The Metaverse and Legal Issues

International Edition 23'

Modern Cases


Paul Sills

Isaac Asimov said that “today’s science fiction is tomorrow’s science fact.”

Is this true of the metaverse? The term was coined by Neal Stephenson in his 1992 novel Snow Crash in which human avatars and software agents interacted in a three-dimensional virtual space.

A metaverse (there is likely to be more than one) is a virtual reality space in which users can interact with a computer-generated environment and other users. This digital “reality” will make use of existing technologies: social media, online gaming, augmented reality, virtual reality, cryptocurrencies, NFTs, blockchain and other distributed ledger technologies.

One key component of a metaverse will be NFTs or non fungible tokens. An NFT is a unit of information recorded on a blockchain about goods or services that are not interchangeable. This differentiates NFTs from cryptocurrencies which are interchangeable (as standard paper fiat currency is). NFTs are used to own digital assets (art, sneakers, clothing, real estate).

The best way for a layperson to understand the metaverse is to watch Steven Spielberg’s Ready Player One, an adaptation of the 2011 science fiction novel by Ernest Cline which depicts the world in 2045 suffering from both global warming and an energy crisis, with widespread social problems and economic stagnation. Players escape to the metaverse known as Oasis.

Metaverse technology is here (refer to the 2003 video game Second Life) and with billions of dollars now being invested in it by the likes of Microsoft and Facebook (now Meta) it will soon enough become a reality (augmented, virtual or otherwise).

As with any new technology there will be a myriad of legal issues to work through in this brave new utopian world. These include:

Antitrust and competition issues - regulating an increasingly interconnected world without stifling innovation.

Protecting reputations from extortion, deep fakes and the manipulation of data (e.g. fake revenge porn).

Licensing or regulating NFTs – balancing consumer protection against the user’s freedom to trade NFTs with little formality or cost.

Content licensing – balancing the tension between those who create and license content (and want to be paid for doing so) versus end users who focus on their own experience and want their personal content to be transferable between platforms or even different metaverses.

Data protection and privacy rights – end users will be increasingly sharing their personal data and commercial entities operating AI will want it for advertising and product placement. How will this be addressed?

Intellectual property – everything within a metaverse is created and will be somebody’s intellectual property. Commercial parties operating in a metaverse will want to protect their IP. Users will want to take their identity and data everywhere they go. How will new or existing laws adapt to the virtually limitless content and creations contained within a metaverse?

Criminal issues – fraud, theft and conversion will all make a virtual appearance as will fake identities and products (including NFTs) intended to deceive.