Good morning, and welcome to Protocol Fintech. This Tuesday: Mastercard’s long game, digging into Three Arrows’ bankruptcy, and when an NFT looks more like a security.

Off the chain

PayPal is joining the rewards game, unifying its existing merchant discounts and Honey Gold into a single program. As credit card issuers have found with airline miles, consumers love points. Klarna and Affirm are bringing the rewards concept to “buy now, pay later.” Of course, we all pay for rewards programs, which are funded through merchants’ fees. The Points Guy is raising the alarm about the Credit Card Competition Act, which it says could “gut” rewards programs. I suspect card issuers and their imitators will find a way to keep showering customers with points, even if they have to get creative about the fees that fund them. If you don’t get a piece of the action, what’s the point in shopping?

— Owen Thomas (email | twitter)

Playing the crypto long game

Mastercard rolled out a new service to help consumers buy and sell crypto through their banks. It shows the payments giant is playing the crypto long game. More and more banks will want to dabble in this market — but they’ll want to do it in a way that doesn’t get them in trouble.

Despite the crypto crash, big banks want in. The market slide wiped out $2 trillion in value, but interest in crypto remains strong, especially among major financial institutions.

• Payments giants, led by Mastercard, Visa, and AmEx, have been building their crypto capabilities for years. “Our commitment is simple,” Jorn Lambert, Mastercard’s chief digital officer, said. Mastercard will “explore” crypto technology and come up with ways to support “customer choice in payments.”
• The payments behemoths aren’t going away, despite the view that crypto threatens their existence, underlined by investor Chamath Palihapitiya’s prediction that they would be the “biggest business loser for 2022.” (Last we checked, Visa and Mastercard were collectively worth $675 billion.)
• On the contrary: It’s becoming clearer that payments giants will likely play a key role in crypto’s growth. Walter Hessert, head of strategy at Paxos, cited Mastercard’s “powerful network of financial institutions around the world” which offer traditional financial companies “the fastest and most trusted way to offer safe, reliable crypto access for their consumers.”

Crypto needs the old guard. One would expect that this crypto winter would “keep legacy institutions away,” but “it's likely that volatility is what will drive consumers to feel safer with established financial institutions,” Melody Brue of Moor Insights & Strategy told Protocol.

• Turning to a legal, centralized company like Mastercard is “a bit of a sidestep from the underlying decentralized purpose of blockchain,” but major crypto players may have no choice, she said. Their familiarity with the ways of Washington may be an asset as regulators move in.
• Serhii Zhdanov, CEO of crypto exchange EXMO, agreed: “Their processes are already in place and have been sufficiently tested.” Mastercard made “a logical move,” he said, given how “crypto could outgrow their existing industry, and there is already a huge demand.”

Crypto tokens may have taken a dive, but consumer interest in crypto remains strong, and the industry still appears to be on a path to the financial mainstream. When that day arrives, “the card networks and legacy banks will not necessarily be the competition that will edge out the Coinbases of the world, but an opportunity for them to co-exist and collaborate that provides more consumer protection,” Brue told Protocol.

— Benjamin Pimentel (email | twitter)

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On the money

The FTC is investigating Visa and Mastercard's debit card routing. The regulator wants to know if the security tokens the companies use for some payments are restricting competition, The Wall Street Journal reports.

Texas' securities regulator is looking into whether FTX's yield-bearing crypto accounts are illegal. The agency said the crypto exchange should not be allowed to purchase the assets of Voyager out of bankruptcy until the review is complete.

U.S. regulators are digging into the Three Arrows Capital bankruptcy. The CFTC and the SEC are looking into whether the collapsed crypto hedge fund violated rules by misleading investors about the strength of its balance sheet and not registering with the agencies, Bloomberg reports.

Are fintech jobs still cool? The struggles of fintech firms this year are reversing a years-long trend and making traditional financial service jobs more appealing to top talent.

The CEO of an "anti-woke" neobank has resigned. Toby Neugebauer has stepped down from the top role at GloriFi following a report from The Wall Street Journal that the startup had nearly run out of money, despite backing from big names in tech and finance.

​Overheard

Norton Rose Fulbright partner Mohammed Paracha works for big banks during the day. On the side, he bashes them while promoting his fintech startup Nester, Above the Law reports. “We are programmed to trust banks, but then they use our earnings to make greater profits for themselves. Is that OK? Why do we keep trusting them?” Paracha said in a promotional video for Nester.

