Alibaba invests in AR, eyes metaverse

Alibaba is set to invest $60 million in Nreal, a start-up specialised in augmented reality (AR), an initiative seen as the Chinese e-commerce giant’s first foray into the metaverse. The announcement was made by Nreal on Wednesday.

The metaverse, regarded as the next major step in the evolution of the internet, is a virtual parallel world.

The concept is in its infancy, and is considered a way to eliminate physical constraints by multiplying 3D human interactions within the digital lining of the world around us. The opportunities offered by the creation of a virtual ‘new world’ are whetting the appetite of many digital giants.

On Wednesday, Nreal, a Chinese producer of AR glasses, announced that Alibaba is investing $60 million (€53.8 million) in the company.

The funds are earmarked for R&D expenditure, said the Beijing-based start-up, indicating that in recent months it has raised a further $200 million with other investors.

Although relatively modest, Alibaba's investment is generally perceived as the first foray by the group founded by Jack Ma into the metaverse landscape. Proof of this interest is the fact that last year Alibaba set up a dedicated subsidiary.

Virtual reality (VR), and augmented reality, where digital elements are superimposed on the real world, are both regarded as key technologies for building the metaverse.

Like Alibaba, the other leading names in China’s digital sector do not wish to lag behind in this new technology. ByteDance (owner of TikTok) has invested in several companies operating in the field, and bought VR headset manufacturer Pico last year.

Internet leviathan Tencent is instead working on its own version of the metaverse, tapping its know-how as a leading player in the video-gaming sector. In December, the Baidu search engine launched XiRang, hailed as one of the first metaverse apps in China.

China’s leading digital groups are encouraged by the Beijing government's involvement in the tech sector, but they are nevertheless groping their way in this area. And state media have issued many warnings in recent months against extravagant investments.

Conversely, the US digital tech sector is salivating at the prospects afforded by the metaverse. Facebook has made the metaverse its new focus, going as far as rechristening its parent company as Meta.