The metaverse: how to build something we can all gain from

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Cathy Li, head of Media, Entertainment and Sport at the World Economic Forum: There's not a standard definition of the of the metaverse right now, but the experts would agree that this new iteration of the internet would likely disrupt and also transform the current social and economic structures.

Robin Pomeroy, host, Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them. This week: the metaverse - and why it remains an important issue as we head towards Davos 2023 in January.

Cathy Li: There's immense interest in the topic. Some are experimenting with the metaverse, building immersive experience perspectives or experimenting with, for example, NFTs, other digital assets

Robin Pomeroy: And it’s not just virtual products or virtual reality experiences - the metaverse could have applications in real-world industries

Cathy Li: The industrial metaverse applications - advanced manufacturing, healthcare, mobility, are also experimenting with digital twin technology.

Robin Pomeroy: And of course there’s FOMO.

Cathy Li: Many others are simply observing and monitoring and wanting to make sure that they are not left behind.

Robin Pomeroy: The World Economic Forum has an initiative looking at Defining and Building the Metaverse. We speak to the person leading that, Cathy Li, on how we might navigate the opportunities and risks of the metaverse.

Cathy Li: Security, privacy, safety, the rekindled discussion around digital identity.

Robin Pomeroy: Subscribe to Radio Davos wherever you get your podcasts, leave us a rating and a review, and join us on the World Economic Forum Podcast Club on Facebook

I’m Robin Pomeroy at the World Economic Forum, and with this look at the metaverse...

Cathy Li: How is that going to look in the next decade or so.

Robin Pomeroy: This is Radio Davos.

So what is the metaverse, and should we fear it or embrace it? We’ve covered it before on Radio Davos - I interviewed Meta’s Nick Clegg in Davos last May, and in last week’s episode a range of CEOs mentioned the metaverse as a key technology to watch in the coming years, Please do check out both those episodes. Just go to wef.ch/podcasts.

This week on Radio Davos, we’re checking in with Cathy Li, head of Media, Entertainment and Sport at the World Economic Forum who is leading an initiative called Defining and Building the Metaverse. It’s brining together companies, governments and civil society around the world, to discuss possible futures for the metaverse. The first fruits of that work will be unveiled - a couple of reports - in Davos in January.

So I started my conversation with Cathy Li by asking her to define the metaverse.

Cathy Li: The metaverse is coming. We think that's the next iteration of the internet. It's the convergence of technologies ranging from extended reality, which includes virtual, augmented and mixed reality, and to a certain degree, potentially digital assets, wallets and identities all coming together, forging the so-called metaverse. Basically an immersive, interoperable and synchronous digital world. And it's predicted to be a $800 billion market by 2024.

With something still in such a nascent state, we felt that the time was right to bring public sector and private sector together to really understand the opportunities and challenges beyond the hype.

That's why we launched the Defining and Building the Metaverse Initiative back in May at our Annual Meeting in Davos. It's about bringing key stakeholders across different sectors to come together, define and build the parameters of an economically viable, interoperable, safe and equitable metaverse.

The initiative focuses on two key areas: metaverse governance, and economic and societal value creation, which studies how innovation and value creation can be strengthened for the benefit of society.

There's not a standard definition of the metaverse right now, but the experts would agree that this new iteration of the internet would likely disrupt and also transform the current social and economic structures, from more immersive, empathetic social experiences to more universal access to healthcare and education. The metaverse definitely presents momentous opportunities, but also significant challenges as well.

Robin Pomeroy: So we'll talk about the opportunities and the challenges, but let's first stick with defining it. Because one of the reports you'll be launching in Davos is - I love the title of it - Demystifying the Consumer Metaverse. if I got that right? So let's talk about that. What are the myths? What do people think the metaverse is and they're getting wrong, do you think?

Cathy Li: Because the metaverse is not a standard definition, it introduces possibilities of all sorts of misunderstanding. So, first of all, in our opinion, the metaverse is not a destination per se. It's not an end state. It's just ongoing digital transformation.

And it's not that difficult to imagine that the internet of the future will be different from the internet that we know now. Just as the internet has been around for nearly four decades. But when I was born, the internet wasn't even there. And it looks completely different from when the internet was born compared to what we know today. So it's really just ongoing digital transformation, and we don't really think of that as something that would come together all of a sudden. It will come together gradually and reinforce each other. I'm talking about users and behaviours and different products, all of those things. Some of them are in better shape than than others right now, but many of those will come together over the next decade.

Robin Pomeroy: Do you think parts of the metaverse already exist? Are we already in the metaverse to some extent, without perhaps knowing it?