Why is the SEC going after Bored Ape Yacht Club maker Yuga Labs? It’s pretty simple, University of Kentucky law professor Brian Frye told Decrypt: “What you're buying is a piece of Bored Ape Yacht Club, and the value of your NFT rises or falls along with the value of the Bored Ape Yacht Club brand.” That makes it look a lot more like a stock than a piece of art, Frye explained.

Deal flow

Small business banking company NorthOne raised $67 million in a series B round. The company has raised a total of $90.3 million with funding by firms including Battery Ventures, Ferst Capital Partners, Next Play Capital, and Redpoint Ventures.

Maplerad, a Nigerian embedded finance startup, raised $6 million in seed funding. Peter Thiel led the round, with participation from Michael Vaughn, Polymath Capital, Unpopular Ventures, Sean Mahsoul, and others.

British banking services startup GoHenry raised $55 million in equity funding for its app, which targets children under 18. Edison Partners and Revaia led the round, with participation from Italian payments company Nexi.

New York-based Uniswap Labs raised $165 million in series B funding. The round, which was led by Polychain Capital, brings the company’s valuation to $1.66 billion.

TripActions, which has reportedly made a confidential filing for an IPO, raised $154 million in series G funding. Lightspeed Venture Partners, a16z, Group 11, and several other firms participated in the round. The company has a $9.2 billion valuation.

New York B2B payments infrastructure company OatFi raised $8 million in seed funding. QED Investors led the round with participation from Picus Capital, Cambrian Ventures, Fin VC, and others.

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Tech companies have committed hundreds of millions of dollars to buy carbon dioxide removal services. Now, Terraset, a new nonprofit, is jumping in to help channel private philanthropy into the nascent field.

Alex Roetter, the founder of Terraset, which exited stealth mode on Tuesday, said the organization will “be an independent source of demand” for carbon removal services. Bringing down the cost of those services will be key to the world reaching net zero by midcentury, and philanthropy could be an untapped avenue to help make that happen.

Companies including Microsoft, Alphabet, and Salesforce have pledged hundreds of millions of dollars for carbon removal individually. Frontier, a group of companies led by Stripe, has put $925 million up for an advance market commitment for services as well. But that’s a fraction of the investment needed to bring down costs and ensure the technology reaches a meaningful scale.

Until now, individuals who want to pool their resources to pay for carbon removal and help the industry gain a toehold have had very few options outside purchasing services from direct air capture company Climeworks.

“There’s this gulf between how much people want to act and the options available to them,” Roetter, who’s currently a managing director and general partner at Moxxie Ventures and previously was president at Kittyhawk and head of engineering at Twitter, told Protocol. And when it comes to CDR, “there can’t be large supply without a really strong signal that there’s demand.”

Terraset is attempting to bridge that gulf by funneling private philanthropy to the most promising carbon removal startups that need capital to scale. The nonprofit, which has been operating in stealth mode since early this year, has secured annual donations in the “low six figures,” according to Roetter, from a handful of donors, including investor Tim Ferriss and Segment co-founder Calvin French-Owen. Initial donations have been used to fund two CDR startups: Charm and Heirloom.

Starting today, anyone can donate any amount to Terraset. The organization pools the funds, then vets and selects the CDR projects using a handful of requirements.

Among them are ensuring that projects remove carbon dioxide from the atmosphere that wouldn’t have otherwise been removed without a donation and store it for centuries or more. Projects must also be scientifically rigorous, either by publishing research or having scientists who vouch for it. Finally, technology Terraset gives money to must have the potential to scale to remove megatons of carbon and do so in a manner that minimizes or entirely avoids harm to local communities. Though Terraset does not have its own research team, Roetter said it follows the guidance of groups like Frontier and CarbonPlan to help evaluate CDR startups.

Shashank Samala, the CEO and co-founder of Heirloom, said he hears from people “all the time” who want to give directly to Heirloom but aren’t able to. At the moment, all of Heirloom’s customers for its direct air capture services are big corporate buyers like Microsoft, Stripe, and Shopify. Samala said the company would consider eventually letting anyone buy a carbon credit straight from Heirloom’s website similar to Climeworks. Right now, however, the startup doesn’t have the capacity to serve small buyers.

