Tech giants’ latest moves, regulatory action

Citizens try out a virtual reality experience at the opening of Cheonan Qianshu Shopping mall, Shanghai, China, On December 22, 2021. Virtual reality is a key part of the concept of the metaverse.

Xing Yun | Costfoto | Future Publishing | Getty Images

Imagine this: the metaverse with Chinese characteristics. That’s how the virtual world that everyone’s talking about will likely look in the world’s second-largest economy.

China’s technology giants are beginning to invest in the metaverse — the latest buzzword in internet technology. It’s a term with no concrete definition, but largely taken to mean virtual worlds that people will be playing and living in.

Censorship will likely be rife and regulation tight as Beijing continues to keep a close check on the practices of its domestic technology firms.

U.S. firms like Facebook parent Meta are going all-in on the metaverse concept, while Microsoft has positioned its proposed acquisition of gaming company Activision as a play on this theme.

Chinese firms are taking a more cautious approach. So what are they up to and how will regulation play out?

What are the apps?

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…

Winston Ma

managing partner, CloudTree Ventures

That comes down to the type of applications that could be part of the metaverse. Analysts say that virtual reality, gaming and social media could be some of the early applications.

This may include things like buying virtual items in games or creating digital avatars of yourself to participate in meetings.

“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.

China’s tech giants in the metaverse

Still, there are signs that China’s biggest technology names are beginning to experiment and lay the groundwork for future applications.

“Similar to the pitch we’ve seen from Meta, the metaverse concept may at first involved VR/AR-supported games and social interactive environments,” Charles Mok, the founder of Tech For Good Asia, told CNBC.

“These will obviously be the areas that China big tech players will follow first, with features that are advanced in China — such as payment, and WeChat-like integrated online services — that can be extended and built into the metaverse.”

China’s regulated metaverse

[China] knows just when and where it needs to stay its hand; close enough so that it can keep a careful watch, but not to the point where it would cause irreversible harm to the industry.

Hanyu Liu

China market analyst, Daxue Consulting

China also continues to censor content on its tightly controlled internet.

“We should also expect to see strict censorship, meaning there will most likely be an isolated, Chinese metaverse that is separate from the international,” Liu said.

There are more specific pieces of regulation that analysts said could be used to manage the metaverse.

In January, authorities passed a set of regulations that governs how internet firms can use recommendation algorithms. That was followed by draft rules regarding so-called “deep synthesis” technology. This relates to software that could be used to generate or edit voices, video or images or virtual settings. The two rules overlap.

“This overlap with the recent algorithm rule as specifically required by the new rule would have important impact on Metaverse companies in China,” Ma said.

Read more about China from CNBC Pro

Even Chinese cities and regions are looking at opportunities for the metaverse. Last year, the major city of Shanghai mentioned the metaverse in its five-year development plan for the information technology industry.

“China is extremely smart when it comes to this. It knows just when and where it needs to stay its hand; close enough so that it can keep a careful watch, but not to the point where it would cause irreversible harm to the industry,” Liu said.

What about crypto?

https://www.cnbc.com/2022/02/14/china-metaverse-tech-giants-latest-moves-regulatory-action.html

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