Page Text: Lucas Matney @lucasmtny / 16 hours
Hello readers, and welcome back to Week in Review!
Last week, I talked about Apple and crypto. This week, we’re talking about Apple clashing with Meta over their metaverse taxes.
After sending out hundreds of these newsletters, next week will sadly be my last time sending out Week in Review — but more excitingly it will also be my first time sending out my new crypto newsletter Chain Reaction, so if you like my ramblings, please follow me on Twitter and subscribe to Chain Reaction !!!
Incredibly psyched to officially announce Chain Reaction ( @chain_reaction ), TechCrunch's dedicated crypto podcast (and companion newsletter) where @AnitaRamaswamy and I will discuss and unpack web3 happenings with crypto VCs, founders and skeptics. https://t.co/Wvt8iBEokl
— Lucas Matney (@lucasmtny) March 24, 2022
Image Credits: Meta
the big thing
If any of my ramblings in this newsletter have taught you one thing about the metaverse, it’s that a coherent view of it doesn’t really exist. The purest form of it is probably best seen in the undying jealousy Facebook holds for Roblox and Meta’s desire to recreate that tweenage empire and bring billions of users to it.
This week, we got a taste of how exactly Facebook hopes to monetize its looming metaverse dreams.
We learned that Meta will begin allowing goods to be sold in Horizon Worlds, its latest social VR app which it hopes to grow into a multitrillion-dollar empire. The controversial note will be that Facebook will take a 25% cut of goods sold on the platform, which doesn’t sound all that problematic until you learn those goods will also separately be taxed by a 30% cut taken from the Oculus Store. Taken together, it means that virtual goods sold on the Horizon platform in VR will come with a whopping 47.5% tax attached to them.
If you were hopeful that the virtual economy meant an escape from the bothersome features of your daily life, like taxes, you will be disappointed that Uncle Zuck will be taking a bigger cut than Uncle Sam ever did (though he’ll of course be taking his in addition).
Nevertheless, as expected, there was a fair bit of blowback on Facebook for this outsized figure, the most biting of which actually came from Apple:
“Meta has repeatedly taken aim at Apple for charging developers a 30% commission for in-app purchases in the App Store — and have used small businesses and creators as a scapegoat at every turn,” Apple spokesman Fred Sainz stated in an email to MarketWatch. “Now — Meta seeks to charge those same creators significantly more than any other platform. [Meta’s] announcement lays bare Meta’s hypocrisy. It goes to show that while they seek to use Apple’s platform for free, they happily take from the creators and small businesses that use their own.”
These are harsh — and obviously self-serving — words from Apple’s team, but there’s clearly some truth in there. Meta’s CTO responded to the quote with some fairly lukewarm commentary on how Apple makes significant margins on hardware and software while Meta subsidizes its VR hardware and thus should charge more on software. It’s not exactly a bulletproof defense, largely because Facebook tried to sell VR hardware at a higher premium, but no one wanted to buy it — so selling discounted headsets isn’t some nicety on their part, but a means of VR survival.
This all plays into a fairly consistent problem for Facebook though. Every year for the last six or seven years, it’s just always been an awful time for them to start monetizing their virtual reality play. Their audience has seemed to resist monetization shifts every step of the way, and bonafide consumer traction has been so hard to come by over the years that the goal has always defaulted to moving headsets and worrying about paying the bill later. Fast-forward a few billion dollars and the company is beginning to move more headsets by selling them at a loss, but that doesn’t mean that Horizons or VR is in any safer of a position than it was years ago.
A 47.5% cut isn’t terribly different from what content creators on Roblox are used to paying, though that money is generally being paid to account for multiple platform stakeholders rather than one company. I can’t see it being a terribly convincing recipe for bringing desperately needed creators to an emerging platform, but Meta/Facebook’s balance sheet subsidization of the metaverse will have to find revenues somewhere, especially when Meta is, after all — allegedly — a metaverse company.