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International: Legal ramifications of the Metaverse

The notion of the Metaverse has gone from a concept reserved for science fiction media to a very real prospect as technology develops. This progress however brings with it a host of legal issues which should be considered ahead of time. Anas Abdul Alhameed Al-Qudah, Sarah Alkurdi, and Heba Idmoor, from Qudah Law Firm LLP, discuss the key issues which arise from this topic.

blackdovfx / Signature collection /

Today, the advancement of technology does not pause, and so neither must the regulator. Indeed, we might be way past the point of not having full control over the extension of such a digital big bang. The future will be teeming with unprecedented technologies that are irreversibly interconnected with our lives. Actions taken in virtual environments will have real world consequences and vice versa; thus, regulators should spare no effort to ensure that the public will remain shielded from such effects. Several relevant tech-oriented laws have come into force, with countless others in the pipeline. Nevertheless, the research into a number of contemporary issues that might come to the surface with the advent of the so-called Metaverse is still in its infancy. This article sheds light on a handful of seldom argued critical legal points that a future systematic reform to the current legal framework should address, which would be a single element of the reforms that would accelerate the legal domain beyond its ordinary boundaries.

The notion of the Metaverse

Although the concept of the 'Metaverse' has developed quickly ever since the word was first coined in a piece of speculative fiction named Snow Crash written by Neal Stephenson in 1992, it has more recently come into the spotlight due to recent technological developments. In this article, we consider the Metaverse as a combination of technologies that produce a visible image of cyberspace through which users can interact virtually through digital avatars by using features from social media, online gaming, augmented reality, virtual reality, and cryptocurrencies in e-marketplaces where individuals can trade in the intangible assets of the Metaverse.

It might be said that we are already situated in the Metaverse. However, this might not be completely true due to the fact that, according to Metaverse specialists, the development of the Metaverse cannot achieve this duality until it undergoes three sequential stages: (1) digital twins; (2) digital natives; and (3) a physical-virtual reality where the Metaverse could become a self-sustaining private shared virtual realm that co-exists with the physical world with a high level of independence. Regardless of in which stage we currently are at, regulators should adopt a proactive approach to modernise the existing legal infrastructure, to accommodate the ongoing development and to achieve the coveted economic objectives behind the existence of the Metaverse.

Metaverse and the principle of sovereignty

Sovereignty is an unwavering maxim that endows states with the right to maintain order and carry out activities within their territories. This notion expanded from land, to sea and sky, and to cyberspace accordingly. Although different understandings exist around the ideas and practices for exercising sovereignty over cyberspace, the legal regime of the Metaverse should never be limited to the user-market contract. Even if it is not published to date, Jordan, among other countries, intends to issue Metaverse ethics that a user-market contract should be aligned with, which constitutes a line of defence against excessive data collection and further undesired business activities. On a different scale, states should employ the use of 'supervisory technology' and exercise their jurisdiction to continuously oversee the co-operation between Metaverse creators. This should be with the intention of not only reinforcing the equality of access to the Metaverse, but also to unify the technological constraints that next-gen Metaverse creators will inherit from their predecessors, for the sake of sustainability.   

Another question looms over the authority that a state can exercise regarding the expropriation of virtual real estate in the Metaverse. Each state must set a certain legal rule emphasising that the party who suffers the expropriation must receive compensation equal to the fair market value of the expropriated virtual property. Downplaying the rationality of compensation might end with a costly mistake, as it will run counter to the economic vision behind the Metaverse, considering the lawfulness of the expropriation at the first stage.  

Metaverse and IP laws

The Metaverse poses philosophical hurdles that do not fit with traditional legal maxims crafted for the pre-Metaverse world. For example, when an agent enabled by artificial intelligence ('AI') creates a unique product in a virtual world, it should be determined with whom the ownership of the intellectual property ('IP') rights will rest and how to create protected and enforceable IP rights and business brands inside the Metaverse by establishing clear IP arrangements aligned with real world brands. This is the only for content creators to stay clear of harmful IP infringements and for brands to mitigate the risk of reputational damage ensued from misallocation of their branded items in the virtual world. Green companies, for example, will not be overly thrilled if a third-party uses its trademark in a virtual fossil fuel business.     

Metaverse and environmental laws

It deserves a remark that environmental laws, to date, do not prohibit the fossil fuel business activities nor transport by traditional vehicles. The Metaverse therefore will not directly lessen the number of environmentally harmful activities, but it will nevertheless help to preserve the interests that environmental law protects. On the positive side, the Metaverse may eliminate the need to commute and the need to carry out air-polluting activities (e.g. flying combat aeroplanes as a military training exercise); this then reduces air pollution and global warming. Such effects should be encouraged by the regulator to maximise the ecological benefits of the Metaverse. However, on the negative side, the Metaverse heavily relies upon data processing, which consumes an enormous amount of energy to run its facilities. Regulators are advised to impose a duty on creators to power Metaverse businesses with renewable energy or, otherwise, they will not be entitled to run such businesses.

Data protection and privacy

A never-ending clash between data investments and the concept of privacy puts the Metaverse into focus. While the Metaverse is going to be universal, data protection laws around the global are still inconsistent due to the divergence of economic strategies and societal considerations. The quantum of the collected data might not be an issue in comparison with the hazard that inaccurate data might cause. Hyper-realistic avatars allow users to hide their identity for unjustifiable reasons (e.g. a child who choses to appear as an adult in Metaverse), which can in turn affect the validity of the consent upon which the Metaverse system gleans data, a matter that may trigger the Metaverse creator's responsibility. More importantly, regulators should intervene directly to preclude any kind of dispersal of incorrect data among Metaverse users to influence their mindset and behaviour to serve a specific agenda.

Anas Abdul Alhameed Al-Qudah Legal Consultant
[email protected]
Sarah Alkurdi Trainee Lawyer
[email protected]
Heba Idmoor Trainee Lawyer
[email protected]
Qudah Law Firm LLP, Amman