Cathy Li: Absolutely. So, again, if you think of the metaverse, not as a state, not even as a medium, but more as, you know, the continued integration of our physical and digital lives, then, yes. Think about how much time we spend online and in the digital world now. And that percentage will continue to go up. And think about the generation after us, the iPad-native generation. They haven't been brought into workforce yet. Once they do, that's also when you see a generational shift in terms of new products and new behaviour.

Robin Pomeroy: Shall we take a look at governance first, then? What are the the big issues about regulating the metaverse? What needs to be in place for this to work well?

Cathy Li: The community that we've put together over the last 12 months, the community that are working on this issues together, ranging from public sector, private sector, civil society and academia. They have identified four topic areas to investigate over the next 12 months: interoperability, privacy and security, safety and identity. So the first output that we're publishing in January during the Annual Meeting is going to be focussing on interoperability.

Interoperability is founded on the ability for users to participate across environments and technologies, for data to circulate freely and securely, and for systems to exchange information seamlessly. For the metaverse to operate seamlessly, it will require varying degrees of interoperability for users to move, create, transact and participate across different platforms and localities.

Robin Pomeroy: So if we compare that to the world we're living in now, for example, I could be on an app, let's say Facebook, and if that was an enhanced, more metaverse type space, which I assume it will be, because that's one of the companies that's really driving this, I'll be in that world in a more virtual reality kind of way, perhaps. But at the moment, I can't go from Facebook, jump from that into a different platform. I can't go and watch a virtual concert or go to a virtual sports game within Facebook unless it's on Facebook. Do you envisage that would be easier to do that and that's what we mean by interoperability? Is that the main thing or am I missing something?

Cathy Li: Indeed, that's a very good example. But let me give you a even more straightforward example. The the fact that I can send you email from my Gmail account to your Yahoo account is not taken as a given. That's because they all follow the same email protocols, be it POP or IMAP. And that's not the case with, for example, games. Again, I'm talking about games, but it doesn't mean that games are necessarily the metaverse. Those are different virtual world experiences, but the most similar to the kind of vision of the metaverse when it comes to the visualisation and immersive perspective. But the different games, they are optimised for their own experiences and existence, so by definition they are not interoperable. You can't bring your Call of Duty sword or costume into Minecraft. Right now that doesn't work. In the future it could work. The market forces will decide what should be interoperable or not. The interoperability should be seen as a spectrum, but not something that needs to be mandated. In the end, if it does have value, financial incentives and market forces will take care of it. But lookomg at the the trend, consumers will definitely demand certain levels of interoperability.

Robin Pomeroy: So that is a report that will be coming out in Davos in January. When it comes to governance, I'm reading from your blog, 'governance that prevents potential harms and emerging risks'. What are the harms and risks we're talking about?

Cathy Li: First of all, we are looking at the existing harms and risks with the current version of the internet, for example, digital safety, harmful content. How do we protect our children? How how do we protect ourselves from, you know, unwanted harassment, different types of harmful content, other risks, for example, security and privacy concerns around data, the use of data. And now think about in the metaverse, there will be probably potentially even more data being harvested, including biometric data and many other type of data. But at the same time those data could be used for good as well. But we do need to put the proper kind of governance mechanism around it.

And then from the security perspective, any time you expand the digital infrastructure, you unintentionally expand the attack surface for the attackers as well. So think about how do we safeguard the digital infrastructure is one of the aspects we need to look out for.

Robin Pomeroy: So there'll be more targets for cyber attacks.

Let's turn to the second thing then in your blog, 'value creation', if we'd had this discussion 20 or 30 years ago about the internet, the value creation, it's funny, you can go back and watch clips online of famous people, even incredibly smart people who are really into this, who just got it wrong. You know, 'oh, this will be a fad, the internet won't work'. People will look back probably to interviews like this now in 10 years time and we may have got it all wrong. But I'm just wondering, with the discussions you have with the various stakeholders, where are these additional value creation possibilities with the metaverse?

Cathy Li: Indeed, it's very difficult to imagine the potential upside when whenever a new technology comes through, because, as I mentioned earlier, many of the things we need to come together, new technologies, many different changes and user behaviours, and they will reinforce each other and that will generate even more use cases and products, so on and so on. So I wouldn't be surprised that we get it wrong to some degree.

In terms of use cases. the metaverse will have all of the function of the internet, except that the experience will be more immersive and you might be able to own your data and digital assets. It's still early days, but we can already see that the metaverse is and will continue transforming industries, including media and and entertainment, consumer and retail, where consumers always long for more immersive experience. And in real estate and mobility industries where digital sales are becoming a norm. In advanced manufacturing and healthcare, where AR, VR technologies and digital twins are playing a vital role in supply chain analysis and medical intervention.

