Shalini Nagarajan

Meta and Alphabet must implement stricter crypto advertising policies on its social media platforms within the European Union (EU), according to a complaint lodged by consumer group BEUC with the European Commission and consumer authorities.



On Thursday, BEUC said it called upon the Consumer Protection Cooperation Network — a group of European Union enforcement authorities — for more robust crypto rules on Instagram, YouTube, TikTok and Twitter.



BEUC is urging measures to be implemented that would prevent influencers from misleading consumers about crypto, among other actions. BEUC, otherwise known as the European Consumer Organization, is a collective of 46 independent bodies hailing from 32 countries.



In a <a href="https://www.beuc.eu/sites/default/files/publications/BEUC-X-2023-073_Hype_or_harm_The_great_social_media_crypto_con.pdf" target="_blank" rel="noreferrer noopener">report</a> titled &#8220;The Great Social Media Crypto Con,&#8221; BEUC stated that crypto investment products pose significant risks to consumers because of their high volatility and speculative nature.



It referred to instances in 2018 when Instagram (Meta) and YouTube (Google) banned cryptocurrency promotion but later allowed it under a weak approval process. This approach fails to protect consumers from misleading claims about crypto benefits and downplays the risks, BEUC said.



The report mentioned an incident in April 2023 when Twitter CEO Elon Musk <a href="https://www.theguardian.com/technology/2023/apr/04/twitter-changes-logo-to-dogecoin-cryptocurrency-image-in-apparent-late-april-fools-day-gag" target="_blank" rel="noreferrer noopener">changed</a> the microblogging site&#8217;s logo to <a href="https://blockworks.co/price/doge" target="_blank" rel="noreferrer noopener">dogecoin</a>, resulting in a 30% surge in value within a few hours.



“This again contributes to creating a positive perception of crypto among consumers and prevents them from clearly understanding the risks associated with them,” the group said.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1584" height="910" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=1024&amp;h=1024" alt="" class="wp-image-58304" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=1584 1584w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=454 454w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=381 381w, https://blockworks-co.imgix.net/wp-content/uploads/2023/06/Screen-Shot-2023-06-08-at-14.30.08.png?w=80 80w" sizes="auto, (max-width: 1584px) 100vw, 1584px" /><figcaption class="wp-element-caption">The front page of BEUC&#8217;s report, co-funded by the European Union</figcaption></figure>



BEUC cited discovery of crypto advertisements on TikTok despite the platform’s ban on crypto-related content. The group further noted that influencer endorsement is a major concern as it often involves misleading advice that can harm consumers.



Kim Kardashian and boxer Floyd Mayweather are currently facing a class action lawsuit, which a US judge <a href="https://www.reuters.com/legal/litigation/kim-kardashian-floyd-mayweather-cant-evade-emax-crypto-investors-claims-judge-2023-06-07/" target="_blank" rel="noreferrer noopener">refused</a> to toss out, for allegedly promoting the now-defunct crypto token EthereumMax (EMAX) inappropriately on social media.



<h2 class="wp-block-heading">EU already passed sweeping crypto regulation</h2>



The Market in Crypto Assets (MiCA) regulation is <a href="https://blockworks.co/news/european-parliament-mica-doesnt-touch" target="_blank" rel="noreferrer noopener">pegged to regulate crypto assets</a> in the EU. But the law is not yet implemented and is expected to come into force only by early 2025.



“Crypto will be regulated soon with the new Market in Crypto Assets Regulation but this legislation does not apply to the social media companies benefiting from the advertising of crypto at the expense of consumers,” BEUC Director General Monique Goyen said in a statement.&nbsp;



“This is why we are turning to the authorities in charge of protecting consumers to ensure Instagram, YouTube, TikTok and Twitter fulfil their duty to protect consumers against crypto scams and false promises.”



Outside the EU, the UK&#8217;s leading financial regulator is also working on finalizing rules for crypto ads.