Because carbon removal technology is so nascent, the cost of financing is high, Samala said. Lenders also want to see that there are buyers who will purchase carbon removal services at a price that covers their cost. Pulling a ton of carbon from the sky costs around $1,000 per ton or more. While Heirloom and other companies are aiming to get costs down to $100 per ton or less in the coming decades, there’s a lot that needs to happen between now and then to get there.

He compared the CDR industry to the early days of solar and wind when it comes to the potential of decreasing costs with scale. Solar penetration is currently about 3% in the U.S., and the industry has already seen a massive drop in cost. For context, solar power purchase agreements were often $100 per megawatt hour or more as recently as 2011. By 2015, they were averaging $50 per megawatt hour and have gotten cheaper since.

Policy played a major role in driving down the cost of solar power, particularly tax credits to encourage more production. The CDR industry has just seen an influx of federal support, including the Inflation Reduction Act’s 45Q tax credit for direct air capture. The Department of Energy is also planning to spend billions to create direct air capture hubs that could spur further innovation in the industry.

“We need a lot of diversified buyers from various different parts of the economy,” including corporations, governments, high-net worth individuals, and people giving small amounts, Samala said, since every additional buyer helps companies like Heirloom scale up and reduce costs as a result.

Organizations like Terraset help “galvanize individuals to play a small role in the world right now,” Samala said. Plus, the tax benefits of donating to a 501(c)(3) can provide a “pretty dramatic increase” in the impact of every dollar, given that doing so allows donors to deduct up to 60% of their adjusted gross income. That’s an incentive for individuals to give more than they would if the donation weren’t tax deductible.

Climate philanthropy accounts for less than 2% of global philanthropic giving, according to a ClimateWorks analysis. Within climate-focused giving, the nonprofit estimated that CDR received 3.85% of total average foundation funding for climate change mitigation between 2015 and 2020. Both CDR and climate philanthropy as a whole have room to grow within the larger world of giving.

French-Owen, an early Terraset donor and Silicon Valley entrepreneur, said he was impressed by what Stripe had done with its Frontier fund, “catalyzing this market between a bunch of different early-stage tech firms.” He said Terraset “felt like a good first step” when it comes to using philanthropy to help the industry mature.

“Terraset is helping to tackle a very challenging problem — how to bring in early catalytic dollars into carbon removal to help bring down costs, and answer big open questions in advance of larger government procurement efforts,” Peter Minor, director of science and innovation at Carbon180, wrote in an email to Protocol.

Roetter was inspired to start Terraset when he was “shocked” to discover that something like it didn’t already exist. But he already has big plans for it, saying he hopes Terraset becomes “the same size if not bigger” than Frontier by 2030 and eventually attracts the attention of everyone from the person who gives $50 a year to massive philanthropic organizations like the Gates Foundation.

The wealthy are largely responsible for driving the climate crisis. While philanthropy is certainly one avenue to make up for those impacts, it also amounts to getting a tax break after polluting.

Given that ClimateWorks estimated that total donations to climate change mitigation in 2020 globally were between $6 billion and $10 billion, Roetter’s goal of reaching Frontier levels of funding is a tall order. To rake in $1 billion of donations would put Terraset in the upper echelons of climate nonprofits, on the order of the World Wildlife Fund, the Natural Resources Defense Council, or the Nature Conservancy. Even in a world where climate philanthropy has grown at a faster rate (14%) than overall giving (3%), that’s a lot to hope for with a new nonprofit.

Even that would still be a drop in the carbon removal bucket, though. United Nations estimates put the need for CDR as high as 10 billion tons annually by midcentury (other experts think that may be high, though). If the industry meets its $100-per-ton cost target, that would still put the market at $1 trillion per year. Given the huge price tag, it’s clear that while private philanthropy can play a role in covering the costs of CDR, it can’t be the only driver.

Good morning! Horizon Worlds is supposed to be Meta’s proof that social VR is the metaverse’s killer app. So far, it’s failing.

Who is Horizon Worlds for?

Meta, a company known for scaling social products to billions of users at breakneck speed, is facing a serious, expensive, and increasingly existential challenge in growing its nascent metaverse platform, Horizon Worlds.

