Behind the Metaverse Boom: Avoiding Involution Competition and Technological Fragmentation

Authors: Xu Xin, Wang Xiaoyun, Yi Yaqi (Xu Xin is a professor and doctoral supervisor at the School of Economics and Management, East China Normal University, vice president of the Institute of Humanities and Social Sciences, and director of the East China Normal University eSports Industry Development Research Center; Wang Xiaoyun and Yi Yaqi are master's students at the School of Economics and Management, East China Normal University)

The enthusiasm for the metaverse remains high, with the global market and governments actively laying out plans for the metaverse. The United States was the first to propose the concept of the "metaverse," with the establishment of the first metaverse company, Roblox, followed by internet giant Facebook rebranding to Meta. Subsequently, American companies such as Microsoft, Google, and Nvidia announced their plans for the metaverse. While embracing the metaverse, U.S. regulatory agencies are focusing on data security and privacy protection issues. In Asia, the South Korean government has reacted the fastest to the metaverse, not only establishing a metaverse association but also stating in the "Tourism Industry Recovery and Leap Forward Plan" that it will build a "Korean Tourism Metaverse Platform" integrating major attractions and popular filming locations in Korea, and promote a "dual-track" system of virtual tourism and smart tourism for actual visitors.

Looking domestically, first-tier and new first-tier cities are leading in policy layout and implementation. Shanghai's urban digital transformation has entered the "comprehensive promotion stage," and the electronic information industry involved in the metaverse is a key foundational industry for Shanghai's high-quality economic and social development and digital transformation. Li Qiang, Secretary of the Shanghai Municipal Committee, pointed out at the Shanghai Municipal Economic Work Conference: "Guide enterprises to accelerate research on important platforms for the interaction between the future virtual world and real society, and make timely layouts."

Subsequently, the Shanghai Municipal Commission of Economy and Information Technology issued the "14th Five-Year Plan for the Development of Shanghai's Electronic Information Industry," proposing to strengthen forward-looking research and development of core underlying technologies for the metaverse, promote the development of new interactive terminals and systematic virtual content construction, and explore industry applications. The Chongqing Municipal Government released the "Pilot Work Plan for New Urban Infrastructure Construction in Chongqing" on December 13, 2021, proposing two phased goals: to start the construction of a municipal-level City Information Model (CIM) basic platform in 2021 and carry out "CIM+" pilots in key areas such as the Two Rivers and Four Banks; by 2025, to promote the application of the Internet of Things in urban infrastructure, smart connected vehicles, smart communities, intelligent construction, and smart city management based on the CIM basic platform.

In addition, Zhejiang has research and reserves in areas such as AR engines, virtual avatars, 3D space and virtual scene construction, new human-computer interaction, 5G cloud networks, edge computing, and industrial XR interaction engines for the development of the "metaverse" industry; Beijing also has a foundational technology and service industry for the metaverse.

The above cases are bound to become reference models for the construction and governance of the metaverse in Chinese cities. Only by assessing risks in advance and viewing governance as an opportunity can we achieve "Chinese speed" and demonstrate "Chinese height" in the global metaverse race.

I. The Metaverse as an Amplifier of Industrial Risks, Exposing Construction Issues

(1) Lack of Consensus on New Concepts, Chaotic Application Scenarios Leading to Unhealthy Competitive Landscape

Currently, there is no clear definition of the metaverse, and the industry is rife with vague references to the concept. Various voices continuously propose imaginative new viewpoints and interpretations, attempting to combine the metaverse with all industries, such as "new consumption + metaverse" and "new socialization + metaverse." Abnormal fluctuations in stock prices have already attracted the attention of regulators, with several metaverse concept companies receiving frequent inquiries from exchanges. According to statistics from the Yuan Chuang Metaverse Research Institute, as of early November 2021, there were 663 metaverse-related enterprises nationwide. Currently, 29 provinces and municipalities directly under the central government have metaverse-related enterprises. In this context, the lack of mutual recognition and the inward competition among major platforms have led to improper competition in the metaverse:

Firstly, Ecological Closure. Pessimistically, due to each interest entity competing to seize the high ground of the metaverse, the competitive landscape among giants tends to show relative closure of future ecosystems, which contradicts the decentralized concept advocated by the metaverse. The absence of unified digital social governance standards for the currently planned metaverse has resulted in governance fragmentation. Unity is the only rule for the standardized operation of all things. From the platform's perspective, major companies operate independently, creating their own standard industrial ecosystems, becoming a "center" in a special sense, but systems must be interconnected and closely integrated with human scenarios in the transition from two-dimensional to three-dimensional, allowing for extensive interaction.

