Baidu says it could be 6 years before it can fully deliver its metaverse

BEIJING — While metaverse hype has swept the world this year, one of China’s tech giants in the game has revealed a version of the virtual ecosystem that’s underwhelming so far.

The metaverse can be loosely defined as the next generation of the internet — a virtual world in which humans interact through three-dimensional avatars. Social network giant Facebook jumped into the trend in October, changing its name to Meta and announcing plans for $10 billion in related investments in the next year.

China is similarly abuzz with metaverse headlines. Beijing-based Baidu plans to hold its annual developers’ event Monday in the virtual world of its metaverse app, XiRang. The company claims it will be China’s first metaverse conference.

However, at a preview event Tuesday, the executive in charge of XiRang downplayed expectations by noting how many aspects weren’t yet up to par.

Development of the app began last December, but it is still “negative six” years to full launch, Ma Jie, a vice president at Baidu, told reporters in Mandarin. In response to questions such as one asking for details on that timeline, Ma struck an apologetic tone: “That’s a very good question, but I may not have a very good answer.”

Baidu’s app, as it exists now, can host 100,000 virtual attendees for Monday’s conference, Ma said, showing reporters a graphic rendering of the virtual stadium.

He said Baidu aims to build an open-source platform for metaverse developers — an infrastructure for a virtual world.

Monday’s event marks the opening of XiRang to developers, primarily in China for now.

“The metaverse, while a buzzword in the global tech and investment community, is still very much in its infancy,” Brian Tycangco, analyst at Stansberry Research, said in email. “A lot of people don’t even fully understand what the word means today or will mean in the next 3 to 5 years.”

Baidu’s timeline reflects the company’s understanding of the metaverse, its conservative approach in managing expectations and China’s regulatory environment, he said. “Baidu is clearly trying to move ahead to ‘own’ the metaverse in its home market while adhering to Beijing’s new policies aimed at preventing monopolistic situations, hence the open platform.”

The Chinese government has cracked down on alleged monopolistic practices by China’s internet tech giants with fines and new regulations in the last 18 months. Beijing also enacted a new data privacy law this year. Analysts say policymakers are trying to address income inequality issues, while supporting innovation-driven growth.

Baidu said in a statement to CNBC that openness is an inherent part of the company, and that by promoting open source development, applications can be adopted more widely and quickly.

The company was founded nearly 22 years ago as an internet search engine and has since shifted its focus to cloud computing, artificial intelligence, robotaxis and other technologies.

China’s internet is tightly controlled by the government, with blocks on foreign social media sites Facebook and Twitter. Google only operated its search engine in China briefly.

Analysts disagree on how quickly China’s metaverse is developing is compared with that of the U.S.

Alibaba has a webpage promoting its metaverse cloud offerings. In November, Tencent President Martin Lau said in an earnings call that he expects the Chinese government will support the development of metaverse technologies, with regulations specific to the China market.

Earlier this month, Microsoft co-founder Bill Gates said he expects that in two or three years, most virtual meetings will move to the metaverse. Around the same time, Facebook (Meta) announced its virtual reality ecosystem, Horizon Worlds, would end its invite-only phase and become freely available to anyone age 18 and older in the U.S. and Canada. Users can interact with other avatars and build their own worlds and games in the system.

In the view of Dan Ives, U.S.-based senior equity analyst at Wedbush Securities, “a six year timeline for Baidu is disappointing to hear for investors and a head scratcher as they will miss out on this massive metaverse market over the coming years.” Ives expects monetization of the metaverse will begin in 2024 and grow to a greater scale the following year.

Baidu’s XiRang app demonstrations on Tuesday showed avatars possessed unhuman capabilities such as sometimes being able to walk through walls or other objects. Some parts of the virtual universe would briefly turn black or purple while the system loaded.

The app does mimic the real world by making avatars walk or take public transportation. Video games typically display a map or offer other features that let users quickly jump to other parts of the virtual game space.

While the metaverse discussion captures public attention, Chinese state media have published a number of articles on the topic, often about the risk of scams.

On Thursday, the Chinese government’s central disciplinary commission published an article on its website about the global history of the metaverse. The piece also warned about the risk of unsubstantiated metaverse hype by some companies, and the need for financial supervision in the virtual world.

Virtual land has become an area of speculation in the nascent metaverse.

But Baidu’s XiRang app will not support digital currencies or trading of assets like speculating on virtual property, even though it uses underlying technologies that are similar to blockchain, Ma said.

He isn’t the only voice of moderation.

A full metaverse will take five to ten years of development, said Alvin Graylin, China president at HTC, a smartphone and virtual reality company, noting he could not comment specifically on Baidu. “For the products and services that will comprise the Metaverse, pieces of them will come much sooner.”

“The key challenge of achieving the full Metaverse ecosystem will likely be less about specific technology or products, but more about the underlying infrastructure, international regulatory agreement and global standards,” Graylin said in an email. “It will take a joint global effort across many companies and governments to deliver on the promise of the Metaverse.”

He added that some of the elements the metaverse needs immediately include tax regulation, and global coverage for high-speed cloud computing.