While Meta set out in 2022 to grow the platform to more than half a million people, it has fewer than 200,000 people logging in every month, according to a Wall Street Journal report. In Horizon’s struggles lies a central hurdle for Meta: What if Mark Zuckerberg’s metaverse flops?

Meta is gambling on a social-first vision. While most VR today revolves around gaming, Zuckerberg is pitching a version of the metaverse that’s immersive, social, and tethered to the real world, including people’s social and work lives.

• “Back when we started working on this, we believed that over time social experiences would become the main way people would use VR. That’s coming true. Today the top apps in the Quest store are social metaverse apps,” Zuckerberg said during the Connect keynote.
• “For the first time, we can build technology centered around people and how we actually experience the world,” Zuckerberg added. “That's why the metaverse is first-person. Right? You feel like you’re actually in it.”

But Horizon Worlds isn’t sticky enough. Unlike other social networks, Horizon Worlds is a VR playground that requires you to hang out with friends and strangers alike with a computer strapped to your face.

• The WSJ’s report said most users stop logging back into Horizon after the first month, and only 9% of user-generated worlds are ever visited by more than 50 people.
• “An empty world is a sad world,” read an internal document on Horizon’s population problem. The report also states that more than half of all Quest headsets sold end up unused after six months.

Ultimately, people want something different. The social experiences most users want to engage in right now are not social networks or VR versions of Microsoft software. They’re video games like Fortnite, Roblox, and Minecraft, none of which needed VR or productivity add-ons to grow.

Read more: A longer version of this story appeared in the Protocol Entertainment newsletter. Sign up here.

A conservative grab for the enterprise 

Ye, the rapper formerly known as Kanye West, is buying Parler for an undisclosed sum following his suspension from Instagram and Twitter for anti-Semetic posts. But if you want to understand why the deal matters, it isn’t what Ye’s buying, but rather what Parler’s parent company — now called Parlement Technologies — is keeping.

Parlement Technologies will focus on digital infrastructure. It bought the cloud service company Dynascale last month with the intention of powering what it calls an "uncancelable" future.

• The move signals that it’s leaving the niche of conservative social media behind as it failed to truly challenge mainstream social platforms, Protocol’s Ben Brody writes.

Enterprise companies have been caught up in controversies over content involving conservative users and platforms.

• One recent example: In early September, Cloudflare booted Kiwi Farms from its service after “escalated” threats of violent anti-trans bigotry.

Parlement’s intentions are clear: It wants to have a say in what Ben calls the “digital choke points” that dictate what can and can’t go on the internet. Ye taking Parler off its hands frees the company to focus on that goal. But it still has a long way to go if it wants to compete with giants like AWS, which are taking up the vast majority of the market share.

Read more: The most important half of Ye's Parler deal is what he isn't buying

​Thiel sets his sights on Arizona

Peter Thiel is putting money down on the Republican party. And this time, he’s supporting one of his own, Protocol’s Hirsh Chitkara writes.

Thiel’s donating up to $5 million to Blake Masters’ Arizona Senate campaign. Masters is the Thiel Capital COO and previously hadn’t gotten support from Thiel beyond a $15 million donation to the Saving Arizona PAC.

• Thiel has already donated to tons of Congressional campaigns this midterms cycle, but Masters and J.D. Vance, another candidate he’s supported, have both worked for Thiel.
• While Vance holds a strong lead in Ohio, Masters has a bit of catching up to do. FiveThirtyEight models give incumbent Sen. Mark Kelly an 80% chance of winning in Arizona.
• Both candidates winning would move Thiel’s vision for the GOP — which Hirsh describes as a more “buttoned-up” version of Trumpism — closer to a reality.

One of Thiel’s more prominent views is that Democrats rode their way to the top of Big Tech and hurt the American middle class along the way.

• He’s described, for example, a so-called “tech curse” in which the tech industry is “associated with social dysfunction rather than progress.” Thiel believes that’s translated into distorted political dynamics and contributed to the real estate crisis.
• Thiel has criticized the Republican party, as well, for pushing itself too far to the other side of “wokeism” and broader California politics.

Thiel wants less regulation and more investment in non-software companies, but Hirsh pointed out that he doesn’t want to destroy Big Tech to solve the issues that come with it. Rather, political power would be a means of breaking down the political dysfunction surrounding companies like Apple and Google.

