Creating value in the metaverse: An opportunity that must be built on trust

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Mohamed Heikal, Head of Business Development, Majid Al Futtaim, Ruben Duarte, Director Corporate Development, Majid Al Futtaim, Joe Abi Akl, Chief Corporate Development Officer, Majid Al Futtaim

• All the excitement and hype around the arrival of the metaverse has coincided with a global crisis of trust around such virtual spaces.
• Most firms view the metaverse as a new channel for their existing operations but the opportunities for value creation are growing rapidly.
• As the digital and physical worlds merge more than ever before, user trust in the technology and data behind the metaverse will be vital.

The year 2022 marked the moment when the concept of the metaverse finally entered mainstream thinking.

The arrival of this new technology – an immersive version of the internet that we will experience in avatar form – caused a huge amount of excitement and hype. It did not take long for the hype to collide head-on with a global crisis of trust around the space.

This collision poses fundamental questions for businesses who view the metaverse as amajor opportunity for value creation.

At this early development stage of the metaverse, most businesses are viewing it as a new channel for their existing operations – a way of engaging audiences that are out of reach of current channels, namely Generation Z. As consumers and retailers move deeper into the metaverse, the opportunities for value creation will grow exponentially.

Build trust to create value in metaverse

Much of the recent metaverse buzz has centred on non-fungible tokens (NFTs) and the cryptocurrencies used to purchase them. Trust will be the primary currency of mainstream metaverse commerce.

Businesses rely on trust to build and maintain customer relationships. Customers will likely stay away from mainstream metaverse commerce without trust, and all the potential identified in this space will be quickly lost.

To make the metaverse work, we will need to ask a lot more of consumers in terms of data and privacy. This will begin as soon as they put on a virtual reality (VR) headset and enter the metaverse. These headsets can capture and process massive amounts of biometric data, such as iris scans, pupil dilation, heart rate and voice analysis.

To gain the trust of customers who will be asked to share this vast amount of data, we must establish transparent governance standards for data acquisition, storage and security. These standards must be adopted and followed by all virtual ecosystems in an interoperable metaverse.

Customers will also need to put new faith in the financial mechanisms that will power the metaverse. They will need wallets linked to global institutions governed by opaque regulations, or foreign exchange markets they may be unaware of. That is a completely new level of trust that must be earned.

The hype surrounding some forms of crypto has clearly failed to deliver on the expectations it created, eroding customer trust in the digital currencies that will be the bedrock of value creation in the metaverse. Regaining that trust will be critical to running a successful metaverse business.

Metaverse will transform retail experience

As retailers enter the metaverse, they are experimenting with new experiential elements that will transform shopping and allow customers to engage with brands in a more immersive and interactive manner.

Multiple companies are taking different approaches. For example, IKEA has developed a virtual reality showroom where customers can browse and buy furniture. Customers can use VR headsets and other technology to walk through a virtual showroom and see how different pieces of furniture would look in their own homes.

We, at Majid Al Futtaim, recently launched Dubai’s first virtual mall – the Mall of the Metaverse (Decentraland coordinates 95,21). Customers can try on digital wearables for their avatars, meet our virtual penguins, watch the latest movie trailers, and learn about our major brands and ecosystem partners here.

By investing in upskilling our talent, engaging with local authorities including the UAE Council for Artificial Intelligence (AI) and the Dubai Future Foundation, and creating and testing pilot virtual experiences, we strive to create one of the most advanced metaverse platforms.

As we complete various stages of testing, we know that shopping in the metaverse will be like no other. Meta-retailers will need to establish a high level of trust in order to encourage customers to enter their virtual doors. Customers will want to know they’re entering a secure environment where their privacy is respected, their data is secure, and their trust is rewarded.

Meta-retailers and regulators must collaborate to provide customers with a better understanding of the metaverse through education and awareness campaigns, as well as to lower entry barriers.

Trust and technology, such as blockchain, will have to go hand-in-hand in enabling this immersive customer experience.

If it is to work effectively, our data will have to travel with our avatars into every metaverse environment, and our digital wallets must be accessible to every consumer outlet, on every metaverse platform. All retail ventures must be geared up to process transactions in an instant.

Only when we reach this level of interoperability will the metaverse function in the way its champions envisage.

Regulation for the virtual worlds of tomorrow

Even in today’s digital world, we have barely scratched the surface in terms of creating frameworks for data and privacy intended to truly protect consumers and ensure their trust.

Europe’s GDPR and the UAE Privacy Law are examples of regulatory principles that might inform how we progress in the age of the metaverse – but we will need to go much further.

We believe that nothing less than a global set of principles articulating accepted governance, exchange, and use of personal data will suffice.

These principles will need to go far beyond what we currently have and be 100 times more relevant when people interact with multiple people, businesses, governments, and so on through materialized avatars in the metaverse.

This also exponentially multiplies today’s challenges, because in five to seven years’ time everyone may be living on virtual platforms and leading dual lives.

Trust must be central to the metaverse

The metaverse will be built with advanced technology such as augmented and virtual reality, as well as substantial, complex infrastructure made simple for the end user – but trust must be the foundation upon which it stands.

The path to establishing trust in the metaverse will be long and difficult. Arsène Wenger, the legendary former football manager, spoke about confidence going up the stairs and coming down in the lift. The lag between concept and activation allows us to address some fundamental questions about data, privacy and value creation.

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What is the World Economic Forum doing about the metaverse?

Experts believe that the metaverse will come to represent the next major computing platform, transforming consumer experience and business models across industries.

Fashion brands are one example. Over years, apparel companies have perfected the design, manufacture, and distribution of clothing to anticipate consumers’ wants and needs in line with seasonal changes. But today, most of their revenue is surpassed by the $3bn worth of sales of digital cosmetic items in Fortnite, which have a cultural significance that extends far into the physical world.

This is one of the economic opportunities of the metaverse – the possibility to “assetize” digital content, creating a framework of digital ownership for users. If it is replicated at scale and across sectors, then entire industries will be reshaped by changes to their traditional value chains.

However, the promise relies on the advancement of several key technologies, including augmented, virtual and mixed reality (collectively known as XR), as well as blockchain, connected devices and artificial intelligence. How should these be governed in a way that promotes their economic upsides while protecting individuals’ safety, security and privacy?

The World Economic Forum is bringing together leading voices from the private sector, civil society, academia and government to address this precise question. Over the next year, it will curate a multistakeholder community focusing on metaverse governance and economic and social value creation.

It will recommend regulatory frameworks for good governance of the metaverse and study how innovation and value creation can be strengthened for the benefit of society. Updates will be published on the World Economic Forum website on a regular basis.

We are at an inflection point in which the choices we make now will define how we live in a world where our digital and physical identities will merge like never before.

Without a doubt, the metaverse will be built differently. That must be reflected in the governance and regulatory frameworks, and at the heart of it all must be the establishment of trust prior to the onset of mainstream value creation.

We can create it, but people will only come if they trust the technology and the people who own and operate the metaverse and other virtual worlds.