$8T Metaverse Market Potential May Hinge on Regulation in China

The metaverse will replace the mobile internet with a more immersive experience.

That’s the prediction of Morgan Stanley on the virtual reality world where users can interact, play games and experience things as they would in the real world, as it becomes part of Big Tech firms.

In a note to investors last month, the New York-based global investment bank and financial services company said China’s market for the metaverse could dominate the sector at $8 trillion. The companies that could drive the metaverse include TikTok, ByteDance, Alibaba and Tencent.

Much will depend on how the sector is regulated. Meta Platforms, the parent company of Facebook, and Microsoft Corp. are full steam ahead on the metaverse concept. But the Chinese government is being more cautious amid tighter regulations.

Read more: Metaverse to Face Strict Online Rules in UK

In the United Kingdom, the metaverse could face strict regulations, possibly making Meta and the other tech giants behind virtual worlds subject to billions in fines. The Online Safety Bill, which the U.K. intends to publish in the first quarter of 2022, imposes an online duty of care on platforms, requiring the removal of illegal content.

Morgan Stanley could have upped that total market potential estimate, but it excluded non-fungible token (NFTs), the non-interchangeable unit of data stored on a blockchain that can be sold and traded, given the uncertainty of the regulatory environment.

“We expect the metaverse TAM (total addressable market) to be expansive and go beyond the current online consumption market, which is mainly dominated by e-commerce and online entertainment spending,” the company said.

In a speech earlier this month, Vishal Shah, vice president of Meta’s Metaverse unit, outlined the many opportunities that await brands in the metaverse, with immersive shopping just being one of many.

See also: Meta Exec Talks Up Profit Perks of Metaverse

Without the physical limitations that exist today that put pressure on businesses’ bottom line such as real estate, supply chain and geographical reach, the metaverse will open more opportunities to make money, Shah said at a recent conference.