EU To Launch Global Metaverse Regulation In 2023; Will The US Follow Suit? – Antitrust, EU Competition

The European Union’s (EU) “Thrive In The
Metaverse” initiative 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?

Background

The September announcement of the EU’s metaverse regulation
framework is part of the continent’s digital regulation
strategy, which examines new online opportunities and trends.
According to Thierry Breton, European Commissioner for the Internal
Market, any hype surrounding the virtual world or immersive social
connectivity will be subject to scrutiny. Further, he said 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’s metaverse regulation will cover three
topics in particular:

1. Network Infrastructure Taxes
   
   It is likely that the EU’s metaverse 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.




2. Rebooted Digital Rules
   
   Judging from 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.




3. 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:

1. FTC’s 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.




2. 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.




3. 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.

Conclusion

Countries in the EU, South Korea, and Japan have made
significant strides toward regulating the metaverse. While 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.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.