The Financial Conduct Authority (FCA) said this week it has <a href="https://blockworks.co/news/uk-new-crypto-marketing-rules" target="_blank" rel="noreferrer noopener">introduced new rules</a> that mandate clear risk warnings, prevent misleading advertisements and provide investors with the option to withdraw from investments within a specific timeframe.



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Meta, Alphabet Must Do More To Protect EU From Dodgy Crypto: BEUC

Google Cloud has trumpeted a series of collaborations with popular blockchain networks Ethereum and Solana in recent weeks, accelerating the tech giant’s support of Web3.



Late last month, Google Cloud announced a node-hosting service for Web3 developers called the <a href="https://cloud.google.com/blog/products/infrastructure-modernization/introducing-blockchain-node-engine" target="_blank" rel="noreferrer noopener">Blockchain Node Engine</a>. The tool is designed to help build and deploy on blockchain-based applications and platforms.



Ethereum is the first blockchain supported by the engine. Rival network Solana is to <a href="https://twitter.com/googlecloud/status/1588927896911069184" target="_blank" rel="noreferrer noopener">follow soon</a>, per a tweet over the weekend. The post sparked a near-20% rally for the network&#8217;s native token, although it has since given up most of those gains.



“Web3 companies who require dedicated nodes can relay transactions, deploy smart contracts, and read or write blockchain data with the reliability, performance, and security they expect from Google Cloud compute and network infrastructure,” Google Cloud executives Amit Zavery and James Tromans said in a statement.



During this weekend’s <a href="https://www.youtube.com/watch?v=EaQf9DtjNHk" target="_blank" rel="noreferrer noopener">Breakpoint 2022 conference</a> in Lisbon, an event held by the Solana Foundation, Google’s Web3 lead Nalin Mittal explained that Google has really deepened its investment in the Web3 space throughout 2022. This has culminated in the formation of a dedicated Web3 team at Google Cloud.



“This is like a natural evolution for us because we saw a lot of our financial services crypto-native gaming customers do more and more blockchain-related workloads on [Google Cloud] and it was clear that a dedicated product suite for Web3 would serve them better,” Mittal said.



The Big G has indeed been busy backing crypto-native companies. Google parent Alphabet participated in <a href="https://cms.blockworks.co/alphabet-poured-1-5b-into-blockchain-companies-over-10-months-study-finds/" target="_blank" rel="noreferrer noopener">four funding rounds</a> in blockchain firms between September 2021 and June 2022, including crypto conglomerate Digital Currency Group and Dapper Labs, the Web3 startup behind NBA Top Shot.



<h3 class="wp-block-heading">Google Cloud runs validators on Solana, alongside other blockchains</h3>



This weekend, Google Cloud tweeted to confirm that it’s participating in Solana consensus by running a <a href="https://twitter.com/googlecloud/status/1588927896911069184" target="_blank" rel="noreferrer noopener">validator</a>, a special kind of server node that processes transactions by adding blocks to the network’s chain.



But it’s not the first time Google has opted into a blockchain network. It began operating its first validator for proof-of-stake network Hedera Hashgraph in 2020. According to Mittal, the cloud unit now operates validators for a “lot of the top [layer-1] protocols.”



“We recognize how active and passionate [the Solana] community is, and we want to make it a top priority for Google Cloud,” Mittal said. Google Cloud will soon accept crypto payments for certain customers via a <a href="https://cms.blockworks.co/coinbase-stock-pops-on-google-deal-to-accept-crypto-for-cloud/" target="_blank" rel="noreferrer noopener">partnership with Coinbase</a> announced last month.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="549" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg" alt="" class="wp-image-36983" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/11/googleweb3timeline-1024x549.jpg?w=1600 1600w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Image Source: <a href="https://www.youtube.com/watch?v=EaQf9DtjNHk">Solana/YouTube</a></figcaption></figure>



Google Cloud’s move into Web3 infrastructure mirrors Amazon’s offering, Managed Blockchain, which has <a href="https://www.coindesk.com/tech/2021/03/02/amazon-managed-blockchain-at-last-supports-ethereum-ending-a-two-year-tease/" target="_blank" rel="noreferrer noopener">supported</a> Ethereum nodes-as-a-service since last year.



