Home PublicationsCommentary Innovation Should be the Priority as the EU Tip-Toes into the Metaverse

Innovation Should be the Priority as the EU Tip-Toes into the Metaverse

by Patrick Grady

As the EU turns its gaze to the metaverse, it should focus on incentivizing investment and improving enabling infrastructure and avoid compromising a nascent industry by imposing strict rules on little-understood technologies that are still developing.

Last year’s State of the European Union address promised an “initiative on virtual worlds, such as metaverse” in 2023. Commissioner for the Internal Market Thiery Breton’s corresponding statement confirmed that the EU had set its target on the metaverse. Soon after, the European Parliament launched the Virtual and Augmented Reality Industrial Coalition to facilitate dialogue between stakeholders and more recently authorized a report on “Virtual worlds: opportunities, risks and policy implications for the Single Market.” The European Commission has also organized a citizen’s panel on virtual worlds to deliberate on and contribute to future proposals.

The metaverse—generally understood as immersive virtual worlds accessed by augmented reality (AR), mixed reality (MR), and virtual reality (VR) technology—has the potential to transform many sectors, including gaming, healthcare, and tourism. Where it will have the most significant impact is still unclear. It is commendable that the EU is proactively seeking to better understand, define, and support this emerging technology. At this early stage, it should focus on supporting metaverse infrastructure and resist pushes to ensure interoperability or regulate new content types.

The metaverse needs enabling technologies: connectivity, AI, computing, and blockchain. However, the EU lags behind its global competitors in almost all areas. If the EU fails to close this technology gap, it will fall behind in the metaverse. To this end, the European Commission’s Digital Policy Programme is a good start. The proposal sets targets, with accompanying penalties, for member states in areas such as 5G, cloud computing, and AI uptake. To be a hub for metaverse investment, the EU should go further in financing the research and development of enabling technologies. It should also ensure that its regulatory framework for these technologies, such as its AI Act, is innovation-friendly by only targeting novel risks.

One potential distraction is the EU’s push for interoperability. Interoperability is one of the four FAIR principles in the EU’s Horizon Europe (the bloc’s key funding program) for 2023-2024, and Breton announced that “private metaverse spaces should be based on interoperable standards.” The merits of interoperability are simpler to evaluate and implement for charging ports or public services but hazier for the metaverse. In the metaverse, interoperability might refer to common technical standards for media, digital goods, virtual identities, and communication protocols or to hardware compatibility across devices and consoles. It is not yet clear what standards will most benefit consumers nor whether it is even desirable. For example, should avatars in Accenture’s virtual office, one of the precious few case studies of VR uptake, be able to enter other virtual spaces? Interoperability mandates can chill innovation and competition and, at this nascent stage, the metaverse needs more of both. The EU should engage with researchers and global partners (through forums such as the Trade and Technology Council) to establish desirable standards but avoid mandating interoperability.

A second potential distraction is rushing to regulate privacy, safety, and speech in the metaverse. VR headsets have some features, such as eye tracking and wearable cameras, that create unique privacy considerations, and immersive environments raise new health and safety concerns, including for children. Policymakers will eventually need to consider whether existing laws sufficiently address any new concerns. However, as the impressively expensive but largely empty launch of the EU’s Global Gateway platform (a virtual environment where avatars can roam, chat, and rave) revealed, European consumers are not flocking to metaverse spaces. VR devices are not ubiquitous in the EU, and it will be several years before AR devices test European markets. Therefore, EU policymakers should focus on enforcing and updating its existing regulations, including the upcoming Digital Services Act (which will cover virtual spaces), before attempting a Metaverse Act anytime soon.

The EU’s metaverse initiatives are laudable fact-finding missions. Nevertheless, the EU should prioritize the digital infrastructure enabling metaverse applications. To avoid stepping on the toes of innovation, moves to police interoperability, privacy, safety, and speech in the metaverse should remain light-touch. By focusing on innovation, the EU can adapt and evolve with the metaverse, not prevent it from coming about.

Image credit: Maksim Chernishev

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