Decentralization paving the way for web3?

Meta’s Reality Labs, a product of Mark Zuckerberg’s ambitious metaverse technologies, posted a $4.28 billion operating loss for the fourth quarter and a total loss of $13.72 billion for 2022. This has, however, not deterred Zuckerberg from his belief that metaverse will continue to be the company’s future.

Not all seem to be equally sure about the potential of metaverse, with some business leaders wondering if metaverse is a fad or a long-term proposition?

While the opinions are divided, market indicators are quite positive, especially for India that enjoys a significantly large digitally-equipped young population. A study by Deloitte says metaverse’s potential on India’s economy by 2034 is likely to range from $79-$148 billion per year or stand at 1.3 to 2.4% of the overall GDP.

The same report, however, states that “a fully immersive metaverse with smooth real-time rendering of millions of simultaneous users is still far away”.

While a number of brands like Maruti Suzuki, Mondelez, Starbucks, HUL and Tata’s Tanishq have ventured into the space, others like Godrej Consumers Products Ltd hasn't tried metaverse yet due to scalability reasons considering the company’s huge product range and diverse consumer cohorts, a top official of the company said.

Decentralization of the web is another concern for many. Web3 is an unregulated space with no guidelines from the consumer affairs ministry or any other agency.

Niraj Ruparel, Emerging Tech Lead at WPP India, Head Of Mobile and Emerging Tech at GroupM India, opines: “Web 3.0 continues to advance and become more widely adopted, leading to new applications and use cases such as decentralized finance, digital collectibles, and virtual reality marketplaces. However, the development and success of the web3 and metaverse ecosystem will also depend on overcoming challenges such as scalability, user experience, and regulatory hurdles.”

In his presentation at the Indian Society of Advertisers in Mumbai recently, Ruparel showcased several brand innovations developed by the WPP team in the metaverse space, including deep fakes of celebrity endorsers, which have the potential to change the marketing ecosystem forever.

Web2 versus Web3

Web2 is operated by big tech companies that own and harvest users’ data, and use them for surveillance and advertising.

In contrast, web3 is based on blockchain technology, which works on a decentralization model that broadly refers to the internet owned by its builders, users, and creators. In web3, the stakeholders own their data.

“Blockchain, cryptocurrency, and NFTs are driving innovation and commerce at scale. With increasing concerns over data privacy, the decentralized model is likely to push adoption of Web3 further,” digital leaders of media agencies say.

The challenges

As per recent directives from the government of India, the Information Technology Rules 2021 will apply to the metaverse and deep fake segment. The government has asked social media platforms to remove “all deep fake images” within “24 hours”.

Asked how brands can navigate when rules of the game are still not clear, Ruparel said, “The government and ASCI must bring some guidelines in this regard.” Making meta clones of a celebrity requires several levels of permissions at present and it is a cumbersome process, he noted.

Besides, the past year did bring to the surface a number of issues across web3, from the proliferation of “NFT '' scams to the alleged misuse of customer funds.

There are concerns related to data privacy as well. While web3 allows users to express themselves safely using avatars and even gives them control over their data, there are concerns over data security and privacy of user data, tech experts point out.

Nevertheless, business leaders are optimistic about the future of web3. Over 30% of the organizations in the world will have products and services ready for the metaverse by 2026, says a study by Gartner, a US-based technological research and consulting firm.

Last year, Sanjiv Mehta, CEO and MD of Hindustan Unilever, had suggested a four-fold governance stack (data privacy, privacy literacy, equality and inclusion) to help build the metaverse for good.