While Solana is known for its cheap and quick transactions, the network has suffered a bumpy road with <a href="https://status.solana.com/uptime?page=1" target="_blank" rel="noreferrer noopener">five major outages</a> this year alone. Even so, the network remains among the most functional protocols in the Web3 ecosystem today, according to James Wo, CEO of investment firm DFG.&nbsp;



“Solana has a very robust cluster of DApps, NFTs, and smart contracts running on it, which accounts for what Google Cloud needs to build a robust portfolio of innovative and futuristic Web3 applications,” Wo told Blockworks.&nbsp;



“The embrace of Solana by Google Cloud is just another avenue to deepen its footprint, seeing as it has inked related deals with other Web3 projects, including NEAR, Hedera, and Aptos, among others.”



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Google Signals Major Crypto Push With Ethereum, Solana Support

Ornella Hernandez

<div id="highlights-block_63594d397f388" class="highlights">
 <ul>
 <li>The case fuels debate over whether US tech companies should turn over data held on systems outside the country</li>
 <li>A compliance monitor will ensure Google fulfills its legal obligations</li>
 </ul>
 
</div>



The US Department of Justice and Alphabet Inc.’s Google <a href="https://www.justice.gov/opa/pr/google-enters-stipulated-agreement-improve-legal-process-compliance-program" target="_blank" rel="noreferrer noopener">filed</a> a joint stipulated agreement on Tuesday to close a dispute ongoing since 2016 in California federal court.



US District Judge Richard Seeborg signed the resolution in which Google admitted to a loss of data in response to a 2016 search warrant. The government agency sought data related to a criminal probe into the cryptocurrency exchange BTC-e.



Under the agreement, Google must reform and upgrade the compliance program that handles responses to legal demands such as subpoenas and search warrants.



Google has reportedly already spent over $90 million on additional resources, systems and staffing to improve its legal process compliance program, as stated in the press release.



The tech giant will also be required to bring on an independent compliance professional, serving as an outside third party, to assess Google’s adherence to the agreement and verify the accuracy of its update reports. These reports must be submitted to the government, the Google Compliance Steering Committee and the Audit and Compliance Committee of the Alphabet Board of Directors.



“The warrant underlying this agreement was sought in connection with a significant criminal investigation,” said US Attorney Stephanie Hinds for the Northern District of California, referring to a now defunct BTC-e.



The exchange has been shut down since July 2017, after the arrest of key staff members who were charged with being involved in money laundering schemes. <a href="https://cms.blockworks.co/tag/alexander-Vinnik/" target="_blank" rel="noreferrer noopener">Alexander Vinnik</a>, the alleged Russian operator of BTC-e, was sentenced to a five-year prison term by a Parisian court in June 2021. 



“This agreement will help to ensure that, moving forward, Google will maintain the technical capability and resources necessary to comply with lawful warrants and orders, such as the one at issue in this case, that are critical to federal criminal investigations,” Hinds added.



<h3 class="wp-block-heading">A Big Tech dilemma</h3>



The warrant was issued under the Stored Communication Act (SCA) statute that requires tech companies such as Google to disclose customer communications if there is probable cause.



The DOJ claimed that Google failed to turn over data stored outside the United States.



However, when the US Court of Appeals for the Second Circuit ruled in 2017 that foreign-held data couldn’t be reached under the SCA, Google only provided information stored in the United States, according to the DOJ.&nbsp;



The legal battle over the warrant between Google and the government carried into 2018, when Congress clarified the SCA did in fact require US providers to report any data stored abroad.



The Department of Justice said that “in the intervening time, data responsive to the warrant was lost.”



