The EU Metaverse Strategy will analyze privacy, competition, and rights.

The European Commission’s metaverse strategy, which was supposed to be released next week, has been delayed and is not expected to have significant impact. However, there are genuine concerns about policy issues such as property rights, technological standards, and privacy in virtual worlds.

The strategy was initially announced by Commission President Ursula von der Leyen in September, but its release has been postponed as much as possible. EU commissioners are set to agree on it next Tuesday, any later and it would clash with preparations for the next State of the EU speech.

The Commission has indicated that the proposal will not be legislative, but rather a discussion of policy issues without a formal bill. However, it may pave the way for stronger action in the future.

The metaverse strategy is seen as a starting point that sets the agenda for future developments. Patrick Grady, editor of the Brussels-based website and research initiative Metaverse EU, said, “Once the machine gets moving, it doesn’t really stop.”

Grady also mentioned the Commission’s 2018 strategy on Artificial Intelligence, which initially promised a stakeholder alliance and reinterpreted liability rules, but eventually led to an AI bill in 2021.

While a clear regulatory framework is often welcomed by the industry, there have been controversies surrounding EU rules in areas like AI. The recent Data Act, for example, which is meant to govern information collected by connected objects, raised concerns among Web3 proponents that it could potentially make smart contracts illegal.

European values

The Commission has stated that the metaverse will need to embody “European values,” with specific attention to topics like discrimination, safety, and data controls. Commissioner Thierry Breton’s blog and subsequent consultation from the Commission hinted at another immediate fear – that Web3, like its predecessor, could be dominated by major players that stifle competition.

This may include familiar companies like Facebook, which has rebranded itself as Meta (META) and is shifting towards a more immersive experience. Apple’s entry into the space could also have a transformative impact.

During an April hearing, Meta’s EU Public Policy Director Aleksandra Kozik faced questions from lawmakers regarding the technology’s impact on jobs, discrimination, and organized crime abuse. Kozik emphasized that the metaverse is not a single product built by one company, but a collaboration of various stakeholders, both large and small.

Given the Commission’s previous scrutiny of Meta’s dominance, it is skeptical of such analogies. Grammar may offer a clue to the EU executive’s thinking, as Grady points out.

Similar to the internet, the essence of the metaverse is to be a unified space, avoiding fragmented silos. However, the Commission’s own paper refers to virtual worlds in the plural form, suggesting that Meta’s metaverse might be one of several separate walled gardens. Breton also discusses both the metaverse and different metaverses.

One solution is to ensure that companies like Meta adhere to common international standards. However, the EU’s antitrust rules can sometimes hinder this, as any collaboration among perceived competitors may be treated as a cartel.

Rights

Some in the digital sector see this as an opportunity. A spokesperson for the lobby group DigitalEurope stated that virtual worlds are increasingly part of the modern digital industry, in which Europe excels. They hope to see a strategy that supports this, citing possibilities such as affordable online job training, virtual factories, and power grids.

However, the metaverse raises many legal quandaries, including basic rights. Joshua Fairfield, a law professor at Washington and Lee University, highlighted concerns about personal property interests being undermined by the terms and conditions of online platforms. He stated that end-user license agreements in the metaverse supersede constitutional rights, as they replace many of the social rules we take for granted.

There is ongoing debate on how to address these fundamental problems – specifically, whether the metaverse is truly new and requires its own set of rules.

Meta, in response to the EU’s consultation, stated that the metaverse is not being developed without regulations. They mentioned that existing online laws still apply. They suggested that if any new or unique issues arise as the metaverse continues to evolve, the Commission should address them on a case-by-case basis using evidence-based policy development.

For some, virtual worlds represent a significant change due to the reliance on potentially invasive technology like headsets and glasses.

According to the Electronic Frontier Foundation, extended reality technology poses risks to human rights and could lead to increased sensitive data collection and surveillance by governments and corporations. They even expressed concerns about accessing people’s thoughts and emotions.

Will any of this impact the average crypto fan? It is likely, especially if the predictions of the commission’s Joint Research Centre come true.

A report published by the JRC on Monday suggests that blockchain and cryptocurrencies will be the technological foundation of a decentralized infrastructure supporting the metaverse.

This will be welcomed by those who believe that online virtual worlds require a different way of thinking compared to the centralized structures of Web2. It also means that metaverse regulation carries a risk for the crypto sphere.

Edited by Sandali Handagama.

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