Federal regulatory efforts could affect VR, metaverse

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As federal leaders eye regulating online data collection and use, as well as reforming antitrust laws, the effects could trickle down to what’s being called the next evolution of the internet: the metaverse.

The metaverse is a virtual world that enables consumers to remain home while interacting, shopping and working with others online. Meta, formerly known as Facebook, popularized the concept late last year and plans to spend more than $10 billion on technologies to build out the metaverse. Microsoft, in its own gamble on the metaverse and expanding its interactive entertainment portfolio, plans to acquire Activision Blizzard — creator of popular games like Call of Duty and World of Warcraft.

The metaverse, and augmented and virtual reality technology that would be used by consumers and businesses to access the metaverse, has yet to garner enough interest from Congress to merit specific regulatory actions. However, data privacy and antitrust efforts to rein in tech giants and the control they wield over consumer data could affect AR and VR technology use, and subsequently the metaverse.

“How policymakers shape these conversations around these other digital platforms will have a big impact,” said Daniel Castro, vice president of the Information Technology and Innovation Foundation.

Data privacy laws

Data privacy laws stand to be some of the most impactful legislative measures to AR and VR technology use and the metaverse.

The privacy implications of AR and VR technologies and the metaverse are already making some lawmakers concerned. Rep. Suzan DelBene (D-Wash.) is warning about VR technology and the amount of personal data it’s able to collect. DelBene is one of many federal leaders behind the push for a federal data privacy law, which experts doubt will come to fruition in 2022.

Although a federal data privacy law may be a long time coming, states are adopting data privacy laws that could leave large loopholes for VR and AR technology, said Lee Tien, senior staff attorney at the nonprofit digital rights group Electronic Frontier Foundation.

The wording in some state privacy laws OKs collection of biometric information for identification purposes, particularly as identification tools such as facial recognition and even fingerprints gain popularity.

Lee Tien, senior staff attorney, Electronic Frontier FoundationLee Tien

Tien said as long as VR and AR technology companies can claim that the biometric information they collect is for identification purposes, then they can continue capturing a significant amount of data — even if it’s not all for identification needs.

“That creates a terrible privacy loophole,” Tien said. “That would undercut a great deal of the value of biometric information privacy laws.”

ITIF’s Castro said additionally, the way privacy laws address biometric information collection can have a significant impact on enterprise businesses. Illinois implemented a biometric privacy law that has resulted in a wave of lawsuits against companies using biometric data to sign employees in and out of the office that employees are claiming didn’t meet the law’s compliance requirements.

The lawsuit risk may deter companies from adopting AR and VR technologies, Castro said.

Antitrust reform

Pending antitrust reform bills aim to increase interoperability between platforms like Meta and third parties as an attempt to open closed platforms and increase competition.

These sorts of open platform policies, such as the bipartisan American Innovation and Choice Online Act introduced by Sens. John Kennedy (R-La.), Amy Klobuchar (D-Minn.), and Chuck Grassley (R-Iowa), have significant implications for all technology, including AR and VR, and the metaverse, Castro said.

The question of whether a company could restrict third-party apps on a platform could affect how different VR platforms might develop, the safety measures they implement and how they interoperate with those third-party platforms, he said.

All of these types of policies could have huge implications for [VR] technology in ways I don’t think anyone is thinking about right now. Daniel CastroVice president, ITIF

“All of these types of policies could have huge implications for this technology in ways I don’t think anyone is thinking about right now,” he said. “It’s critical these policies be developed in ways that are future-proof.”

Specific VR, metaverse regulations

Although broad privacy or antitrust legislation could affect AR and VR use — and potentially the metaverse — Tien said he doesn’t expect to see legislation from Congress anytime soon aimed specifically at AR, VR or the metaverse.

“It’s a classic example of Congress tends to lag,” Tien said. “They lag not only because they’re not particularly good on technology, but also because they often require the bad thing to happen before they’re going to do anything.”

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