This requires cross-platform operation and selectively liberating the virtual and the real.

Secondly, Technological Fragmentation. Technologically, the application technologies of the metaverse mainly include networking and computing, artificial intelligence, the Internet of Things, and blockchain. One of the characteristics of the metaverse is the virtualization of space. As the intersection between the physical world and the digital world increases, their boundaries will become increasingly blurred. If the application of technology lacks a certain consensus and harbors malicious hidden behaviors, it may foster a selfish mentality of "weapon concealment." For example, the current development toolchain has a problem of multiple factions, leading to excessively high content development costs.

Competition undoubtedly promotes the progress of human society, but it should not become a means of internal consumption; the metaverse should not be a battleground for the spoils of the virtual world. The mutual competition among revelers is a result of excessive confrontation, which is not easily perceived within the group, but this "jealousy" may transform into greed, causing a short-sighted mentality to devour the original intention of building the metaverse.

(2) Supply and Demand Structure and Responsible Entities are Unclear, Lacking Standardized Governance Construction Ideas

The metaverse advocates "decentralization," allowing users to participate in content creation and profit without barriers. However, the platforms on which the metaverse relies are still monopolized by private enterprises, leading to chaos in industrial development. At the same time, with a large number of users in China, whether to access the metaverse indiscriminately or categorically, how to determine the relevant basis and standards, and whether it will further exacerbate social issues such as wealth disparity, remains to be considered. This phenomenon is reflected in the following aspects:

Firstly, Content Production Level. Internet content has shifted from PGC to UGC, where users can be both consumers and producers, which is not a privilege granted by the metaverse; the rise of live streaming and short video platforms has already sparked "mass creation." The main driving force of the metaverse seems to come from all users, but capital usually favors outstanding content creators and provides special support. If there is no neutral third-party platform to provide corresponding monetization and retention mechanisms, high-quality content will still be bound to capital, and the "MCN institutions" of the metaverse will severely impact the fairness of the creative ecosystem.

Secondly, Device Terminal Level. One of the technological application terminals of the metaverse is VR devices, but the current VR shooting methods and lens language practices have not yet reached mature standards.** Unfair resource distribution will further widen the gap between high-quality and ordinary content, causing creators to lose their desire and demand for creation. At the same time, in practice, the ownership of virtual currency still shows a trend of leaning towards large holders and institutions, leading to centralization and monopolization in distribution outcomes.

Thirdly, Intellectual Property Level. Intellectual property issues have always been a "chronic disease" in digital spaces. Although blockchain technology provides the technical possibility for authentication, rights confirmation, and accountability, the massive generation of UGC in the metaverse space and the cross-boundary use of IP exacerbate the complexity and confusion of intellectual property management.

The metaverse is a shared space where future users will become creators and builders of this world, but the ownership of works and the collaborative relationships in creation exhibit greater instability than in the real world, requiring standardized governance to break the deadlock.

(3) Lack of Theoretical and Practical Basis for Industrial Value Development, Urgent Need for Talent Team Support

The application scenarios of the metaverse currently cover office meetings, gaming eSports, and cultural and artistic films. Although major companies have provided vivid and specific scenario displays, the frenzied speculation of capital and the massive influx of speculative funds raise the question of whether they have exceeded the various supplies needed by existing user demands and social economic development. There are two major issues here.

Firstly, compared to the heat of industry research driven by market orientation, the theoretical research related to the metaverse is somewhat lagging, and the industry lacks authoritative theoretical basis. Whether excessive immersion in the virtual world may exacerbate social anxiety and other industrial risk issues remains to be judged by academia. Currently, the cost-performance ratio of virtual terminals still has a significant gap with public consumption expectations, such as the common use of Cat5 cables in home networking, which cannot support gigabit speed transmission. The current relevant application scenarios of the internet still have room for improvement, and the metaverse naturally cannot avoid foundational issues based on this.