Read more: Peter Thiel’s gamble against the “somewhat fake California thing”

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USD Coin (USDC) is the institutional grade stablecoin. Monthly attestations show exactly what reserves back USDC, and businesses all over the world are using USDC to build the next generation of financial services and global payment applications.

Learn why institutions trust USDC at Circle’s Transparency & Stability Hub

People are talking

Rajesh Gopinathan, CEO of Indian IT provider TCS, said funding commitments toward “digital transformation” are still hot, though excitement has died down:

• “What we are getting into is the second leg of these transformation journeys, which is very critical.”

Making moves

Darren Burton joined Eightfold AI as chief people officer. Burton previously held the same role at KPMG and worked at IBM and Raytheon before that.

David DeRuff joined GoSecure as CFO. He was most recently a partner at DBO Partners.

Ankur Mehrotra is joining Julo, an Indonesian fintech startup. Mehrotra was Grab's head of lending.

Wesley Bush joined Red Cell Partners as a director and adviser. He’s also on the board of General Motors, Dow, and Cisco and has served as chairman and CEO of Northrop Grumman.

G4 is shutting down. The gaming channel and online network created by Comcast had already endured layoffs and its biggest creators leaving the platform.

It's not privacy vs. security anymore

In the last few years, the roles of privacy and security executives — and the budgets they control — have grown significantly as organizations have worked to stymie the growing threat of cyberattacks and navigate the ever-changing landscape of data regulation.

In this event we will explore how the chief privacy and chief information security officer roles will evolve and how each can support the other best when the company needs it most. Join us 11 a.m. PT Oct. 27. RSVP here.

In other news

Microsoft is the latest to lay off staff. The company didn't say how many jobs had been cut, but one person told Axios it's around 1,000.

Elizabeth Holmes's trial is taking more twists. Holmes asked for a new trial again yesterday, this time on the basis of a key witness visiting her home in August.

Discord unveiled a suite of new features and an additional, cheaper subscription tier to its Nitro service. The company hopes that the new features, called Activities, will make users think of Discord as a destination, not just a chat app.

Mastercard is launching the Crypto Source program allowing bank partners to help customers buy and sell crypto through a partnership with crypto investment services company Paxos.

Climate tech made up a substantial portion of VC funding in the third quarter, claiming five of the top 10 biggest deals during the period.

Netflix is rolling out a new feature that will let people transfer viewing data to new accounts to help people untangle their viewing recommendations when they leave a shared account.

TikTok is raising its age requirement for livestreaming from 16 to 18. Creators will also soon be able to target adults only for streams.

Triller is launching its own metaverse. The platform, titled Metaverz, will host its first event on Saturday: a DJ set in a virtual nightclub.

Lyft is hiking service fees for U.S. riders to cover increasing insurance costs. The increase on average will be less than 50 cents per trip.

All Gas no breaks

It’s time to move on from the BeReal hype, because the next popular social media app isn’t all about being authentic; it’s about compliments. As of Friday, an app called Gas, which prompts users to “gas each other up,” became the most popular app and top social networking download in the App Store. Although it’s too early to say how long its success will last, the app’s been downloaded 500,000 times since it launched in August. Maybe it’s worth a try. Never hurts to receive a compliment, right?

A MESSAGE FROM CIRCLE

USD Coin (USDC) is the institutional grade stablecoin. Monthly attestations show exactly what reserves back USDC, and businesses all over the world are using USDC to build the next generation of financial services and global payment applications.

Learn why institutions trust USDC at Circle’s Transparency & Stability Hub

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

The Inflation Reduction Act’s tax credits for electric passenger vehicles have garnered the most intense scrutiny. No shade to those tax credits — which are bringing a wave of battery and auto manufacturing to U.S. shores — but the tax credits to electrify medium- and heavy-duty transport could be an even bigger deal.

A new report from policy modeling shop Energy Innovation and shared exclusively with Protocol shows that the law’s tax credits could double or even triple the share of electrified trucks and vans used in fleets by 2030 compared to business as usual. That would pay huge dividends by cleaning up what is one of the dirtiest segments of the transportation sector in terms of carbon and air pollution that disproportionately affects disadvantaged communities.

There’s no precedent for a policy that could lead to that type of explosive growth in the commercial fleet sector. “The fact that the IRA includes a new commercial EV tax credit is, to my mind, a game changer,” Sara Baldwin, the director of electrification at Energy Innovation, said.

