Analysis: a metaverse with Chinese characteristics is a clean and compliant metaverse

BEIJING, Jan 26 (Reuters) – How will the Chinese metaverse evolve? Look at the letter “c”. Clean, censored, compliant, and encryption-free is the expert view.

The descriptions point to the long shadow cast by Chinese authorities who have previously hinted that they will have a heavy regulatory hand over how it develops – a shadow that some defenders of the Chinese metaverse fear will stunt its growth.

From Microsoft’s (MSFT.O) $69 billion plan to buy Activision (ATVI.O) to Facebook’s renaming of Meta Platforms Inc (FB.O), much of the tech world is leaping to build this which many hope will be the next generation of the Internet: immersive virtual worlds that replicate many aspects of real life.

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Experts say China’s metaverse efforts lag behind countries such as the United States and South Korea, citing less investment from domestic tech giants. Industry-leading products such as Meta’s Oculus virtual reality (VR) headsets are banned in China, and the slow development of attractive domestically-made VR headsets means China has yet to see a platform VR or a metaverse gain popularity.

But interest started to mount. Over the past year, more than 1,000 companies, including heavyweights such as Alibaba Group Holding (9988.HK) and Tencent Holdings Ltd (0700.HK), have applied for around 10,000 metaverse-related trademarks, according to the Tianyancha business tracking company.

Baidu (9888.HK), broke new ground in December with the launch of “XiRang”, described as China’s first metaverse platform, although it has been widely criticized for not delivering a high-level immersive experience. Baidu says its app is a work in progress.

Start-ups are also seeing more investment. In the three months to the end of November, more than 10 billion yuan ($1.6 billion) was invested in metaverse-related businesses, far more than the 2.1 billion yuan of investments than the reality. Chinese virtual and related industries attracted for the whole of 2020, according to Sino Global, a China-focused crypto venture capital firm.

“Investors and venture capitalists who hadn’t spoken to me in years suddenly texted me – asking if I wanted to go eat and talk. They all want to talk about metaverse,” Pan Bohang said. , based in Beijing, whose startup plans to launch. a VR social gaming platform.

A REGULATED DOMAIN

Experts say the infancy of China’s metaverse leaves Beijing free to co-opt its development, especially since the current metaverse buzz has coincided with an unprecedented regulatory crackdown on technology and other industries.

“Traditional Chinese internet companies developed first and then were regulated. Industries like the metaverse will be regulated as they are built,” said Du Zhengping, head of the industry committee of the metaverse. ‘State-backed China Mobile Communications Association, which was formed in October.

But China’s authoritarian approach is at odds with how the metaverse is growing in other parts of the world where users are drawn to new ways of expressing themselves, and that will stifle growth, says Eloi Gerard, a virtual reality entrepreneur who worked in China for 10 years. before recently moving to Los Angeles.

“The metaverse is already a place where you have religious groups, LGBT movements, coming together all over the world and using the virtual world to share ideas, that’s what people are doing on VRChat right now. . that’s crazy progressive and liberal,” he said. said, referring to a popular San Francisco-based VR platform.

“The idea of ​​the metaverse is that you move between virtual worlds…it immediately goes against the idea of ​​one party, one voice, one vision.”

Experts also note that gambling – seen as the gateway technology to the metaverse – is tightly regulated in China.

Games must be approved by the government and although fighting games are allowed, strong violent content such as the depiction of blood and dead bodies is prohibited, as is anything that could be construed as obscene. As part of their recent regulatory crackdown, authorities have also sought to curb underage gambling as well as the excessive adulation of celebrities and money.

Gaming giants such as Tencent and NetEase Inc (9999.HK) were quick to state publicly that they would abide by all rules when developing metaverse offerings.

THE REACH OF GOVERNMENT

The government’s long arm should also be felt in other ways. An influential app, Xuexi Qiangguo, which is required reading for many Communist Party cadres, published an article in November that said the metaverse should be used to improve the quality of compulsory ideological education lessons for schoolchildren.

At a January meeting of Beijing’s municipal political advisory body that discussed metaverse development, proposals included a registration system for metaverse communities aimed at preventing them from influencing wider public opinion and cause economic or financial shocks, according to a state media report.

And while cryptocurrencies have become a defining feature of many western metaverse worlds, they are notably absent from the Chinese metaverse as they have been banned by Beijing. Instead, the multiple forms of Chinese digital payment already in use, such as the central government’s digital yuan, will likely take their place.

Despite the likely many restrictions, some entrepreneurs say the Chinese metaverse will simply thrive because of Chinese consumers’ willingness to try new forms of online entertainment.

Nikk Mitchell, whose company is in talks about metaverse projects based on Chinese stories that will play up elements like Chinese calligraphy and traditional costumes, is one such believer, noting advancements in eyewear and the national VR content.

When Chinese consumers are ready to give this metaverse-related technology another chance, “then there will be mass adoption at a level that I don’t think will happen in the West as quickly,” he said. .

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Reporting by Eduardo Baptista; Additional reporting by Yingzhi Yang; Editing by Brenda Goh and Edwina Gibbs

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