The press release noted that this agreement does not provide the US government with access to Google user data.



Even as Google’s compliance costs are on the rise, its ad revenue has gone the other way, <a href="https://cms.blockworks.co/google-summer-ad-business-falls-after-crypto-winter/" target="_blank" rel="noreferrer noopener">dropping 2% to $7.1 billion in the last quarter</a> as advertisers slashed budgets.



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Google Agrees To Boost Compliance Program in DOJ Legal Battle

<div id="highlights-block_62ff3cfc346c6" class="highlights">
 <ul>
 <li>BlackRock and Morgan Stanley have also invested in funding rounds which raised over $1 billion in total</li>
 <li>Big Tech critics are wary of the power they hold in the digital worlds</li>
 </ul>
 
</div>



US tech giant Alphabet is the largest among publicly-traded companies that invested in the space between September 2021 and June 2022.



Crypto intelligence platform Blockdata used the size of funding rounds as a proxy for investor involvement. The Google parent invested in funding rounds that totaled $1.5 billion across four blockchain companies — <a href="https://cms.blockworks.co/tag/fireblocks/" target="_blank" rel="noreferrer noopener">Fireblocks</a>, <a href="https://cms.blockworks.co/tag/dapper-labs/" target="_blank" rel="noreferrer noopener">Dapper Labs</a>, <a href="https://voltage.cloud/" target="_blank" rel="noreferrer noopener">Voltage</a> and <a href="https://cms.blockworks.co/tag/digital-currency-group/" target="_blank" rel="noreferrer noopener">Digital Currency Group</a> — in the last 10 months, Blockdata&#8217;s <a href="https://www.blockdata.tech/blog/general/top-100-public-companies-investing-in-blockchain-and-crypto-companies" target="_blank" rel="noreferrer noopener">study</a> found.



&#8220;In most cases, we cannot determine how much money these corporations have invested, as they participate in funding rounds with multiple or many other investors,&#8221; the platform noted.


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><a href="https://cms.blockworks.co/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies.jpeg"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg" alt="" class="wp-image-28409" width="372" height="512" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=743 743w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=218 218w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=1114 1114w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=1485 1485w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=186 186w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=189 189w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=159 159w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=58 58w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=36 36w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/2022-08-19-top-100-public-companies-investing-in-blockchain-and-crypto-companies-743x1024.jpeg?w=1721 1721w" sizes="auto, (max-width: 372px) 100vw, 372px" /></a><figcaption>Click to expand image; Source: Blockdata</figcaption></figure></div>


Alphabet, which held cash reserves of nearly <a href="https://www.macrotrends.net/stocks/charts/GOOGL/alphabet/cash-on-hand" target="_blank" rel="noreferrer noopener">$125 billion</a> by the end of June, is one of the most prolific investors in the startup ecosystem through its investing vehicles. Crunchbase data shows <a href="https://www.crunchbase.com/organization/google-ventures/recent_investments" target="_blank" rel="noreferrer noopener">Google Ventures</a> has made 990 investments, <a href="https://www.crunchbase.com/organization/google-capital/recent_investments" target="_blank" rel="noreferrer noopener">CapitalG</a> counts 106 and <a href="https://www.crunchbase.com/organization/gradient-ventures/recent_investments" target="_blank" rel="noreferrer noopener">Gradient Ventures</a> has 158.



Other top companies participating in the funding of blockchain companies over the same time frame are BlackRock and Morgan Stanley, according to the study. Top Wall Street banks Goldman Sachs, BNY Mellon, Citi and Wells Fargo also feature on the list.&nbsp;



Overall, 40 companies invested about $6 billion in blockchain-related investments in that time period. Investments covered in the study would’ve partly been carried out during the cryptocurrency market downturn, triggered by <a href="https://cms.blockworks.co/tag/terrausd/" target="_blank" rel="noreferrer noopener">TerraUSD’s</a> crash in May.