Secondly, the high entry threshold makes it difficult for culture and technology to truly reach the public, leading to lagging practical feedback. The potential development of the industry requires universities to actively cultivate industry and technology research talents, and enterprises to innovate and create practical platforms to provide theoretical and practical basis for industrial development. With continuous favorable policies for the industry and rising market confidence, the initial competition among major companies and cities in the technology track will inevitably evolve into a competition for talent resources in the later stages. The digitalization of the industry releases huge demand, and new infrastructure empowers industrial development, while social governance needs to keep pace. The embryonic stage of the metaverse still has many uncertainties, and both the industry and the market need to rely on theoretical value exploration and practical experience to return to rationality, supported by the establishment and construction of talent teams in the metaverse field for research and application.

II. Breaking the Deadlock in Metaverse Governance

(1) Taking the Construction of Metaverse Application Scenarios as a Starting Point, Deeply Grasping Development Laws

Since the concept of the metaverse emerged, cities have quietly begun their struggles and competitions in the metaverse. Relevant statistics show that Beijing ranked first in the number of "metaverse" trademark registrations this year, followed by Guangzhou, Shenzhen, and Shanghai. However, there are differences in the development paths of different cities, and the different strategies for choosing application scenarios will widen the development gap of the metaverse among cities. For example, the current construction of the Hainan Free Trade Zone, due to its weak industrial foundation, may see the metaverse become a breakthrough for innovative development in tourism and trade. Integrating the idea of "seeking common ground while reserving differences" into the construction of the metaverse emphasizes that local governments should return to the essence of urban development when laying out the metaverse, clarify urban positioning and industrial development stages, and incorporate local development characteristics when creating metaverse application scenarios.

(2) Building a Strong Development Foundation with Metaverse Governance as the Key

The metaverse world also requires standardized social rules, economic order, currency systems, and cultural systems, similar to those in real society. The public and social nature of the metaverse makes the participation of neutral third parties for tracking and supervision particularly important. From the perspective of the universe itself, one of the core concepts is "decentralization," which can currently be achieved using technologies such as blockchain. However, due to the potential issues of knowledge rights confirmation and industry monopolization mentioned earlier, the supervision and guarantee of neutral third parties are still needed. Industrial governance can also learn from urban governance. Enhancing the governance capability of the metaverse is key to practicing refined governance.

(3) Ensuring Talent Development in the Metaverse to Stimulate Innovative Development Vitality

Although the technological foundation of the metaverse is like a collective, technological development and governance need to be targeted. Therefore, it is necessary to focus on the innovation of each specific technology and the practical integration of technological development. Technological solutions require significant capital investment, but due to the uncertainty of technological paths, the uncertainty of investment returns leads to considerable risks, necessitating collaborative cooperation among government, industry, and research. Talents in artificial intelligence, 5G communication, cloud computing, and other new infrastructure will still be in high demand during the metaverse era. It is essential to stimulate talent to actively achieve deep integration of industry, academia, and research, providing new experimental space for enterprises to expand their markets, incubating platforms for the application of innovative results, and offering platforms for showcasing professional talents.

III. Chinese Strategies for Metaverse Governance

(1) Avoid the Old Path of "Construction" First and "Governance" Later. Firmly Establish the Awareness of Planning First and Conduct In-Depth Application Scenario Innovation Experiments.

With the vigorous development of the metaverse, the requirements for digitalization, intelligence, and data governance have increased. Simply extending data management and construction cannot support the existing more complex intelligent scene ecology. If we do not adopt a dual approach of "construction" and "governance," lacking standardized construction and quality control, it will be more challenging and costly to govern after a series of construction issues and data pollution arise. Therefore, strict planning should be prioritized, strengthening practice to achieve integrity, effectiveness, consistency, standardization, openness, and sharing in metaverse construction and governance.

(2) Let China's Unique Metaverse New Infrastructure and New Models Experiment and Take Root in Leading Domestic Cities, Bearing Fruit.

Wu Tong, deputy director of the Blockchain Special Committee of the China E-commerce Industry Park Development Alliance, has stated that internet giants are important contributors to the metaverse ecosystem, possessing significant advantages in traffic, data, scenarios, and underlying technologies.

However, the metaverse based on the "big internet route" may be overly centralized and unable to solve data governance and interoperability issues. In the future, constructing the metaverse based on blockchain routes to achieve decentralized systems, with data as the primary production factor and core digital assets, will gradually form widespread consensus globally, making it more promising in the long run. Building application scenarios that combine local characteristics and Chinese wisdom.

(3) Acknowledge the Shortcomings of the Integration of Digital Economy and Real Economy, Promoting the Deep Integration of the Metaverse and Consumption Upgrading.

