Apr 14, 2022 - Technology

Meta's metaverse faces high "tax" rate

Illustration: Annelise Capossela/Axios

Meta came under fire Wednesday for the size of the cut it plans to take from creators selling digital goods inside its metaverse.

Driving the news: The company formerly known as Facebook announced Monday it was piloting a program for its Horizon Worlds that will "enable creators to experiment with different ways to monetize what they're building."

Details: There will be one "tax" right off the top that goes to the owner of the device platform you're using. That could mean 30% to Apple or Google (if you're using a phone) — or to Meta, if you're using one of its headsets.

  • Then Meta will take an additional 25% of the remaining money from everyone, bringing its total cut to as much as 47.5%.

Given how much grief Apple and Google have already gotten for the standard 30% cut they take in app store fees — including complaints from Facebook/Meta itself — observers were quick to cry foul.

  • "The rent in the metaverse is too damn high," Platformer's Casey Newton tweeted.

Between the lines: Joining the pile-on were proponents of NFTs and other Web3-style technologies that aim to "cut out the middleman."

  • Many Web3 advocates see the metaverse as an environment where their tech can take root, and part of Web3's appeal is a promise to limit or eliminate gatekeepers' levies.

Our thought bubble: Meta's in a bind. It needs to show that its version of the metaverse will welcome and support third-party builders. But it's also struggling with a revenue squeeze, thanks to Apple's recent privacy restrictions in the iPhone advertising world.

  • Best case for Meta: It deliberately overreached with its opening bid so an eventual compromise will look more reasonable.

Meanwhile: Physical goods have a whole different virtual "tax" structure.

  • On Etsy, the handmade-goods platform, some sellers are on strike this week to protest the handmade-goods platform's increase of transaction fees from 5% to 6.5%.
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