The commercial EV tax credits differ from the ones for passenger vehicles in a few crucial ways. The IRA includes tax credits of up to $7,500 for light- and medium-duty vehicles and $40,000 for heavy-duty trucks. Those credits don’t come with any requirements for where battery components and minerals can be sourced from or how much vehicles cost, both of which are facets for the passenger EV tax credits.

“The medium- and heavy-duty vehicle market is much more nascent,” when it comes to electric options, Baldwin said. “There’s a lot more opportunity for growth, as well as innovation.”

The Energy Innovation report modeled what the tax credits for both the vehicles themselves and charging infrastructure could mean for EV uptake. The IRA is expected to juice the share of new passenger battery EVs sales to as high as 29% by 2030, up from 21% under the status quo. The percentage of EVs on the road could reach 11% by 2030, an uptick of 2%.

But the market for battery-powered EVs in the light- and medium-duty category could explode. Without any additional policies, 17% of new sales would be battery EVs by 2030. With the IRA, though, that percentage could rise to as high as 38%. Heavy-duty electric truck sales could nearly triple due to the IRA, reaching 27% by 2030.

“As far as we’re aware, this absolutely is an unprecedented incentive,” Baldwin said. “Combine that with the fact that we now have billions of dollars flowing to charging infrastructure at the same time, what we’re doing is we’re unlocking both of those barriers: the up-front cost barrier and then the charging and range anxiety barrier.”

The latter is particularly important for long-haul trucks and delivery vehicles that have schedules to keep, and could help companies already looking at electrifying their fleets speed up the process. Some major businesses have already made major pledges to electrify their fleets. Amazon, for example, put in an order for 100,000 electric vans from Rivian and installed some of its own charging stations. The new tax credits could provide incentives for it and other major companies to make more EV purchases, including heavy-duty trucks, as well as make it easier for smaller companies to transition to electric fleets.

Regulating polluting vehicles could speed the transition up even further. The Environmental Protection Agency is considering new emissions standards for medium- and heavy-duty trucks, and setting more-stringent ones could act as a stick to the IRA’s carrots. States could also take a lead. On the heels of phasing out gas-powered car sales by 2035, California is considering banning diesel truck sales by 2040.

“You really can’t incentivize your way to clean vehicle fleets across the board,” Baldwin said. “Part of that is just because you need to make sure that the baseline is always moving in the direction of reducing emissions, and incentives alone aren’t going to achieve that goal.”

Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Tuesday, we’re looking at Meta’s struggles to grow its Horizon Worlds platform, and what that says about its social-first push to sell mainstream consumers on VR and the metaverse. Also: a key endorsement for the Activision Blizzard deal and the voice acting controversy engulfing Nintendo’s Bayonetta 3.

‘An empty world is a sad world’

Meta, a company known for scaling social products to billions of users at breakneck speed, is facing a serious, expensive, and increasingly existential challenge in growing its nascent metaverse platform, Horizon Worlds.

The platform, currently a VR-only app, reported 300,000 monthly active users in February of this year. According to a new report from The Wall Street Journal, however, that number is shrinking. While Meta set out in 2022 to grow the platform to more than half a million people, it has sunk to below 200,000 monthly users. In Horizon’s struggles lies a central hurdle for Meta: What if Mark Zuckerberg’s metaverse flops?

Horizon isn’t sticky enough. Unlike other social networks, which rely on the dopamine rush of likes, comments, and algorithmic recommendations, Horizon Worlds is a VR playground that requires you to hang out with friends and strangers alike with a computer strapped to your face.

• The problem is that most people just don’t stick around. The WSJ’s report said most users stop logging back into Horizon after the first month, and only 9% of user-generated worlds are ever visited by more than 50 people.
• “An empty world is a sad world,” read an internal document on Horizon’s population problem. The report also states that more than half of all Quest headsets sold end up unused after six months.
• Not even the employees building the platform seem eager to use it. The Verge reported earlier this month that Metaverse VP Vishal Shah put the platform into a “quality lockdown” to squash bugs and improve the user experience while new features would be put on ice.
• Shah encouraged more employees in a company memo to use Horizon to help improve it: “The simple truth is, if we don’t love it, how can we expect our users to love it?”
• “Everyone in this organization should make it their mission to fall in love with Horizon Worlds. You can’t do that without using it,” Shah added in a second memo. “We are working on a product that has not found product market fit. If you are on Horizon, I need you to fully embrace ambiguity and change.”