On July 19, 2021, with the approval of the State Council, Shanghai, Beijing, Guangzhou, Tianjin, and Chongqing took the lead in cultivating and constructing international consumption center cities.

Many cities in China are accelerating the construction of international consumption center cities, which is one of the core functions of modern international metropolises, with a strong guiding and driving effect on consumption, capable of promoting a number of medium and large cities to enhance their internationalization level, accelerate consumption transformation and upgrading, and comprehensively promote the digital transformation of commerce through government, enterprise, and university cooperation to create a "metaverse consumption" experimental platform. Among them, Shanghai, as the first city to enter an aging society, has enormous potential in the "silver economy," and innovative elderly care can also intersect and integrate with metaverse construction, serving as the first foothold for domestic metaverse governance.

(4) Break Down Technical Barriers of Digital Governance Tools in the Metaverse, Accelerate the Application of Metaverse Terminal Technologies in Various Application Scenarios, and Remain Vigilant Against Technological Malfeasance.

The core of the development and governance of the metaverse lies in technological breakthroughs. New economic cities like Shanghai possess fertile ground for the development of electronic information and digital industries. Digital technologies such as blockchain are currently one of the key tasks for technological innovation in Shanghai. Promoting the innovative iteration of metaverse-related technologies and advocating for technology to be used for good can utilize the fertile ground of China's new economic cities to create favorable conditions for optimizing the metaverse ecosystem.

(5) Implement Responsible Entities, Issue Overall Standards for the Metaverse, Platform Standards, Data Standards, and Technical Standards to Provide Legal Guarantees for Governance.

Improve the responsibilities of competent departments and regulatory agencies, clarifying the primary responsibilities and obligations of platform enterprises. Compliance issues related to the main behaviors in the metaverse, the data transaction process, and the governance, openness, and sharing of public data all require secure and trustworthy legal guarantees. The government should play the role of the "visible hand," guiding industry self-discipline and collaboratively enhancing the security guarantee capability of metaverse governance, strengthening standardized support.

(6) Apply a Basic Platform for Metaverse Data Management. Build a Multi-Level Data Monitoring Platform to Break Down Information Silos Between Departments and Regions.

Promote data integration to make risk prediction more accurate and industrial governance more efficient. The construction of the "two networks" for urban operation in China reflects the refined governance concept of digital governance and showcases humanistic care. Metaverse governance should also leverage the advantages of integrated platform governance to form a supervisory synergy and cohesive mechanism through division of labor and cooperation.

(7) Guide Rational Social Discussions and Strengthen the Theoretical Research Foundation for Industrial Governance.

Encourage universities to play a leading role in cultivating basic research talents, promoting the formation of a research atmosphere on the application of information technology in the metaverse, providing more authoritative basis for future technological applications.

(8) Enrich Practical Paths for Talent Cultivation, Build School-Enterprise "Pilot" Platforms for the Metaverse, and Promote the Circulation of Industry Resources.

Strengthen the joint cultivation of existing technical talents by universities and enterprises. Foster new industry talents such as virtual reality engineering technicians to meet industry needs and solidify the practical foundation for industry development.

(9) Build a Broad Stage for Innovation Practice, Achievement Display, and Skill Exchange Activities in the Metaverse Among Universities and Cities, Optimizing the Talent Recognition and Reward System.

Stimulate research motivation in universities, innovation vitality in enterprises, and the "craftsman spirit" of practitioners deeply engaged in the industry, effectively empowering the industry and benefiting related individuals. Promote the transformation of educational achievements and cultivate a talent high ground for the metaverse through the integration of industry, academia, and research.

(10) Promote Co-Building, Co-Governance, and Sharing, Jointly Release Authoritative White Papers Based on Data to Contribute Wisdom and Suggestions for the Development of the Metaverse in China.

As a demonstration city with various industries in China, there should be a sense of leadership, taking the lead in industry communication and city exchanges. Actively leverage the advantages of educational resources and enterprise resources, integrating collaborative thinking throughout the entire process, chain, and field of metaverse governance system and mechanism construction.

The current metaverse, as a global technological hotspot, continues to grow amidst controversy. China's leading cities possess unique cultural and resource soils; if cities can engage in certain exchanges and discussions on new concepts and new construction issues, they can gather Chinese wisdom and accelerate industrial development. If China can leverage its strengths and make good use of the metaverse as a magnifying glass for digital industrial risks, it may seize the infinite opportunities of future digitalization. Timely layout of the metaverse is not about waiting blindly, but about making all necessary preparations.