Have you heard of the novel Snow Crash? Well, this novel is unlikely to be overlooked because it describes a virtual world in the 21st-century dystopia. Written in 1992, Neal Stephenson coined the term “Metaverse.” Interestingly, Stephenson wrote in this novel:
“Like any place in Reality, the Street is subject to development. Developers can build their own small streets feeding off of the main one. They can build buildings, parks, signs, as well as things that do not exist in Reality, such as vast hovering overhead light shows, special neighborhoods where the rules of three-dimensional spacetime are ignored, and free-combat zones where people can go to kill each other.”
This simple quote by itself describes, if not precisely outlines, the grand virtual experience of the Metaverse. Mark Zuckerberg further tells us this enthralling concept in a recent letter to his employees: “We’ve gone from desktop to web to mobile; from text to photos to video. But this isn’t the end of the line. “The next platform will be even more immersive—an embodied internet where you’re in the experience, not just looking at it. We call this the Metaverse, and it will touch every product we build.”
Now, what exactly is the Metaverse?
The short answer is: good question, we don’t know yet. Similar to other buzzwords, the term “Metaverse” has no universally accepted definition. What we can say is that the Metaverse involves four elements: virtual reality (“VR”), augmented reality (“AR”), digital ownership, and avatars, connected by a massive network. Some say that the Metaverse is the next generation of the internet, built on the core principles of immersion, augmentation, automation, decentralization, mobilization, autonomation, and real-time activity. Others understand it as a “graphically rich virtual space, with some degree of verisimilitude that allows us to work, play, shop, socialize — in short, do the things humans like to do together in real life”. Focusing on achieving the gripping sensation of “presence and immersion”, the Metaverse would really make participants love socializing. Currently, the most outstanding application of the Metaverse is in video games like Pokémon Go, but we cannot neglect its applications in other fields. To highlight a few: the workplace (Meta is developing a product called Horizon Workrooms, and Microsoft is developing a product called Mesh); entertainment like musical performances and concerts (Travis Scott and Ariana Grande have each held virtual concerts within online game platforms); education (incorporating lessons about the surface of a planet in our solar system and math concepts); healthcare and medical procedures; and real estate and digital assets. It is also worth envisioning having diverse sets of virtual spaces owned by distinct proprietors and companies. For example, in November 2021, Disney CEO Bob Chapek advised its investors that Disney would establish an unprecedented Disney Metaverse.
While all of these sound extremely exciting to most people, we should stay vigilant because now is the time to think about what governs or regulates the Metaverse. Undoubtedly, as we delve deeper, we know that the Metaverse brings multiple layers of legal implications and we must deal with them one by one. Notably, most of our existing laws would make an awkward fit, so not only does this trigger the passage of new laws, but also forces courts to face unprecedented issues in regard to this new form of technology.
In talking about how the Metaverse would generate uncountable legal issues, it is advantageous to start predicting and listing out a few possibilities here. First, since traditional approaches to enforcement of intellectual rights might be greatly challenged, we will encounter issues surrounding the ownership of intellectual property (“IP”). The Metaverse could be seen as a type of digital art, so the proposed NFT-powered metaverse allows us to own things like avatars, land, or digital apparel, and migrate them across platforms via your cryptocurrency wallet. While it brings unique economic opportunities for users, we should “provide a much larger scope of IP rights by creating real-world licensing legislatures, therefore decreasing ungranted content exploitation”. Such uncertainties could also lead to problems with trademarks. We would have to recognize and distinguish infringer identities, actual creators of avatars, and whether digital assets qualify as “goods”. Also, since Metaverse uses cryptocurrencies and tokens, it might be subject to traditional financial regulatory regimes such as securities, banking, money transmission, and commodities laws. Additionally, the SEC (US Securities and Exchange Commission) is unsure of the appropriate application of securities laws for certain Non-Fungible Tokens (“NFTs”). An NFT is a digital asset that represents real-world objects like art, music, in-game items, and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. Each has a digital signature that makes it impossible for NFTs to be exchanged for one another, hence, non-fungible. Essentially, NFTs are like physical collector’s items, only digital. For example, instead of getting an actual oil painting for display purposes, the buyer gets a digital file instead. As if these concerns are not bad enough, we still have to face issues regarding the issuance, trading, exchange, and lending matters. Don’t forget, when such assets are in transfer, they may be subject to several taxes such as income and sales taxes. Understandably, the US Internal Revenue Service (“IRS”) has already issued countless subpoenas to cryptocurrency exchanges searching for information about identification and collection of income taxes.
The Metaverse also presents privacy and cybersecurity issues. The Metaverse will expose various categories of our personal data for information collecting and processing. This includes facial expressions, gestures, and other types of reactions an avatar could produce during interactions in the Metaverse. Thus, we should impose extensive agreements on governing data transfers, information security standards, and responsibility for compliance. We should also be aware of unanswered problems in addressing deep fakes, avatar identity theft, trolling, theft, and new attack vectors coming from wallet integration and use of digital land for unlawful activities. Additionally, cybersecurity also presents various issues in the Metaverse. Generally, cybersecurity involves the ways a company protects itself from an attack by a third party that might impact its data and information systems. Rationally, it is possible to predict issues surrounding phishing, NFT scams, malware invasions, and cybersecurity wallets. What is also worth our attention is that the Metaverse is built through blockchain technology, and while this technology is reliable and secure, it is not invincible. Since the technology is decentralized (no designated admin or moderator to control), it is almost impossible to retrieve stolen or illegally obtained assets. With all that being said, it is indeed crucial to spread awareness around these issues.
Yet, this is not where the danger truly lies. There must be regulations for user interaction. It is extremely difficult to impose punishments and make an avatar be responsible for their actions in the Metaverse. Should we allow avatars to be sued when they assault each other? This might seem like a silly question but worryingly, sexual predators, drug dealers, and illegal weapon dealers are already emerging in the Metaverse. Their identities cannot be easily tracked when they are behind avatars. Research has shown that Metaverse apps have exposed children under thirteen years old to virtual-reality rooms where avatars were simulating sex and children were asked to take part in virtual sex. They were shown sex toys and condoms and approached by numerous adults. This is entirely inappropriate, threatening, and cruel because most of these platforms currently have no age verification checks. Sexual harassment laws do not require physical contact to constitute sexual harassment, but are existing laws adequate to deal with the new Metaverse environment? That answer is: probably not.
Zuckerberg said in announcing his company’s rebrand and Metaverse initiative: “The best way to understand the Metaverse is to experience it yourself, but it’s a little tough because it doesn’t fully exist yet.”
Although the Metaverse is here today to give rise to countless opportunities for people, it could create major upheaval in the near future. The interplay between law and technology must quickly begin searching for solutions because there is going to be a miraculous shift from conventional legal thinking to the “Metaverse legal thinking” before the Metaverse becomes mainstream.
Student Bio: Tianyue Liao is a second-year law student at Suffolk University Law School. She is a staffer on the Journal of High Technology Law and a member of the Suffolk National Trial Team. Prior to law school, Tianyue received a Bachelor of Arts in International Relations and French from Mount Holyoke College.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