Meta is gambling on a social-first vision. While most VR today revolves around gaming, Zuckerberg is pitching a version of the metaverse that’s immersive, social, and tethered to the real world, including people’s social and work lives.

• This comes with risks: What if only a limited number of people want to work with a VR headset on or socialize with friends or co-workers as cartoon avatars?
• “Back when we started working on this, we believed that over time social experiences would become the main way people would use VR. That’s coming true. Today the top apps in the Quest store are social metaverse apps,” Zuckerberg said during the Connect keynote.
• “For the first time, we can build technology centered around people and how we actually experience the world,” Zuckerberg added. “That's why the metaverse is first-person. Right? You feel like you’re actually in it.”
• This sounds compelling on paper, but the social experiences most people want to engage in right now are not nascent social networks or first-run VR versions of Microsoft software. They’re video games like Fortnite, Roblox, and Minecraft, none of which needed VR or productivity add-ons to grow.

Meta is banking on Horizon Worlds’ success. The company continues to buy VR game developers, including three new purchases announced last week, and operates a Roblox-like platform called Crayta. But Horizon Worlds is supposed to be Meta’s proof that social VR is the killer app of the metaverse. So far, it’s failing.

• The app has drawn criticism for its poor graphics and rudimentary avatars. Meta is planning to revamp the visuals and has showcased new, more realistic avatar designs.
• But at Meta Connect, when Zuckerberg announced that Horizon avatars would finally feature legs (instead of floating torsos) and realistic locomotion, the company had to quietly clarify after the fact that it used “animations created from motion capture.” Legs, it seems, are still in the oven.

A big hurdle for Horizon right now is that it requires a Quest headset, and Meta has seemingly given up on its strategy of subsidizing affordable VR to help maintain mainstream adoption. (Mobile and browser versions of Horizon are still on the way.)

• Meta raised the price of the Quest 2 earlier this year in response to the economic downturn.
• Last week Meta announced a $1,500 Quest Pro supposedly catering to “prosumer” customers who want to experiment with VR productivity apps, including a suite of Microsoft app integrations teased last week at Connect.
• This is all starting to cost Meta a lot of money. The company’s stock price is down 60% this year. Over the past two quarters, Meta has incurred nearly $6 billion in losses on its Reality Labs division, with tens of billions more spending planned for the years ahead.

Horizon Worlds in many ways feels like a microcosm of Meta’s struggle to build the metaverse. It’s an ambitious product that can at times evoke profound social experiences, but it is also trying too much too early. The New York Times’ Kashmir Hill wrote this month that her extensive use of the app helped her meet a diverse cast of strangers from all over the world, but she also compared the experience to “surfing AOL chat rooms in the 1990s.”

Is the platform a video game, a social network, both? Does it really need VR, or can it gain traction as a mobile app or desktop website? Meta doesn’t really know what Horizon Worlds is yet, just like it doesn’t know exactly what the metaverse will look like, who might build it, or what we’ll all want to do in there. Zuckerberg says he has a pretty good idea as to the answers, but so far, he’s missing the mark.

— Nick Statt

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It's becoming increasingly appreciated among the broader business and NGO community that the planet and people elements of sustainability are mutually dependent, and as such a focus on one at the exclusion of the other will be fruitless. But balancing profit and sustainability progress remains a more thorny debate.

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Overheard

“We’re certainly of the belief that it’s a good thing for Microsoft and for the industry. We’re in favor … It’s a highly fragmented business and there’s plenty of room for creativity to go around. Microsoft is an ally of ours, and if this makes their business more powerful, we think that’s good for us.” — Strauss Zelnick, the CEO of Grand Theft Auto publisher Take-Two Interactive, endorsed Microsoft’s acquisition of Activision Blizzard, which is now facing intense regulatory scrutiny, in an interview last week with The Wrap.

“Mobile is a great place to have a successful game. At the core of it, what I wanted to do was make a game I really wanted to play. I had just become a father. My son was born basically the day Hearthstone was released and I found that it was much easier for me to play mobile games. So I wanted to build something that I would be able to play more often.” — Ben Brode, the game director for Blizzard’s Hearthstone, spoke to The Washington Post about working with Marvel on the free-to-play mobile game Marvel Snap with his new studio, Second Dinner.

