Note. From ABOBE STOCK, by Forbes, 2022. (https://www.forbes.com/sites/bernardmarr/2022/04/04/the-effects-of-the-metaverse-on-society/?sh=2a71134c765b) CC-BY 2.0
With the continuous development of metaverse technology, the world where virtual cyberspace, data intelligence and the real world merge is gradually being reconfigured. The metaverse has made the complicated web governance issues that existed in today’s web 2.0 era even more acute. An important question is whether the metaverse should follow the practices of web 2.0 and the real world and maintain the same necessary regulation and content censorship.
Privacy and security of data
Firstly, the protection of user privacy and data security is an essential prerequisite for the governance of the metaverse industry. Compared to the traditional Internet, the metaverse has real-time, immersive and ultra-realistic characteristics. In particular, the future combination of the metaverse with VR technology will create certain data protection issues. VR technology can collect more body data through facial recognition systems, eye tracking systems and advanced sensors, such as fingerprints, voice prints, eye movement detection, etc. This indicates that all individual attributes and behavioural preferences of the user in the future metaverse space will be recorded and collected in real-time in digital form. Criminals will be able to use the complete data to piece together a more three-dimensional and realistic portrait of the user to commit crimes. As a result, data leakage in the metaverse could cause unpredictable damage to users’ privacy and security.
Note. The technology sector and the video game industry are preparing for the advent of the metaverse: a network of 3D virtual worlds, where humans can interact with each other socially and economically, mainly through avatars. From naratrip wboonroung / iStock / Getty Images Plus, by WIPO Magazine, 2022. (https://www.wipo.int/wipo_magazine/en/2022/02/article_0002.html) CC-BY 2.0
Some scholars believe that a metaverse with distributed governance to maintain regulation and privacy protection is a more feasible approach at this stage (Rennie et al., 2019). A metaverse with Web 3.0 characteristics is likely to be a distributed platform where data is stored on users’ own or delegated trusted nodes, with each node forming a decentralized autonomous organization ( Rennie et al., 2019). The DAO is an unconventional form of organisation with a completely new set of economic collaboration mechanisms (Hassan & De Filippi, 2021). For this new community structure within the metaverse, the strategy of distributed spontaneous governance emerges. Distributed spontaneous governance refers to empowering users with democratic oversight and valuing the role of rules such as platform terms of service and community norms to achieve a balance between privacy protection and necessary regulation (Hassan & De Filippi, 2021). In distributed governance, when users encounter speech acts that undermine public order requirements or feel offended, they can enforce oversight directly in two ways. The first way is to report the person who is spreading illegal information or disrupting the order to facilitate subsequent monitoring by the system (Jacob, 2022). The second way to enforce oversight is through whistleblowing reported to the platform’s algorithm or operator. The metaverse can use economic rights such as tokens and NFT to create rewards and punishments to address issues that exist in the virtual world but cannot be covered in reality (Dhanani & Hausman, 2022).
Despite the shortcomings of this distributed governance approach, it ensures that the metaverse maintains a fuzzy equilibrium, i.e. a loose and adjustable balance between privacy protection and order maintenance. Maintaining an appropriate fuzzy equilibrium in a metaverse with a large number of customers and a rich set of applications is both a less costly regulatory approach to governance and a way to order government and institutional intervention in situations where user privacy is protected (de Roo & Porter, 2007). In fact, in addition to its application to privacy protection, the idea of distributed spontaneous governance can also be useful in other compliance and internal governance issues of the metaverse.
The entrance to Decentraland
Note. Decentraland is a 3D virtual world platform. Users may buy virtual plots of land in the platform as NFTs via the MANA cryptocurrency, which is a sidechain of Ethereum. From Decentraland, by TIME, 2022. (https://time.com/6140467/metaverse-real-estate/) CC-BY 2.0
Protection of virtual assets
Additionally, the misuse and hidden exploitation of capital pose a challenge to the regulation of virtual assets and virtual currencies in the metaverse. The assets negotiable under the metaverse space have real-world prices through digitisation, thus giving birth to a whole new but strongly connected economic system to the real world. For example, according to the Wall Street Journal, a piece of virtual land on the virtual gaming platform Sandbox was sold for $4.3 million, a new record price for a metaverse real estate transaction (Putzier, 2021). Non-Fungible Tokens (NFT) artwork prices are also being pushed up by capital speculation. These and other things are enough to show that social media will become a new platform for digital currency with the development of the metaverse.
Note. Participants can buy a virtual yacht or paintings for their virtual homes. From Republic Realm/The Sandbox, by The wall street journal, 2021. (https://www.wsj.com/articles/metaverse-real-estate-piles-up-record-sales-in-sandbox-and-other-virtual-realms-11638268380). CC-BY 2.0
Simultaneously, data platform companies with a dominant presence in the virtual space pose a significant challenge to state regulation. For instance, in the financial sector, the metaverse financial activities that have emerged are decentralised transactions. If the regulatory system and capacity cannot adapt to the risks of new technologies such as decentralised markets, the economic activities in the metaverse may be mapped onto the real economy and even lead to a global financial crisis (Williams, 2022). Therefore, the combination of metaverse and finance should be extremely cautious, especially to avoid the self-propagation and speculation of virtual currencies that are detached from fundamental values and fiat currencies.