Alphabet boss Sundar Pichai <a href="https://cms.blockworks.co/alphabet-ceo-says-company-definitely-looking-at-blockchain/">confirmed</a> earlier this year that the company was exploring how to integrate blockchain technology into its services like YouTube and Google Maps.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Anytime there’s innovation, I find it exciting, and I think it is something we want to support the best we can,” Pichai said during an earnings call.</blockquote>



“The web has always evolved, and it’s going to continue to evolve, and as Google, we have benefited tremendously from open-source technologies, so we do plan to contribute there,” he said.



<h3 class="wp-block-heading">Worries over Big Tech influence</h3>



Critics of Big Tech firms have previously lashed out over them wielding too much power. Web3 companies, built on the premise that future companies will live on the blockchain, operate with the same idea that supports cryptocurrencies. They won’t be controlled by single entities like Facebook or Google.



Yat Sui, board chairman at Animoca Brands, recently described the empires of Meta and Microsoft as “digital dictatorships” in a <a href="https://www.bloomberg.com/news/articles/2022-08-17/opensea-investor-animoca-bets-big-during-crypto-winter">Bloomberg</a> interview. Animoca, which itself is a big blockchain investor, says its goal is to give people ownership of their digital property and dissolve the influence of Big Tech.



Correction, Aug. 19, 2022, at 9:09 am ET: The size of the individual investments from Alphabet-affiliated companies and others studied is not known. Blockdata used the total amounts companies fundraised as an approximation of the relative size of investments.



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Alphabet, Samsung among 40 Big Companies Investing in Blockchain, Study Finds

Michael Bodley

<div id="highlights-block_61f99ef2ea65f" class="highlights">
 <ul>
 <li>The company’s cloud services department is looking at how to integrate blockchain technology</li>
 <li>YouTube and Google Maps could employ Web3 elements, Alphabet’s CEO said</li>
 </ul>
 
</div>



Alphabet, the parent company of Google and YouTube, is looking at how to build blockchain technologies into its blockbuster services, executives said on a Tuesday earnings call.



Responding to an analyst question on how the company views Web3, CEO Sundar Pichai said there are several “areas of interest” for Alphabet: augmented reality, for one, as well as looking at how blockchain technology can be used to power computing and services layers for the likes of YouTube and Google Maps.



The company is “definitely looking at blockchain,” Pichai said, calling it “an interesting and powerful technology with broad applications.”



Alphabet’s cloud team — an <a href="https://cms.blockworks.co/google-creates-blockchain-unit-hires-new-founding-leader/" target="_blank" rel="noreferrer noopener">emerging</a> part of its business that competes with Amazon Web Services and Microsoft — is looking at how to “support customer needs” via blockchain-based <a href="https://cms.blockworks.co/google-cloud-hiring-blockchain-specialists-in-bid-to-drive-decentralization-efforts/" target="_blank" rel="noreferrer noopener">platforms</a>, according to Pichai. That seemingly could be applied in employing blockchain tech to organize customer service requests. 



He did not provide further specifics.&nbsp;



“Anytime there’s innovation, I find it exciting, and I think it is something we want to support the best we can,” Pichai said. “The web has always evolved, and it’s going to continue to evolve, and as Google, we have benefited tremendously from open-source technologies, so we do plan to contribute there.



The company’s <a href="https://abc.xyz/investor/static/pdf/2021Q4_alphabet_earnings_release.pdf?cache=d72fc76" target="_blank" rel="noreferrer noopener">earnings</a> exceeded analyst expectations, with fourth-quarter revenue of $75.33 billion, an increase of 32% from the same period a year prior. Profits rose by one-third. 



“Technology will continue to evolve and innovate, and we want to be pro-innovation and approach it that way,” Pichai said.





