By Ajay Singh,
Author of CyberStrong: A Primer on Cyber Risk Management for Business Managers
It is widely believed that the Metaverse is the next big thing that will shape the way we communicate and interact on the Internet. Top tech CEOs are also predicting the Metaverse to be the future of the Internet. Built upon concepts borrowed from video games and sci-fi films, the Metaverse is set to create a parallel online universe where we can traverse the virtual world using immersive technologies like virtual and augmented reality, 3-D reconstruction, AI, and social media. Furthermore, we can ‘live’ in the metaverse as digital humans. Another way to look at the Metaverse is that it acts as a connection between the digital world and the physical world. The concept of the ‘digital twin’ is one of the building blocks of the Metaverse. A digital twin is a real-time virtual representation of a real-world physical object, system, or process that functions as its digital counterpart. It can be used to perform activities like system simulation, integration, testing, monitoring, and maintenance.
Every day there are reports around the world of new applications where the Metaverse is being used to provide unprecedented experience to consumers in diverse areas such as Healthcare, Military, Manufacturing, Retail, Real Estate, and Education.
The Korean motor giant Hyundai is introducing its new Venue N line in India using Metaverse. This is a part of Hyundai’s larger plan, which involves launching its Hyundai Mobility Adventure available via Roblox, an app they have made available via the Play store. This is a first of its kind in the global automotive industry, which will enable potential buyers to ‘virtually experience’ their forthcoming future mobility lifestyles in the Metaverse.
The spread of 5G technologies, the proliferation of the Internet of Things, and low latency networks are ready to power the Metaverse by providing persistent, real-time connections, high bandwidth, and decentralized data transmission even as more industry sectors figure out how they can leverage the power of the Metaverse to attract new customers.
Traditionally, regulation has always followed the innovation of Internet-based products and services. Whether e-commerce platforms, social media, or peer-to-peer networks, regulation happened well after the introduction and growth of online offerings. Even as the Metaverse is being rolled out to consumers who are lapping up the idea of new and immersive experiences, threat actors are busy unearthing any loopholes in its framework. Cyber-attacks ranging from regular account takeovers and phishing attacks to more advanced attacks, such as presenting fake services to stealing digital data, are already happening in the context of NFTs.
Taxation and regulation across the world seem to have followed former American President Ronald Reagan’s dictum – “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Hence regulatory moves by governments have often come late in the day, be it cyber laws, piracy prevention laws, cybercrime prevention and cybersecurity regulations, privacy laws, and in general, while addressing various issues arising from the use of new and innovative technologies.
Metaverse today is riding on the promise of a new paradigm -Web 3.0, which promises to address various key issues not addressed by earlier versions of the web. Web3 is a broad term that promises fundamental changes in the architecture of the Internet, such as providing control to content creators and over personal data, which presently is being exploited by different platforms and third parties for profit. Web3 will allow creators to tap into various monetization opportunities while ensuring a fair and equitable regime that will reward them for their efforts. It is more than likely that if this promise is fulfilled, many of the current business models will be disrupted. While these goals are laudable, the moot question is- can all this happen as a process of evolution, or does it require the force of regulation to drive the change? Based on prior experience, we can safely say that new laws and compliance mechanisms need to be implemented early in the game so that players learn to play by the rules or face penalties and fines for violating them.
South Korea is among the early adopters of the Metaverse and has invested nearly $200 million in creating its Metaverse ecosystem. It is important to note that the South Korean government is engaged in preparing a Metaverse Industry Promotion Act and has already published a document that defines ‘Metaverse Ethical Principles’, which focuses on such issues as personal data and copyright protections.
As things stand, there are no regulations in place for the Metaverse, although it is well known that security threats such as privacy, use of deep fakes, financial fraud, tracking, misuse of personal data, social engineering, and data breaches are still to be comprehensively brought under regulatory control. Organizations wanting to use the Metaverse will have their data protection policies and provide assurances to self-regulate as they commercialize their platforms, but will they act against their self-interest when it comes to adopting a fair and equitable regime?
One option is to apply existing regulations to the Metaverse, but it is unlikely they will be effective. As the Metaverse evolves further and becomes more like the real world, the need for regulation will be felt even more. It is also inevitable that regulations will eventually evolve to meet different challenges and issues thrown up by more widespread use of the Metaverse. However, it would serve us well if global consensus is reached on already identified issues of privacy, safety, taxation, antitrust, copyright, trademarks, and patents, whether adapted from current regulations or created specifically for the Metaverse.