How big are Facebook's ambitions for the metaverse? So big that the social media giant recently paid a South Dakota bank $60 million just to acquire the trademark rights associated with its Meta Financial name.
Both companies last week confirmed to Reuters that Facebook (which rebranded to Meta in October) used a shell company called Beige Key LLC to acquire the trademark rights.
The deal is notable for its size: while $60 million may not sound like much to a company with a $928 billion market cap, it is a huge sum in the trademark world. It's also notable for what it could allow Facebook to do.
Owning a trademark gives the owner extra leverage when it comes to stopping competitors from using specific words, phrases, or logos. That leverage, however, doesn't extend to stopping someone from using the same name for a related product; that's why Apple computers, Apple Records and Apple Autoglass can all co-exist.
In a typical trademark deal, a purchaser pays to acquire not only a name but the goodwill that customers associate with a certain product or service. In the case of Meta Financial, its goodwill comes from its regional banks in South Dakota and Iowa and online payment products that the bank says promote financial inclusion. While Facebook has dabbled in payments through its crypto wallet Novi, Meta Financial's operations have very little to do with Facebook's traditional social media businesses or the metaverse where Facebook is so eager to plant a flag.
This suggests the $60 million deal could serve as a power play by Facebook to chase others away from using the terms "meta" or "metaverse." Alexandra Roberts, a trademark law professor at the University of New Hampshire, suggested as much on Twitter:
is fb taking over this whole co.? sounds like no. is it just paying co. to change names so new meta can acquire the broadest rights possible? sounds like more than that. but new meta getting priority based on old meta's earliest use is sketchy, esp if fb isn't in that space yet.
— alexandra j. roberts (@lexlanham) December 18, 2021
If Facebook uses its new trademark to bring legal pressure on other companies, it would heighten the already-growing tension over who gets to own the metaverse. While CEO Mark Zuckerberg has put the term at the core of his company's rebranding, the broader crypto community has shot back that the metaverse is meant to be a decentralized, permissionless sphere that no one should own.
Facebook's approach has already come under scrutiny after it appeared to snatch the @metaverse handle from an artist on Instagram (which is owned by Facebook) without explanation. The company subsequently returned the handle amid media controversy.
Facebook, however, is hardly the only company trying to stake its claim in the fast-evolving metaverse. A number of brands, including Pepsi and Budweiser, have been buying up Ethereum handles, NFTs or digital real estate—often with cringe-inducing results.
Crypto giant Coinbase is also staking out a position to be the go-to service for helping its customers manage the NFTs and avatars that many people will use to identify themselves in the metaverse. While the company's CEO Brian Armstrong has long been a vocal advocate of decentralization, Coinbase could end up exerting an outsize role in the metaverse if its identity plans come to fruition.
The bottom line is that it's very early days in determining who, if anyone, will control the metaverse, but giant companies from the current internet era—particularly Facebook—are willing to spend, and possibly to bully, in order to get in early.