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Alphabet CEO Says Company ‘Definitely’ Looking at Blockchain

Sam Reynolds

<div id="highlights-block_61cdb3616a743" class="highlights">
 <ul>
 <li>Bring on the metaverse! As the idea of a metaverse matures from something nebulous into something practical investors are hungry to get exposure</li>
 <li>But it’s not all about gaming. Including too many periphery stocks in an index would distract the ETF from its mission and make it too susceptible to macro factors</li>
 </ul>
 
</div>



What is the metaverse, and how can I invest in it?



With the dream of a “<a href="https://www.goodreads.com/book/show/9969571-ready-player-one?from_search=true&amp;from_srp=true&amp;qid=CG8AsCDRv7&amp;rank=1" target="_blank" rel="noreferrer noopener">Ready Player One</a>” virtual, interoperable world bound together by NFTs and blockchain still a long way away, the metaverse is beginning to take shape in the form of metaverse ETFs. So far, <a href="https://cms.blockworks.co/proshares-files-for-metaverse-etf/" target="_blank" rel="noreferrer noopener">two of them</a>, the Global Metaverse Index ETF which is already trading in Toronto, and the ProShares Metaverse ETF which is awaiting approval, are tracking the same Solactive Global Metaverse Index.



But here’s the problem: The Solactive Global Metaverse Index includes some companies that are irrelevant to the metaverse, or that have not expressed much interest in the metaverse at all. Some of these companies are more exposed to macro factors rather than market interest in the metaverse. Likewise, if there’s too much overlap between a metaverse ETF and a gaming ETF there would be no point in the specialized investment vehicle.



In the first part of this two-part article, we’ll take a look at what should be excluded from a metaverse-focused fund. In Part 2, the companies and projects that are essential pieces of the emerging metaverse puzzle.



<h2 class="wp-block-heading">What to exclude</h2>



<h3 class="wp-block-heading">Big tech driven by macro tailwinds, e.g. Alphabet (a.k.a. Google) </h3>



Yes, Google has an interest in the metaverse. Google’s vision for the metaverse involved an augmented reality, where data is overlaid onto the user’s vision. A few years ago Google experimented with this with <a href="https://screenrant.com/google-glass-smart-glasses-what-happened-explained/" target="_blank" rel="noreferrer noopener">Google Glass</a>, but at the time the technology was rather primitive, and the camera-on-glasses approach in public made <a href="https://www.firstpost.com/tech/news-analysis/why-google-glass-might-be-creepiest-gadget-ever-invented-2-3620937.html" target="_blank" rel="noreferrer noopener">many uncomfortable, with some calling it</a> “the <a href="https://en.wikipedia.org/wiki/Panopticon" target="_blank" rel="noreferrer noopener">panopticon</a> made real”.&nbsp;



After the initial run of Google Glass came to an end, the company re-focused and pivoted the vertical more <a href="https://blog.google/products/devices-services/glass-enterprise-edition-2/" target="_blank" rel="noreferrer noopener">toward enterprise use</a>, designed to assist workers that need to pull up data while on the job like mechanics or paramedics. After Google purchased a startup called North, which holds many AR patents, <a href="https://9to5google.com/2021/12/13/google-augmented-reality-os/" target="_blank" rel="noreferrer noopener">work continues</a> on the next generation of the project.&nbsp;



Nevertheless, Google’s augmented reality ambitions make up such a small percentage of the company’s overall revenue. <a href="https://abc.xyz/investor/static/pdf/20210203_alphabet_10K.pdf?cache=b44182d" target="_blank" rel="noreferrer noopener">Eighty percent of revenue</a> from Google’s parent company, Alphabet, comes from ads on search while another 13%, or $20 billion in revenue, is from ads on YouTube. The two of these are driven by macro tailwinds — the capital available from firms to spend on advertising — and advances in its vision of the metaverse would make up a fraction of this.



<h3 class="wp-block-heading">Game companies little metaverse interest, e.g. Nintendo</h3>



Nintendo is notorious for being hyper-protective of its IP. Its library of game franchises, such as Mario, Pokémon and Zelda, are <a href="https://www.statista.com/statistics/1247964/best-selling-video-gaming-franchises/">some of the most profitable in the world</a>. 



