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Amid AI hype, tech companies are taking a step back from the metaverse


Artificial intelligence is all the rage right now - and the metaverse not so much. Companies are scaling back metaverse projects. And last week, Disney and Microsoft said they were shuttering some of their efforts. Even Meta, the company formerly known as Facebook, seems to be dialing back, too. NPR's Dara Kerr has looked into why and joins us now. Welcome to the program.


RASCOE: So let's start with Meta because it changed its name to signal it was going to be all about the metaverse. So is that now looking like it's a bad bet?

KERR: Yeah, so it was only in late 2021 when Meta CEO Mark Zuckerberg announced his vision of the metaverse. His plans included not only renaming Facebook as Meta but also laying out this idea of this alternate world where he believed humans would interact in the future with cartoon-like avatars. Basically, it's a series of immersive online worlds where you can shoot hoops with your friends or buy real estate or go to an art gallery. There was skepticism at the time. The idea just hasn't really picked up. I spoke to Mike Proulx, a Forrester analyst, and I really like how he describes it.

MIKE PROULX: We saw 2022 as the year of metaverse hype. And in 2023, we're experiencing, effectively, a metaverse hangover.

KERR: Proulx said his data shows that people aren't yet really excited about the concept of the metaverse and instead are still craving real-life physical connection.

RASCOE: Yeah. It seems like, you know, the whole thing with the pandemic - people still want to get out and touch each other. So does it look like Meta's really going to ditch its plans?

KERR: Yeah, so Meta has very slightly dialed back a bit of its metaverse rhetoric. And in recent layoffs, some of the employees who were let go were from the metaverse division. But in its last earnings call - this was in February - Mark Zuckerberg made it clear he still had big ambitions around the metaverse. And we're seeing that plan in action. For example, just this week, Meta had an ad on Hulu about the metaverse. But what's interesting is rather than laying out this futuristic world where we can all hang out, the ad talks about how the metaverse can help us in our real world.


UNIDENTIFIED PERSON: And while the woolly mammoth is still extinct, that doesn't mean students can't take field trips to visit them. The metaverse may be virtual, but the impact will be real.

RASCOE: So Meta is also, at this point, getting into the newest tech innovation that's getting a lot of hype right now, and that's AI. But does getting into AI get in the way of its vision for the metaverse?

UNIDENTIFIED PERSON: No. Zuckerberg actually said it dovetails with his Metaverse plans. He said Meta is planning to use AI to build out the metaverse. It'll do that with this supercomputer that the company is developing. Zuckerberg says the computer will use trillions of examples from the real world to create this virtual metaverse. But one problem with the metaverse is people need to buy hardware. They need those virtual reality headsets. And that could be a big roadblock to adoption. I don't have one of those headsets. They cost a few hundred dollars. But hearing from people who do, it seems that the metaverse is now kind of empty and a dead zone. This is from The Wall Street Journal. It's something called the Hot Girl Summer Rooftop Pool. And apparently, it's now empty. And the Macy's virtual Thanksgiving Day Parade sounded kind of sad. It was even called tragic. Meanwhile...

RASCOE: Oh my goodness. This sounds really, really depressing (laughter).

KERR: I know. I know. Just all gray - yeah. Meanwhile, all the headlines have been eaten up by AI and ChatGPT and the things that they can do, like write poems in the style of Walt Whitman and ace the SATs and ponder the meaning of life. Proulx, the Forrester analyst, said the metaverse is a long-term play, so it's going to take a while, whereas AI - we're immediately getting all these short-term, real-world, practical uses. So essentially, it seems that us humans aren't yet ready to go live in another reality. And instead, we want to stay in this world, where AI is changing our actual lives.

RASCOE: Well, we'll see what happens with that. That's NPR's Dara Kerr. Thank you so much for joining us.

KERR: Yeah. Thank you. Transcript provided by NPR, Copyright NPR.

Ayesha Rascoe is a White House correspondent for NPR. She is currently covering her third presidential administration. Rascoe's White House coverage has included a number of high profile foreign trips, including President Trump's 2019 summit with North Korean leader Kim Jong Un in Hanoi, Vietnam, and President Obama's final NATO summit in Warsaw, Poland in 2016. As a part of the White House team, she's also a regular on the NPR Politics Podcast.
Dara Kerr
Dara Kerr is a tech reporter for NPR. She examines the choices tech companies make and the influence they wield over our lives and society.
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