Metaverse Law: Unravelling the Future of Online Interactions

Rory Greener

Protecting your digital-self in the Metaverse

Meta Insights
Metaverse Law: Unravelling the Future of Online Interactions

Many individuals and groups are making Metaverse laws, best practices, and legal standards to regulate and standardize the growing Web3 landscape.

Similar to the rise of social and user-driven Web 2.0, where laws regulated elements of its online interactions like eCommerce transactions, copyright, and harassment.

Many organizations are working to make legal infrastructure to support the various elements that empower spatial communications, such as eCommerce, blockchain, and intellectual property (IP) rights.

By considering legal issues right now, companies can ensure that they build a technology service that aligns with the law and regulatory principles.

Metaverse Law, a Background

The Metaverse provides users with interconnected real-time 3D (RT3D) environments for business operations and socialization.

The concept depends on a decentralized economy and inoperable ownership, although the technology’s spike and adoption by major international companies mean regulators are diagnosing the situation. For example, brands like Nike have dived head-first into Metaverse and Web3 technology. Its Nike Digital branch works on projects like NFTs, digital goods, and a Roblox Metaverse with roughly 7 million users.

Metaverse and XR Investigations

Although primary, extended reality (XR) firms like Meta face ongoing hurdles with their refocused Metvaerse and immersive hardware ambitions. In July, the Menlo Park-based firm notably faced a significant roadblock when the Federal Trade Commission (FTC) filed a motion that blocked Meta’s acquisition of Within, an immersive fitness and wellness application.

The FTC first felt concerned over the investment in 2021 when Meta announced the $400 million purchase. At the time, the FTC urged the US District Court for the Northern District of California to halt the transaction.

The FTC’s Bureau of Competition Deputy Director, John Newman, argued that Meta tried to “buy its way to the top” instead of competing fairly. The FTC said the purchase dampens future XR innovation and competitive rivalry.

The FTC examination is ongoing, although FTC dropped the CEO of Meta Mark Zuckerberg from its antitrust suit in August.

FBI Blockades

Furthermore, Bytdance, the parent company of Meta Quest competitor Pico is facing an ongoing investigation by the FBI stemming from FTC security concerns. The FTC first expressed concern over Pico and TikTok’s parent company in June when FCC Commissioner Brendan Carr posted an open letter to his Twitter account. In the letter, he accused the Chinese firm of collecting data for the Communist Party of China via the TikTok social media and user-generated content (UGC) application.

Carr called the company a “wolf in sheep’s clothing” due to the firm alleged data farming operations. He brought up recent Bytedane controversies as evidence of his security concerns, such as India banning TikTok, claims the service avoided Android privacy safeguards to track user data, and its iOS application tracking sensitive information like cryptocurrency wallets.

Accusations also accuse TikTok of tracking physical and digital locations of US users to Chinese servers, including US government bodies such as the Department of Defense, ban the social media service.

Also, the Metaverse puts forward several new forms of interaction that lawmakers have not defined. For instance, most regions have not recognized cryptocurrency as a valid currency or asset class.

Yet, users widely trade in crypto, and the digital tokens could form the bedrock of the metaverse economy. Lawmakers are also coming together to address other Web3 elements such as NFT transactions, human-AI interactions, IP for AI creators, and virtual real estate.

Key Legal Concepts Explained

Countless legal concepts are defining the growing Metaverse technology market. Some notable concepts are:

  • Intellectual property (IP) – A user must attach an IP license to specific technology apps, services, and content packages inside the Metaverse. The permit will cover definitions of term, territory, and royalty rates, including the license scope. Regulators must carefully negotiate IP contracts to enable interoperability without violating the creator’s rights.
  • Copyright – New Web3 content types mean copyright laws are redefining to suit the Metaverse. New content types like NFTs and blockchain goods led to new regulations redefining copyright and ownership. Meanwhile, AI content creators and solutions are increasing in influence on Metaverse apps and the engines which power them, like Unity and Unreal Engine 5, leading to a significant grey area—leading to speculation by regulators to address and future-proof laws.
  • Patents – The Metaverse is a vast and technologically complex platform that will rely on multiple patents sourced from numerous companies and independent creators. Some firms like Magic Leap accused Nreal of stealing technology by Magic Leap in a now thrown-out case.
  • Trademarks – The Metaverse opens up infinite possibilities for registered trademarks of a company appearing in unexpected spots. For example, brands can advertise on a virtual billboard in the Metaverse or participate in augmented reality  (AR) geotagged brand campaigns. Companies like Nike are already tackling this issue through trademark filings that include all virtually downloadable goods.

What Are the Issues that Metaverse Law Must Address?

IP, copyright, patents, and trademarks are important as companies build Metaverse solutions. Although, Web3, Metaverse tech and its foundational elements require new laws to oversee user-to-user and trade operations properly.

In future, the law will have to address issues such as:

NFTs and Blockchain Ownership

NFT and blockchain license and trading are still young, and the world is yet to see the future benefits and use cases of NFTs. Many firms are working to create NFTs which bring extra use, access to communities, or enhance checkout options, such as pre-orders.

Although NFT and blockchain, experiments bring new regulations. Most major NFT trading apps like OpenSea give users access to analytics, trade history, and privacy tools to ensure safe trading.

On the other hand, alternative forms of ownership appear, such as virtual real estate on Metaverse apps like The Sandbox.

Fair Competition and Accessibility

Many see the Metaverse as a decentralized environment, but firms already, or are trying to, influence significant portions of the growing landscape.

For instance, a well-defined set of content creators and media companies rule the social media airwave. Antitrust law must evolve to tackle this risk and ensure a level playing field for operators of all sizes.

Equally, growing XR firms must consider accessibility for the Metaverse, Web3, and the hardware behind XR applications.

The future of the Metaverse should contain enough chances for everyone. While XR content creation applications are becoming increasingly accessible with low and no-code solutions, the hardware to power XR applications is notably expensive.

With cloud RT3D rendering still waiting for creators in the future, XR content creators require powerful products to design XR experiences. Virtual reality (VR) headsets and AR smart glasses are still luxury items on the customer side. The Meta Quest Pro debuted earlier this year for a high price leading to the cheaper, older model remaining the popular product.

Furthermore, in regions like Brazil, Meta headsets are roughly $2,000. High device price points can lead to XR content creators facing serious difficulties when trying to access the hardware that lets them enter into or build a Metaverse experience which represents them.

With some XR creators facing hardware barriers to entry, XR firms should keep accessibility in mind when making and selling XR content and services.

Data Processing Oversight

The Metaverse will rely on rapid data processing to scalable power worlds and intuitive experiences. But legislators must determine ways to ensure big XR companies don’t exploit user data and privacy.

XR companies must act responsibly with the data they gather. For example, an outward-facing tracking camera can analyze data on the user’s surroundings, such as brands and locations, for XR applications. Although, XR firms can not exploit this incredibly personal data.

Harassment, Cyberbullying, and Discrimination

Cyberbullying has been a long-standing problem for social media, and 75% of online harassment victims have encountered bullies on Facebook. The internet forced lawmakers to adopt laws which handled harassment to cover an ever-evolving world of communication.

The Metaverse could make it even harder to control such activities, needing strict and preventive policy-making. Discrimination is another area that needs attention so that companies properly represent individuals participating in Metaverse-based remote communications.

Fortunately, the legal community is acutely aware of what the Metaverse entails. Companies can work with advisory providers like Reed Smith and PwC for legal/compliance help on the Metaverse.

You can also collaborate with academic think tanks – such as Meta’s ongoing partnership with the Centre for Technology, Robotics, Artificial Intelligence & the Law at the Faculty of Law, National University of Singapore.

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