In other news

Netflix adds a profile transfer feature. The new feature will make it easier for people to disentangle shared accounts; Netflix blames account sharing for some of its recent woes.

Nintendo settles labor dispute with contractor. A former game tester for Nintendo of America has settled with the company and its U.S. staffing agency for $25,000 after accusing the firms of retaliating against them for asking about unionization, Axios reported.

Apple’s headset is supposed to have an iris-scanning feature. The still-unannounced device could use biometrics for authentication; a new report from The Information claims Apple’s design will also conceal outward-facing cameras.

Activision Blizzard faces another sexual harassment lawsuit. An unnamed employee filed a lawsuit last week alleging serial harassment from former manager Miguel Vega, who was only fired last fall after years of reports regarding his behavior.

Samsung is licensing its TV OS to third-party manufacturers. To grow its advertising business, Samsung is now making Tizen for TVs available to some ODM companies.

G4’s short-lived second life. Comcast’s Spectacor is shutting down G4 TV, the video game and pop culture channel that was revived just last year after first shutting down back in 2014, Deadline reported. The company’s leaked memo cited low viewership.

Overwatch 2 hits a major milestone. Despite an incredibly bumpy launch, the new free-to-play iteration of Overwatch racked up more than 25 million players in just 10 days, a feat it took its paid predecessor roughly eight months to achieve.

Take-Two shuts down Playdots. The Grand Theft Auto publisher is shutting down the mobile developer behind Dots and Two Dots, Bloomberg reported. Take-Two, which spent close to $13 billion this year on Zynga, acquired the studio only two years ago for $192 million.

Bayonetta’s voice actor speaks out

The upcoming third installment in Nintendo and PlatinumGames’ Bayonetta franchise is now facing a boycott after actress Hellena Taylor, the original voice of the titular character in the series’ first two installments, said she was offered a paltry sum to reprise her role.

Taylor said Platinum offered just $4,000 for the role, and that was after she auditioned and received an even lower offer first. Although the number is in line with U.S. union minimums for an estimated 16 hours of work, Taylor said her experience and the success of the Bayonetta franchise justified higher compensation.

• “This is an insult to me, the amount of time that I took to work on my talent and everything that I have given to this game and the fans,” Taylor said. “I’m asking the fans to boycott this game and instead spend the money you would spend on this game, donating it to charity.”
• Taylor’s absence from the game was first disclosed earlier this month, when Platinum revealed it had opened auditions to other performers and had chosen well-known voice actress Jennifer Hale, who has responded by saying she’s prohibited under NDA to disclose specifics.
• At the time, Bayonetta 3 director Yusuke Miyata said “overlapping circumstances” had ruled out Taylor for the role.

Voice actors are speaking up about worker exploitation, not just in video games, but also in the anime and traditional animation industries.

• Because voice actors are hired on contract, they are often paid day rates based on the number of hours required in the studio.
• SAG-AFTRA, a leading entertainment union in the U.S. of which Taylor is a member, dictates hourly rates for actors, but overseas companies do not always hire actors on union contracts and, in the case of recent hit anime Mob Psycho 100, sometimes explicitly refuse to work under union terms.
• Video game voice actors have begun shedding light on the lack of residuals and royalties and the entertainment industry’s tendency to skip over seasoned performers in favor of well-known celebrities. (See: Chris Pratt in the Mario movie.)

Taylor’s plight has become a rallying cry for voice actors, but it’s also touched off a sensitive debate over how much money should be considered a fair and livable wage for performers in games and other industries. Some actors have defended Platinum for paying what is considered industry standard, though it’s not known for sure how many studio hours the role required.

Regardless, the voice of Bayonetta is fed up. “I was just asking for a decent, dignified living wage,” Taylor said. “What they did was legal, but it was immoral.”

— Nick Statt

A MESSAGE FROM GOALS HOUSE

Currently, much of the ‘E’ in ESG is focussed on climate only, and it is essential that companies also focus on biodiversity, recognizing nature-climate linkages in order to optimize mitigation and build resilience. ESG will prepare us for the necessary paradigm shift, driven by increasing external pressures forced upon us as a result of short-term profits.

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