Written by Lim Chyi Ean
In view of rapid technological development, the Metaverse has quickly grasped the attention of many. So, what exactly is the Metaverse, and how does the law come into play? On the 9th of April 2022, RWC hosted a webinar with Dr Lau Pin Lean of Brunel University London to discuss the Metaverse and the law. Here is our recap of the same.
As the Metaverse is still at an infant stage, there is currently no agreed definition of the Metaverse, rather it is described as a virtual and augmented world that has digital twins, also known as avatars, that can interact with each other. Though this “universe” may only be a fledgling, it is taking the world by storm with giants such as Nike stepping into the Metaverse.
Considering the Metaverse is swiftly progressing, it is inevitable that it will soon be part of our everyday life. As such, the public should be wary and aware of the risks and legal issues that will potentially arise.
Legal Issues in the Metaverse
As there are multiple virtual worlds (possibly interconnected, but separate) accessible from different parts of the world, it begs the question of what and/or which laws would apply and to what extent?
A possible solution would be to apply the law which governs the developer and/or operator of such Metaverses. It then begs the question of whether there should be a list of terms and conditions that meet internationally accepted laws to protect users of the said Metaverse? If so, to what standard should such terms and conditions meet? Due to the different laws, rules and regulations of each country, there are bound to be difficulties in the creation and enforcement of terms and conditions that balances the interest and rights of the developers and/or operators (commonly private entities), the Government, the Metaverse, and its users.
Additionally, there may also be loopholes found in the laws should they be applied in the Metaverse. Criminals Affair, for example, can be complexed and blurred in the Metaverse. Currently, there are laws for criminal acts involving bodily harm. Having said that, there is an absence of actual bodily harm inflicted on the individual even if it has been inflicted to their avatars in the Metaverse. An example would be assault where no actual physical harm has occurred. Nevertheless, the individual may suffer from emotional trauma that is present, real and has potentially lasting effects. The ultimate question is who should be responsible in regulating the conduct of users in the Metaverse?
The running of businesses within the Metavers is developing rapidly. Currencies used in Metaverses include cryptocurrency and Non Fungible Tokens (NFT). NFTs are essentially digital assets with a special, unique identification that can be traded and sold, most commonly, art. Issues that may arise here are novel intellectual property issues, which includes copyright infringement, trademark infringement, or patent infringement. Here, the issue of transparency also comes into play. There may be risks of leakages of NFTs before it is officially released to the public.
As a result of business and trade in the Metaverse, the issue of taxation then arises. When assets are purchased or sold, they are currently subject to taxes. Due to the fact that we are still uncertain as to what specific laws should apply in each Metaverse, we are thus unable to determine the type and amount of taxes that should apply. Considering the Metaverse is a place for all, should there be a standardized tax which applies to all its users?
Data protection is another main concern. Currently, there are no terms and conditions for avatars to agree for their actions, movements and body languages to be monitored and recorded. This may be considered as a breach in human rights and privacy.
A wide range of data can be obtained from observing one’s conduct while they are logged into the Metaverse. For example, the user’s movements in the Metaverse, their preferred activities or products and biometric data through interactions within the Metaverse, all of which are useful to corporations to understand consumers better. As of now, we are still unsure what the data collected is being used for and how it is being processed, and the absence of this knowledge is alarming.
In our discussion on governance above, we have addressed the issue of assault in the Metaverse. In recent years, we have observed an increase in sexual harrassment cases in the Metaverse. In an effort to combat this issue, Meta has recently created a function called the safe zone, whereby avatars are able to activate a 2 meter barrier around the avatar..
Although it is a good effort, such a function is still insufficient as it does not restrict another avatar from standing outside the barrier and shouting hate speech or lewd words to an individual. Such conduct may still cause emotional damage and trauma to the victims. It is yet to be decided how these assailants should be punished. Is the avatar an extension of a legal personality, or is the avatar to be given a separate legal personality?
A Metaverse is a mixed reality made up of virtual reality (“VR”) and augmented reality (“AR”) with endless interactions and potentials, and as such, many legal and non-legal issues are bound to arise. Presently, we observe 4 potential issues, namely, issues relating to governance, data protection, user interaction, and the marketplace in the Metaverse. It is worth noting that other potential problems include, the creation of a dark and hidden metaverse (akin to the black market) used for criminal acts and illegal trading, masking of identities. It is with great hope that the regulators and operators of the Metaverse will look into these issues and find a viable solution.
Published on 28 April 2022