Suddenly the metaverse is everywhere. But what are the potential legal ramifications of living and working in this parallel universe? In this two part article a team from Norton Rose Fulbright LLP will look at the potential legal issues and, in this first part, the technology behind the concept
BigTech and other online platforms are beginning to acquire software businesses to position themselves for the arrival of the Metaverse. They hope to be at the forefront of profound changes that the Metaverse will bring in relation to digital interactions between people, between businesses, and between them both.
What is the Metaverse? The short answer is that it does not exist yet. At the moment it is vision for what the future will be like where personal and commercial life is conducted digitally in parallel with our lives in the physical world. Sounds too much like science fiction? For something that does not exist yet, the Metaverse is drawing a huge amount of attention and investment in the tech sector and beyond.
In Part I of this article we look at what the Metaverse is, what its potential is for disruptive change, and what some of the computer science challenges are. In Part II, we will consider some of the key legal and regulatory issues future stakeholders may need to consider.
What is the metaverse?
The Metaverse is still just an idea. It has been defined as “the convergence of (1) virtually enhanced physical reality and (2) physically persistent virtual space. It is a fusion of both, while allowing users to experience it as either”.1 It may initially consist of shared, 3D virtual spaces making up a perceived virtual universe.
The Metaverse will be the outcome of the convergence of a range of nascent and extant digital and online technologies. It may start off as a focus for gaming, virtual reality, digital meeting spaces, digital assets (such as non-fungible tokens), and perhaps even brain-to-machine interactions, but it will not end with that. Its scope and impact will expand when Artificial Intelligence becomes ubiquitous within it, and when data from the physical world is brought in via the Internet of Things (integrating humans as well as businesses in ever more digital / physical co-existence).
The Metaverse’s true potential lies, however, not in ever more convergence for its own sake but in the outcome of that convergence. It may evolve to become a universal digital platform for personal and commercial interactions – the platform replacing the current technology stack of the World Wide Web operating on top of the Internet - and become the source of the most valuable data about consumers available to the business world.
|What are the characteristics of the Metaverse?2
1- Persistence: the Metaverse will exist regardless of time and place.
2 - Synchronicity: participants of the Metaverse will be able to interact with one another and the digital world in real time, reacting to their virtual environment and each other just like they would in the physical world.
3 - Availability: everyone will be able to log on simultaneously and there will be no cap on the number of participants.
4 - Economy: participants - including businesses - will be able to supply goods and services in exchange for value recognised by others. That value may start off as (or include) the kind of value that video games players already use now (for example, fiat currency exchanged for virtual gold and in-game items). It may also include non-fungible tokens, cryptocurrency, and e-money, along with more traditional fiat currency. Such exchanges of value may depend upon technologies such as distributed ledger technologies and smart contracts, and technologies not even thought of yet.
5 - Interoperability: the Metaverse will allow a participant to use his or her virtual items across different experiences on the Metaverse. For instance, a user experience may include cross-platform capability allowing, say, a vehicle unlocked in a racing game to be used in a different adventure game, or an item of clothing purchased on the Metaverse to be “worn” and used in games, concerts and any other virtual environments available. As the Metaverse moves beyond gaming, businesses participating may need to move beyond existing proprietary methods of shoring up their market positioning. For example, controls over formats for the exchange of data and over verification of ID will need to change.
Why would the Metaverse be any different from the World Wide Web?
To achieve that, different infrastructure will be required, perhaps in part on a distributed or decentralised basis. While based on Internet infrastructure, there are already successful distributed/decentralised computing models (for example, distributed ledger technology and cloud computing) that might point to the future of what the infrastructure might be like.
|“The Metaverse will require countless new technologies, protocols, companies, innovations, and discoveries to work. And it won’t directly come into existence; there will be no clean ‘Before Metaverse’ and ‘After Metaverse’. Instead, it will slowly emerge over time as different products, services, and capabilities integrate and meld together.”3|
|THE METAVERSE: A COMPUTER SCIENTIST’S VIEW
Professor Peter McBurney, Professor of Computer Science in the Department of Informatics, King’s College London and Co-Head of Technology Consulting, Norton Rose Fulbright LLP, shares his views on some of the computer science challenges presented by the Metaverse
The Metaverse will require massively-large databases with real-time (or near-real-time) updating, along with simultaneous access by millions or even billions of users. The growth of social media has led several companies - particularly BigTech - to develop expertise in the design and operation of massively large databases - expertise that is only also held by some national military and security organisations. As with national telecommunications or electricity networks, the technical expertise needed to operate these very large systems will be concentrated in a handful of commercial organisations. (It is important to note that no university has such expertise, because no university or academic research team operates such large databases having millions of simultaneous users.)
Because of its size and great commercial potential, the Metaverse has attracted attention from large technology companies. However, even these companies, despite their ambitions, are unlikely to be able to provide the entire Metaverse platform on their own, or even jointly. It is much more likely that different parts of the Metaverse will be provided by different companies, perhaps divided by geographic regions, or by economic sectors, or by the types of applications and users (e.g., private individuals vs. small companies vs. large corporates, etc).
Given that there may be multiple Metaverse stakeholders, there may also be significant scope for shared data platforms in the Metaverse (for example, distributed ledger technology). Such platforms may provide a means to transfer information between Metaverse subspaces based on different application domains or different sectors or different geographies (such as transfer of wealth obtained in online games across to bank deposits or across to purchase vouchers usable in e-commerce sites).
For effective collaboration between multiple Metaverse stakeholders, there will need to be standards for real-time exchange of data and user interactions. Standards may emerge, as the Metaverse comes into being and grows, or standards may be agreed in advance. Already, there are efforts to develop open source standards, such as the Open Simulator project (http://opensimulator.org/). Whether these open source proposals will be adopted commercially or not will depend on the attitudes of the major tech companies. Often, standards in computing only emerge after much tactical jockeying and positioning by competing technology companies, each eager to impose their own views and practices onto final standards, though perhaps unwilling to be seen to be doing so.
One interesting comparison is to consider the history of standards for exchange of electronic data between companies. From the 1970s onwards, many large companies participated in industry-specific working groups to define detailed formats for the exchange of data in their industry, under the heading of Electronic Data Interchange (EDI). Although some of these efforts bore fruit, they were all eclipsed in the 1990s by the rapid rise of the World Wide Web. Instead of defining low-level, concrete, detailed and rigid formats for exchange of industry-specific data, the main protocol of the Web, the Hyper-Text Transfer Protocol (HTTP), defined a very abstract (or high-level) standard for exchange of any digital object, and then left the details of the objects to the different users. It is likely that the same high-level approach will also be best for data exchange and interaction standards in the Metaverse.
 Smart, J.M., Cascio, J. and Paffendorf, J., Metaverse Roadmap: Pathways to the 3D Web, Accelerated Studies Foundation, https://metaverseroadmap.org/inputs4.html#glossary.
 These were described by Matthew Ball, The Metaverse: What It Is, Where to Find it, Who Will Build It, and Fortnite, https://www.matthewball.vc/all/themetaverse, 13 January 2020.
 Matthew Ball, op. cit.
Sean Murphy, Partner, Norton Rose Fulbright LLP
Lara White, Partner, Norton Rose Fulbright LLP
Dr Michael Sinclair, Head of Knowledge, IT/IP, Norton Rose Fulbright LLP
The authors wish to acknowledge the contributions of the following Norton Rose Fulbright LLP lawyers to versions of this publication: Jay Modrall, Mike Knapper, Susan Ross, Bryan Park, and Tong Lap Way.