In addition to this, the blurring of the boundary between user play and labour makes the exploitation of users by capital more insidious. The metaverse has been described as a developer or creator-driven economy, whereby users become the actual developers of the metaverse platform. The new relationship between users and platform companies has given rise to new ethical issues. In the case of the ‘Robbux’ platform, for example, users undoubtedly create a great deal of economic value for the platform as developers of games, yet the platform pays far less than the value created by their labour (Defer, 2022). The platform allows developers to monetise their game creations and earn money from the platform by acquiring a virtual currency called ‘Robux’. However, the Robux currency system is entirely controlled by the platform, which receives around 75.5 per cent of the revenue from each sale, while developers receive little or no revenue. As a result, if the future metaverse is to avoid the hidden dangers of capital manipulation, it will be necessary to control the negative impact of capital on the metaverse’s financial sector while preserving user rights to regulate capital’s exploitation of users.
Intellectual property issues
Finally, the protection of the intellectual property is one of the key issues in the governance of the future metaverse. The future metaverse is a collective shared space where almost everyone is a creator of this world. However, the freedom of creation in the metaverse creates difficulties in managing content censorship and the dilemma of defending intellectual property rights when they are infringed. Elements such as virtual digital people, objects and scenes in the metaverse are likely to be derived or adapted from their real-world counterparts. Such adaptations, which cross the boundary between reality and reality, are likely to lead to intellectual property disputes, including portrait rights, music, images, copyright of works, etc. For example, Solid Oak Sketches, the copyright owner of a tattoo, filed a claim against 2K Games, the publisher of the famous video game series NBA 2K. The claimant owned the rights to several graphic designs from tattoos of famous basketball players, including LeBron James, and argued that its copyright was infringed when reproduced in the digital bodies of the athletes in the video game (Ramos & Madrid, 2022). Despite the implied licence defence expressed by the court in this case, it has not been possible to quell the widespread debate about the infringement of images in virtual worlds.
In an interview, Dr Michaela MacDonald argues that the metaverse is a typical UGC (User Generated Content) platform, with content produced mainly by users (Fide Fundacion, 2022). The content produced by such platforms requires strong security protection and content regulation. She points out that copyright regulation should both protect existing content and ensure that the platform gives users enough creativity and freedom.
In the article ‘Blockchain and the Creative Industries’, it is suggested that blockchain technology may enable a more efficient and transparent creative economy. The authors argue that blockchain technology could be used to produce infrastructure with built-in legal and regulatory parameters, which could extend to aspects such as compliance with identity, origination and authentication, or taxation (Rennie et al., 2019). While this blockchain technology offers technical possibilities for authentication, corroboration, and recourse. However, there has never been a sound regulatory approach for a large number of UGC-generated and IP applications in the metaverse space that span the real-imaginary boundary. Therefore, the future governance of the metaverse should strengthen the protection of IP and develop a complete regulatory system.
The metaverse should follow the governance rules of Web 2.0. The policy of distributed governance should be promoted while protecting user privacy and data security. On an economic level, the metaverse should enforce regulation on capital abuse and exploitation of users to prevent volatility in the real financial system. In terms of intellectual property rights, the future metaverse should strengthen the protection of intellectual property rights and develop a complete regulatory system.
Rennie, E., Potts, J., & Pochesneva, A. (2019). Blockchain and the Creative Industries. RMIT University, 42, Article 698760. https://doi.org/10.25916/5dc8a108dc471
Hassan, S. & De Filippi, P. (2021). Decentralized Autonomous Organization. Internet Policy Review, 10(2). https://doi.org/10.14763/2021.2.1556.
Jamison, M. & Glavish, M. (2022). The Dark Side of the Metaverse, Part I. AEI. https://www.aei.org/technology-and-innovation/the-dark-side-of-the-metaverse-part-i/
Dhanani, A., & Hausman, B. J. (2022). Decentralized Autonomous Organizations. Intellectual Property & Technology Law Journal, 34(5), 3-9. http://ezproxy.library.usyd.edu.au/login?url=https://www-proquest-com.ezproxy.library.sydney.edu.au/scholarly-journals/decentralized-autonomous-organizations/docview/2661581119/se-2
Jacob, S. (2022, March 16). Rethinking moderation systems for the Metaverse. XR Magazine. https://www.xrmust.com/xrmagazine/editorial-moderation-metaverse/
de Roo, G., & Porter, G. (Eds.) (2007). Fuzzy Planning: The Role of Actors in a Fuzzy Governance Environment. Ashgate Publishing.
Ramos, A., & Madrid, P. (2022). [Images]. In The metaverse, NFTs and IP rights: to regulate or not to regulate? WIPO Magazine.
Putzier, K. (2021, Nov 30). Metaverse real estate piles up record sales in sandbbox and other virtual realms. The wall street journal.
Clark, M. (2021). NFTs, explained. The Verge.
Defer, A. (June 18, 2022). On Roblox, children are both grunt labor and target consumers of a video game giant. Lemonde. https://www.lemonde.fr/en/pixels/article/2022/06/18/on-roblox-children-are-both-grunt-labor-and-target-consumers-of-a-video-game-giant_5987226_13.html
Bruner, R. (2022). Decentraland. [Images]. In Why investors are paying real money for virtual land. Time.
Putzier, K. (2021). REPUBLIC REALM/THE SANDBOX. [Images]. In Metaverse real estate piles up record sales in sandbbox and other virtual realms. The wall street journal.
Williams, B. (2022, Mar 8). Understanding the Metaverse Economy and how to navigate it. Nasdaq. https://www.nasdaq.com/articles/understanding-the-metaverse-economy-and-how-to-navigate-it
Fide Fundacion. (2022, Jun 30). Global Digital Encounters (21): The Metaverse as a Challenge to Classical IP. [Video]. Youtube. https://www.youtube.com/watch?v=wN8TkRtPvvU&t=5s
Ramos, A., & Madrid, P. (2022, June). The metaverse, NFTs and IP rights: to regulate or not to regulate? WIPO Magazine. https://www.wipo.int/wipo_magazine/en/2022/02/article_0002.html