The EU’s Emerging Governance of Virtual Worlds
As virtual worlds and metaverse platforms rapidly advance, the European Union is formulating comprehensive policies and principles to harness opportunities while establishing ethical safeguards aligned with values promoted by the EU institutions.
The EU Commission’s Approach to the Metaverse
In July 2023, the European Commission released a major Communication outlining its vision for shaping responsible development of virtual worlds and metaverse environments. The document establishes explicit definitions of key terms like “virtual worlds”1 and “Web 4.0”2 to support common understanding and coordination between policymakers and standard-setting bodies.
The Communication also highlights significant projected growth in adoption of virtual worlds globally, from a market size of €27 billion in 2022, rising to over €800 billion by 2030. The EU aims to position itself as a leader in ethical virtual worlds that uphold core European Union’s values embedded in their Digital Values list like privacy, transparency, accessibility, diversity, inclusion, contestability and sustainability. The Commission initiative summarizes how existing and upcoming EU regulations on digital services, data protection, AI and more will apply to the governance of activities within virtual worlds.
The Communication then details 10 specific follow-up actions that EU institutions aim to take to achieve successful innovation in this space while safeguarding consumer welfare and human rights:
- Investing in skills building and public education related to virtual worlds, while promoting the EU as a destination for global tech talent.
- Funding research on health and societal impacts of virtual worlds, and promoting ethical design principles.
- Developing educational resources and tools to enhance digital literacy about virtual worlds.
- Launching a new public-private partnership to foster cross-sector R&D collaboration on metaverse technologies.
- Providing Creative Europe funding for cultural industries to test virtual world business models.
- Driving standards development for interoperability of virtual worlds and supporting open-source developer communities.
- Creating collaborative lighthouse projects on using virtual worlds for public interest fields like health care, education and sustainability.
- Enabling coordination between EU member state governments on virtual world strategies and governance.
- Engaging internationally to align global technical governance of the metaverse with the values put forward by the European Union like privacy and transparency.
- Monitoring market developments and emerging company practices to identify policy needs.
The EU Parliament’s Initiatives
Alongside the Commission’s plans, the European Parliament has also launched two separate initiatives concerning virtual worlds. First of all, the Parliament’s Internal Market and Consumer Protection Committee (IMCO) will try to address the opportunities, risks and policy implications for the Single Market of the metaverse. On the other hand, the Legal Affairs Committee (JURI) will focus on the policy implications of the development of virtual worlds, examining the implications of virtual worlds for EU policy areas like consumer protection, infrastructure development, civil law, intellectual property frameworks and industrial growth. It is worth noticing that the EU Parliament initiatives are not legally binding, but they are rather aimed at expressing the Parliament’s position on specific topics. However, Parliamentary own initiatives have usually been seen as a significant precursor to legislative procedures being initiated by the Commission.
The draft report from IMCO stresses the importance of regular regulatory reviews to keep pace with this rapidly evolving technological domain. It also calls for major investments in 5G and 6G network capacity across Europe to support the rollout of data-intensive metaverse platforms, while emphasizing accessibility and sustainability.
The draft report from the Legal Affairs Committee (JURI), just adopted by the Parliament on December 11, 2023, analyses issues like applicable law, liability and intellectual property rights. It notes decentralization poses challenges for enforcing EU law in virtual worlds. The report calls for transparency around marketing of virtual assets and effective identity management systems. It also emphasizes the importance of accessibility and digital literacy for an inclusive transition to virtual worlds. The report expresses concerns that territorial laws on jurisdiction may not always apply clearly in decentralized virtual environments. It highlights the need to ensure EU consumer protection laws can still be enforced for virtual transactions. Another concern is around potentially misleading marketing of virtual assets like “virtual real estate.” The report also states liability rules must apply fully in virtual worlds, but the use of avatars and decentralization creates significant enforcement challenges. While EU intellectual property rights fully apply, new infringement identification issues emerge. There is also a lack of transparency around the scope of rights granted by non-fungible tokens (NFTs), risking confusion.
The Parliament’s initiatives lay the groundwork for potential legislation in the coming years to regulate various aspects of virtual worlds. However, 2024 brings European elections and a new Commission, which could shift the shape and timeline of metaverse governance. In-depth policy negotiations will likely continue under future EU presidencies before comprehensive rules take form.
While the governance of this new digital frontier remains in the early stages, Europe has kickstarted vital conversations and set directional policies rooted in its human-centric approach of ensuring new technologies respect rights and serve society. The EU’s proactive stance asserts a commitment to ethical oversight of emerging virtual spaces while aiming to positively influence policy debates across global standard-setting institutions.
The metaverse and related technologies have a huge potential for European economy, including for immersive education, healthcare, manufacturing, retail and e-commerce, just to name a few, and firms operating at the cutting edge of technological innovation have already been investing in this sector.
As virtual world governance develops across European institutions, companies and organizations have a good opportunity to start engaging on policy developments early on, to inform potential future legislation, especially now as we are approaching a new EU legislative term with the future political priorities of the EU to be determined.
With Trilligent’s expertise in EU tech policy, combined with a global reach and dedicated teams working on emerging technologies, on current and upcoming policies impacting to the metaverse and artificial intelligence among other topics, Trilligent can be a helpful ally in navigating the complexity of Europe’s digital policy future.