Investors have pleaded for Nintendo to expand this IP library past its own consoles to the fast-growing <a href="https://venturebeat.com/2021/09/23/newzoo-mobile-games-will-grow-4-4-in-2021-to-90-7b/" target="_blank" rel="noreferrer noopener">world of mobile gaming</a>, which has <a href="https://kakuchopurei.com/2021/06/25/mobile-games-revenue-is-now-bigger-than-console-pc-combined/" target="_blank" rel="noreferrer noopener">surpassed revenue</a> from consoles and PCs thanks to growth from mobile-first Asia. They were given this in piecemeal form through Super Mario Run on the iPhone and the AR game Pokémon Go (via a partnership with Niantic).



In October, Nintendo and Niantic launched <a href="https://pikminbloom.com/en/" target="_blank" rel="noreferrer noopener">Pikmin Bloom</a> for mobile devices. Pikmin Bloom is another AR game similar to Pokémon Go.



Despite the Pikmin Bloom launch, Nintendo President Shuntaro Furukawa has been quoted as saying the company was &#8220;not necessarily looking&#8221; at launching &#8220;many&#8221; more mobile games. While there is potential for profit, the company seems to prefer to focus on building the perfect experience around their consoles rather than taking a risk with third-party licensing and tarnishing the image.



Will we ever see licensed Nintendo NFTs? Definitely not; Nintendo’s lawyers have already taken a <a href="https://www.nintendolife.com/news/2021/11/nintendos-lawyers-strike-again-this-time-against-a-mario-nft-gambling-game" target="_blank" rel="noreferrer noopener">scorched earth policy</a> towards any project attempting this. Don’t count on Nintendo characters being part of an interoperable virtual world, as it&#8217;s just something the company doesn’t do. There’s not really an avenue for Nintendo to become part of the metaverse, as it&#8217;s just not interested in being meta.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="768" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg" alt="" class="wp-image-13341" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=343 343w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=348 348w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/12/shutterstock_457850722-1024x768-1.jpg?w=1200 1200w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption><meta charset="utf-8">Pokémon Go, not yet with a metaverse presence; Source: Shutterstock</figcaption></figure>



<h3 class="wp-block-heading">Take-Two</h3>



Take-Two is another gaming company that has recognizable IP, such as Grand Theft Auto as well as Red Dead Redemption, but hasn’t really expressed interest in expanding these titles past their respective walled gardens. 



While Sony began to allow <a href="https://arstechnica.com/gaming/2018/09/sonys-walled-garden-cracks-open-cross-console-play-comes-to-ps4/">cross-platform play for Fortnite</a> in 2018, something one might argue as a precursor to the interoperable metaverse, Rockstar has no interest in doing the same. It’s mega-popular Grand Theft Auto’s multiplayer mode is still <a href="https://www.gtabase.com/grand-theft-auto-v/guides/is-gta-5-crossplay-cross-platform-support-for-pc-xbox-ps5" target="_blank" rel="noreferrer noopener">locked down</a> to specific consoles, keeping Xbox, PC, and Playstation players away from each other via big virtual walls.&nbsp;



Granted, there is an <a href="https://www.gta5-mods.com/">active community of people creating mods</a> for GTA V in the form of customized cars, new skins for characters, or even all-new levels. But these are all kept in the lonely sandbox of single player mode and can’t be experienced outside this isolated world, and certainly not monetized.



<h3 class="wp-block-heading">Ahead, in part 2&#8230;</h3>



Tomorrow, we’ll ring in the new year with a take on the metaverse names to definitely include, and even double-down on! <a href="https://cms.blockworks.co/dreaming-of-the-perfect-metaverse-etf-part-2/" target="_blank" rel="noreferrer noopener">Read Part 2 now.</a>



<meta charset="utf-8">Not investment advice. The author has no positions in the above-mentioned equities.



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