By David B. Hoppe, Managing Editor, Gamma Law, San Francisco, United States of America
The European Union (EU) initiative "Thrive In The Metaverse'' for regulating the metaverse is intended to prepare Europe for the age of crypto and web3.
What does it mean for European consumers, and is it likely that the US will follow suit and issue similar regulations?
The September announcement of the EU Metaverse Regulation framework is part of the continent’s digital regulation strategy, which examines new online opportunities and trends.
According to Thierry Breton, the European Commissioner for the Internal Market, any hype surrounding the virtual world or immersive social connectivity will be subject to scrutiny. Further, he said that the Commission will undertake steps to develop standards and increase interoperability in the metaverse market, as “no single private player should hold the key to the public square.”
The Commission aims to issue the Metaverse Regulation in 2023. It is anticipated that the EU Regulation will cover three topics in particular:
a. Network Infrastructure Taxes
It is likely that the Regulation will introduce network infrastructure taxes on network providers. According to Breton, some of the profits made in an increasingly immersive software realm should flow to providers of the networks that serve as the backbone required to host these virtual spaces. If implemented, this provision is likely to prove controversial.
b. Rebooted Digital Rules
Judging from the EU President Ursula von der Leyen's ”Agenda for Europe,” new rules may be put in place to implement the landmark agreements contained in the Digital Markets Act (DMA) and the Digital Services Act (DSA). These Acts saw the EU take global leadership in regulating the digital space to make it safer and more accessible.
c. Safety and Interoperability Measures
From Breton's remarks, the EU appears poised to issue Regulations related to user-centric safety issues, especially those related to content moderation, and to ensure that platforms remain open and contestable to the whole market via interoperability standards mandates.
Indications are that the EU will adopt a blended approach to the metaverse and virtual communities. It will offer support initiatives to encourage development and infrastructure but take a more active role in shaping the development of the metaverse. This type of blended approach is likely to ensure that new forms of immersive technologies do not experience the same toxic growth exhibited by Facebook.
Implications for the Metaverse in America
In the United States, there has been no announcement per se on unilateral regulation of the metaverse. The consensus seems to be that, at least in the short term, self-regulation is the preferred policy, with the onus on the "most reputable players" in the metaverse to join forces, draw up their own code of conduct and create a set of best practices.
In the long term, Washington may issue an all-encompassing metaverse regulation after consulting with key stakeholder groups and representatives from participating industries. In the meantime, regulators in this country have delivered mixed and fragmentary messages:
a. FTC Statement on Meta's Acquisition of Popular Metaverse Application
The most direct US regulatory development on the metaverse is the Federal Trade Commission's lawsuit to block Meta's acquisition of a popular metaverse application. The FTC is seeking to stop virtual reality giant Meta and its controlling shareholder and CEO Mark Zuckerberg from acquiring Within Unlimited and its popular virtual reality dedicated fitness app, Supernatural. This lawsuit is still ongoing, and it seems only a matter of time before the US government issues new guidelines or laws on how the metaverse will be regulated.
b. Data Privacy Laws
Earlier this year, Representative Suzan DelBene (D-Wash.) pushed for a bill to enact a federal data privacy law. The Information Transparency & Personal Data Control Act is a comprehensive consumer data protection protocol that would put people back in control of their data, require companies to publish end-user policies in clear language and establish strong enforcement mechanisms to protect all Americans. If enacted, this bill might take effect sometime in early 2023.
c. Antitrust Reform
In 2021, the House Subcommittee on Antitrust, Commercial and Administrative Law released five bipartisan bills that would hold big tech companies accountable for alleged anti-competitive conduct. These bills were drafted after a 16-month investigation that suggested that big tech companies are using their near-monopoly powers to crush competition and innovation. Further, senators John Kennedy (R-La.), Amy Klobuchar (D-Minn.), and Chuck Grassley (R-Iowa) introduced an antitrust bill, known as the American Innovation and Choice Online Act, to stop big technology companies from limiting consumer choice. The aim of this bill is to restore online competition by establishing common sense rules for digital companies. These rules are intended to prevent abuse of dominant market power and to foster competition in the market. These reforms are also likely to come into force sometime early next year.
Countries in the EU, South Korea, and Japan have made significant strides toward regulating the metaverse.
Whilst the US has yet to issue a comprehensive framework or law on the metaverse, the scope and breadth of discussions on the topic of regulating the metaverse are quite extensive.
It is best to consult an attorney specializing in emerging technologies to get an idea about these regulatory developments as it may have an impact on your business.
It may be added that the use of the metaverse by athletes, teams, leagues and sports fans is also growing in popularity.
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