For example, factory workers can easily drag and drop assets into a metaverse framework, physics-based simulation and quickly discover ways to make manufacturing safer or more efficient without undergoing extensive physical testing. Surgeons, they can practise on the digital twin of the patient before they actually operate on the on the patient, to ensure maximum precision. And the most obvious use cases today might be in work, training and education, where it's proven that immersive experience enhances collaboration.

Robin Pomeroy: We've all got used to using Zoom over the last couple of years. Is the feeling that we'll all be meeting in a virtual space soon? Are there any real benefits, do you think, to being in an immersive space, more of a 3D space, than there is looking at a screen with faces on the screen, do you think?

Cathy Li: That's an interesting question that we've been asked a lot. My response has been, it doesn't necessarily mean that we will be using that kind of 3D environment anytime soon. It's always a choice. If users think it's a better experience, they will be drawn to that. Otherwise they they won't.

Right now, the more advanced VR experience does give you a sense of presence. So very different from Zoom, where it's a 2-D interface. You and me can meet in the metaverse in the VR experience and feel each other's presence. So for some people, that might be a better experience. For others that that might not be.

Again, I want to go back to what I mentioned earlier. The metaverse is still far away. It may not be even be for our generation, but it might be only for, you know, our kids generation. But it's not so hard to imagine that the internet will evolve and human beings are naturally drawn to the kind of experiences that mimic our reality. That's why if you saw the evolution of the internet from text-based to image-based, to video-based, it's not that hard to imagine in the future it will be more 3D immersive experience, but it doesn't mean that tomorrow we're going to all use 3D environment for Zoom calls.

Robin Pomeroy: From limited experience of virtual reality and metaverse applications and gaming, the thing that struck me is the audio is so important. That's what really makes a difference in the things I've used - that you can tell if the monster is creeping up behind you or if you're in a room with a lot of people, you can walk over to someone and their voice gets louder. I think, for me personally, so far at least, the audio, even more than the visual stuff, the audio, I wouldn't say transformational, but it can be really effective.

Cathy Li: Yes, absolutely. That's why many of the companies are working on spatial audio, as you know, because someone is whispering in your ear, shouldn't sound like someone else who was speaking from the corner. So you're absolutely right about that.

Robin Pomeroy: And is there a big hunger among the stakeholders? Are the companies clamouring to get together and to talk about these things? Or did you have to drag them kicking and screaming together?

Cathy Li: I would say there's immense interest in the topic. Some are more advanced than others. Some are experimenting with the metaverse, be it doing it frommore of the building, immersive experience perspective, or experimenting with, for example, NFTs, other digital assets, and strengthening the consumer customer relationship. Or, you know, in the case of a lot of the, what we call the industrial metaverse applications case, many of the advanced manufacturing companies, healthcare providers, mobility, etc. they are also experimenting with digital twin technology, IoT, because many of the foundational technologies are already in place. But many others are simply observing and monitoring and wanting to make sure that they are not left behind. So it's definitely a healthy mix, I would say.

Robin Pomeroy: So we'll meet in Davos again in January. What do you hope to hear people say? Where will the conversation be going, do you think, in January?

Cathy Li: I think in January the conversation will be around some of the latest applications across consumer lens and also industrial metaverse in terms of, for example, energy transition, emission reduction and the improvement in terms of, for example, manufacturing efficiency.

We would like to see more use cases because it's been more than a year since this term really took off. So that's one thing we'd like to see.

And we will also like to see the discussion around the proper guardrails being put in place advance even more when it comes to the learnings around security, privacy, safety, the rekindled discussion around digital identity, how is that going to look like in the next decade or so? Those will be what I would very much look forward to.

Robin Pomeroy: Cathy Li is head of Media, Entertainment and Sport at the World Economic Forum.

We’ll start next year with several episodes looking at the other big issues that will be in the air at Davos 2023. Follow the buildup and the event itself at wef.ch/wef23 and across social media using the hashtag #WEF23.

And subscribe to Radio Davos amd out other podcasts Meet the Leader, the World Economic Forum Book Club Podcast and Agenda Dialogues. And please join the conversation on the World Economic Forum Podcast Club, look for that on Facebook.

This episode of Radio Davos was presented by me, Robin Pomeroy. Studio production was by Gareth Nolan.

We will be back in 2023, but for now thanks to you for listening and goodbye.