Tue. Jan 18th, 2022


This is an audio transcript of the FT News Information Session podcast episode: Investors prepare for ‘gold rush’ in metaverse hardware

Marc Filippino
Good morning from the Financial Times. Today is Monday, January 10th, and this is your FT News Briefing.

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US officials are meeting with Russian diplomats today for talks with major interests. Voters in Portugal are fed up with corruption, and UK regulators are taking a closer look at cloud companies. On top of that, Leo Lewis of the FT says that investors are excited about the metaverse – and not just the software developers, but also hardware manufacturers.

Leo Lewis
There is a lot of hope attached to the idea that Apple might come up with glasses that do for VR headsets that Apple did for smartphones in the mid-2000s.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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Today, US officials will meet with Russian diplomats in Geneva. This is the first of several meetings to address military tensions on the border with Ukraine. However, there are no high expectations that the two parties will reach an agreement. Russia now has about a hundred thousand troops gathered on Ukraine’s eastern border and it threatens military action if the US and NATO ignore Moscow’s demands for new defense agreements. One of those demands would be to reduce the capabilities of the US and NATO in former communist countries. US and European officials will counter their own demands. Jens Stoltenberg, Secretary General of NATO, said yesterday that NATO was prepared for “a new armed conflict in Europe” should negotiations fail.

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Voters in Portugal are going to the polls later this month, and white-collar crime is a hot-button issue. Over the past few years, there have been a series of corruption scandals involving judges, top bankers, football club managers and the most famous former prime minister, José Sócrates. Most of the charges against him were dropped due to time constraints and a lack of evidence. Voters’ frustration is not only with the scandals, but more with the broader legal system. Here is our Lisbon correspondent Peter Wise.

Peter Wyse
So I think there is a general awareness in Portugal among the political class, but also among the public itself that Portugal does not deal effectively with the crime of corruption in its courts, in its investigations. And especially not, justice must be done within a reasonable time so that it can be seen effectively. And that I think in the minds of the wider public in Portugal, it just is not happening at the moment.

Marc Filippino
Peter says parliament did approve a set of anti-corruption reforms last month.

Peter Wyse
But experts in the field of dealing with corruption feel that they focus too much on the laws rather than having effective institutions to deal with them. The efficiency of the police, of the courts, therefore, they find that their independence and their ability to act quickly and efficiently are sometimes curtailed and constrained by a lack of resources.

Marc Filippino
This public dissatisfaction has not been completely ignored, Peter says it is being used by a right-wing party called Chega.

Peter Wyse
The beginning of the debates, there are going to be 20 or more debates on television between the leaders of different parties. And I think one of the smaller parties, known as Chega, which is a right-wing populist party, its name means ‘enough’ in Portuguese, and they focus a lot on this issue of corruption. They feel a public dissatisfaction. So Chega, who elected only one deputy in the previous election, now hopes to become the third largest party in Portugal. And that will give it considerable weight in the sense that most elections in Portugal, and this one taking place in January, are unlikely to yield a majority, an overall majority for a single party. The third largest party can therefore have significant influence over coalition formations or agreements on the support of a minority government.

Marc Filippino
Peter Wise is the FT’s Portugal correspondent.

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UK financial regulators are preparing to intensify the investigation into cloud computing providers. It comes amid growing fears that a break-in or burglary could severely disrupt the banking system, which is increasingly dependent on cloud services. Sources tell the FT that the UK’s Prudential Regulatory Authority wants to see more data from major suppliers such as Amazon and Google and Microsoft. British banks have entered into agreements with these three companies. They see the cloud as a way to reduce IT costs, refurbish old infrastructure and also detect financial crime.

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So if you are not already spending good chunks of your day in the metaverse, it is probably because it has not been built yet. For example, there are not many good headsets or sensors. But companies are working on it and the FT’s Leo Lewis says investors are very excited about the companies making what are called the choices and digging of the metaverse.

Leo Lewis
We happen to focus a lot of the piece on Asian companies – Taiwan, Korea, Japan, China – simply because we know that these are already companies that manufacture a lot of the technological hardware at that kind of component level, some on the, very high end, some on the mass produced side. So they tell us, look, imagine you’re back in the year 2000 and the internet is on its way up and it’s all getting very exciting. The best way to buy the internet story back then was perhaps not by the companies that ended up being very huge, like Facebook and Google and so on, but by the companies that build the servers and the picks and shovels as they call it. And it’s very much the feeling now that there is a lot of investable universe where you can, as it were, buy the infrastructure for the metaverse at this stage while everyone is working out who the winners and losers are going to be among the big kind of software and platform providers.

Marc Filippino
So Leo, are you excited about the metaverse?

Leo Lewis
I’m very excited. I think so, I mean I’m obviously not excited as an investor, but excited as a user, because I think some of the things we’ve seen and some of the worlds they want to introduce consumers to, many, many intriguing and very enticing, really. I mean, I’m someone who grew up with video games and sees games a lot as the access point to a lot of technology. Want to play games in these virtual worlds? Yes absolutely, I do. Am I waiting and did I wait for the hardware to be just right? Absolutely. And you know, I hope a lot, along with a huge number of other people, the big game fans, something will come up. There’s a lot of hope attached to the idea that Apple might be able to come up with glasses that work for VR headsets or that kind of technology that Apple did for smartphones in the mid-2000s, that is, you know, kind of from creating a brand new market that is kind of based on one knock out brilliant product. And I’m, you know, as a potential user, I’m part of the excitement.

Marc Filippino
So what about non-players, Leo? I’m not very good at playing. What kind of use would the metaverse have for someone like me who does not like games?

Leo Lewis
That’s a very good question. I think the answer is that games are already starting environments where the general user, let’s say, can find reasons to come in for, let’s say, more slightly more traditional reasons. So concerts that take place within games, you know, Ariana Grande played concerts in the Fortnite game. Now you may not want to go to Fortnite at this point, you know for several reasons. But if you’re told that the Royal Festival Hall goes online, for example, create a digital twin of himself that you can visit and go to concerts for the London Philharmonic, and you can virtually do that with a headset. You know, it can end up being the kind of access point you find attractive. Others may want to travel to exotic locations via virtual reality. I mean, you know, without sounding too kind to Mark Zuckerberg about it, it’s something waiting for the right software to come along, as well as the right hardware. But that, I think, is where the non-players are going to get into it. It’s going to be music, live concerts, live sports and travel.

Marc Filippino
Leo Lewis is the FT’s Asia Business Editor.

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And before we go, online retailers seem to have beaten brick and mortar. A few years ago, the market value of the new fast fashion retailer Boohoo surpassed that of the venerable Marks and Spencer. But old dogs can learn new tricks. Marks and Spencer are doing well now, thank you very much. Not only have they upgraded profit forecasts, the 138-year-old store is now more valuable than Boohoo and another major online competitor, Asos. To be honest, it is not that consumers are rushing outside to drag their own shopping bags. One analyst says many brick-and-mortar retailers have used the pandemic to cut costs. They also figured out how to better compete with their younger online competitors.

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You can read more about all these stories at FT.com. This was your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript was generated automatically. If there is an error, please send the details for a correction to: tikfout@ft.com. We will do our best to make the amendment as soon as possible.



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