’s next big thing: the Metaverse.

Tim Sweeney, Epic’s billionaire founder, has made no secret of his admiration for this digital world. The Metaverse refers to a virtual space that’s always online and active. It has its own economy, jobs, and relationships. Whether you’re located in Melbourne or Amsterdam doesn’t matter. It’s a place where your unfulfilled real-world desires get fulfilled. Fortnite – and the gaming sector – have come closest towards mirroring a version of Metaverse due to the sheer power of gaming devices and the strong bond of the gaming community.

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Fortnite, the Metaverse’s flagship game, currently counts 350 million users. That number alone exceeds the entire US population. Sweeney is well aware of the market’s size and growth potential. And when a norm-defying nerd has the opportunity to create his digital utopia, one thing is sure: he doesn’t want a gatekeeper in place.

The Cyber-Barons’ anti-anti-trust argument

Yesterday’s Big Tech hearing was full of surprises.

After four months of virtual conferences, it was reassuring to see that not even Silicon Valley’s Tech titans have been spared from technical difficulties.

Their background decors also didn’t fail to entertain. Pichai’s tasteful minimalism stood in sharp contrast to the Zuck’s sterile white wooden background.

Yet, what stood out most was the subtle update to their narrative. At a time when American patriotism is not trading at a premium in Silicon Valley, the Four doubled-down on their American heritage.

Bezos emphasised Amazon being the largest US employer. Cook stressed being “uniquely American”. Yet the Zuck went the farthest.

This became obvious when Members of Congress pressed them on whether they believed that China was stealing technology from US firms.

Cook, Pichai, and Bezos all denied. Only Zuckerberg unequivocally stated that China is stealing American technology.

From there on, Zuckerberg positioned Facebook as a “proudly American company”. A company that upholds “the values of democracy, competition, inclusion, and free expression” – values that the American economy was built on.

Zuckerberg’s strategy marks a sharp U-Turn from five years ago when he held a speech in Mandarin, praising Chinese innovation and covertly hoping for an entrance into the Chinese market.

Now that this hope seems to have been lost for good, Zuckerberg not only seemed to have given up on China, but rather decided to use China as an anti-anti-trust argument.

He confronted representatives with a dystopian bifurcation: keep your fingers off us and watch us conduct business-as-usual– or break us up and watch an aggressive China, whose censorship practices are at odds with liberal values, take over the internet. And then the world.

After yesterday’s patriotic appeal, policymakers will have difficult choices to make. Both China and Big Tech enjoy bipartisan scrutiny in the US. Yet whom will they take on first?

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2018, the year the Techlash materialised


What happened?

Margrethe Vestager, European Commissioner for Competition, has fined Google, an Alphabet subsidiary, $5.1 billion for breaching EU antitrust rules. Google has been charged with forcing Android phone manufacturers to pre-install various Apps. Thus, Google has been penalised for using Android to solidify the dominance of its own services – most importantly Google Search.

Why does it matter?

The ruling comes at an interesting time. It differentiates Android from its competitors’ operating systems (OS). Thereby, Apple’s OS is seen as an exclusive, vertically integrated system as opposed to Google’s Android, which is open-source. More so, it’s the second time within a year that Google has been fined by the European Commission. Back in 2017, Google has been fined for giving its own shopping comparison service an illegal advantage.

 What’s next?

2018 will be known as the year in which the Techlash materialised. The year commenced with the Cambridge Analytica scandal that culminated with Mark Zuckerberg, CEO of Facebook, testifying in front of Congress. The hefty fine against Google illustrates the rift across the Atlantic. A few pointers accounting for the differences in American and European regulation:

  1. Antitrust Laws: US focussed on consumer welfare vs. EU focussed on competition
  2. Societal Values: American Libertarianism clashing with the European notion of Social Justice
  3. National Interests: US sensing the breath of Chinese competition vs. the EU lagging behind


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Alphabet, Blockchain, and Recovering Lost Ground


What happened?

Sergey Brin, Google President and Co-Founder, said that Alphabet ‘failed to be on the bleeding edge’ with respect to Blockchain at an invite-only Blockchain summit, hosted by Richard Branson last week in Morocco.

Why does it matter?

Google, otherwise known for embracing revolutionary technologies, such as A.I., early on, has so far kept its fingers off Blockchain. Especially Google X, the company’s secret research lab, has frequently experimented with cutting-edge technologies over the past decade. This led to various promising projects, including ‘Project Loon’, intended to bring Internet access to remote regions, and ‘Waymo’, focused on self-driving cars.

What’s next?

While Alphabet hasn’t announced any Blockchain projects, rumours about the company exploring potential use cases of the technology have circulated for a while. It’s widely speculated that Google, as an Alphabet division, is working on its own Blockchain-related technology to support its cloud business line. In this case, Google could reassure its clients that their data is safely stored. According to pundits, Alphabet has been a leading acquirer of start-ups involved in the field. While not much has been announced officially, much more can be expected to come from the company that prides itself in being an Internet pioneer.


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Unstoppable Scooters? Not yet.

scooters.jpgWhat happened?

Bird, an on-demand scooter-sharing company, raised another $300 Million last week. The latest round was led by Sequoia Capital, the California-based VC fund famous for its early investments in Apple, Instagram and WhatsApp. The latest funding round is Bird’s second within two months. It raised the company’s valuation from $1 Billion in May to $2 Billion.

Why does it matter?

The Scooter-Hype has taken Silicon Valley by storm. Lime, Spin, and Bird are amongst the most prominent companies. Yet Uber and Lyft have also signalled their interest in joining the race. The Scooter companies pledge to transform urban mobility by:

  • offering environmentally friendly services
  • contributing towards a reduction of cars on the streets
  • offering fun solutions for the so-called ‘last mile commute’

What’s next?

The companies entered cities with an ‘ask forgiveness, not permission’ approach, resembling the efforts of other urban mobility companies. The unloading of the scooters on the streets, however, has created nuisance in many cities. Authorities in many cities have decided to step in. Recently San Francisco announced a cap of 5 Scooter company permits for 2018; (the permits require users to wear helmets). This seems to be latest twist in the never-ending story of Silicon Valley vs. Regulation. Expect more to come, as Bird and Lime expand across the Atlantic.

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