No Need for Metaverse Regulation Yet, EU Antitrust Boss Says

The development of the metaverse has not yet sparked the need for legislative or regulatory intervention, EU antitrust boss Margrethe Vestager has said.

The metaverse has been pioneered largely by innovative start-ups, but there are concerns that the likes of Microsoft and Meta could trample over these firms due to their existing reach and scale. These fears have been exacerbated further since Apple entered the fray with its Vision Pro headset (albeit sidestepping any reference to the metaverse.)

However, Vestager has said the EU has no plans to step in and regulate the industry just yet. Speaking to journalists yesterday (via Reuters), she moved to quash fears that established tech giants will dominate the metaverse.

“Actually, we see that there is a lot of innovation when it comes to virtual worlds,” she said.

“I don’t think that any company can claim that they will own it, so to speak, but that is what we hope to find out.”

Vestager was speaking ahead of the launch of an EU metaverse initiative which will help regulators understand the metaverse but stop short of telling them how it should be governed.

The initiative will provide a “toolbox of guidelines” for interacting with virtual worlds and guidance on how to fight counterfeiting, Reuters added, citing a leaked document.

Beware of Gatekeepers

The EU may not be baring its teeth just yet, but the document does warn of potential issues on the horizon, according to reports by CoinDesk.

It claims that large “gatekeeper” companies have the potential to freeze out competition, presumably referring to app stores that regulate the path between developers and users.

Despite concerns, the document actually proposes relaxing regulations to help foster innovation in “Sandboxes”. Experimenting in these lightly regulated environments will help organisations test projects in the short term to establish what works and what doesn’t.

“Virtual worlds bring unprecedented opportunities in many societal areas,” the document states.

“This technological shift also involves new forms of global governance.”

Although no metaverse legislation is expected to be announced next week, Vestager said that existing digital legislation will also apply to metaverse governance.

“In Europe, now we have a body of digital legislation, I think we do have time to explore, to know that we should not jump to regulation as the first sort of safety pad,” she added.

EU Activity

The EU is no stranger to putting its money where its mouth is, targeting metaverse builders Meta and Google in just the last few weeks.

In June, the European Union (EU) imposed a €1.2 billion fine on Meta Platforms, accusing the tech giant of breaching transatlantic data transfers.

The penalty, the largest ever imposed on a Big Tech firm, was issued by Ireland’s Data Protection Commission (DPC), which oversees the EU’s General Data Protection Regulation (GDPR).

The DPC alleged that Meta Ireland, based in Dublin, had failed to adequately protect data transfers from the EU to the United States. The data flow relied on contractual clauses that did not sufficiently address the risks to users’ rights and freedoms.

The DPC ordered Meta Ireland to suspend further transfers of personal data to the US within five months and cease processing and storing data from EU citizens in the US within six months.

Meta, in response to the EU penalty, expressed disappointment, arguing that it was being singled out despite using the same legal mechanism as numerous other companies operating in Europe.

A matter of days later, the European Commission accused Google of violating its antitrust laws by favouring its own advertisement services over competitors.

.@Google controls both sides of the #adtech market: sell & buy. We are concerned that it may have abused its dominance to favour its own #AdX platform. If confirmed, this is illegal. @EU_Commission might require Google to divest part of its services.https://t.co/6SwdoLlN8a pic.twitter.com/2rZok2BWYs

— Margrethe Vestager (@vestager) June 14, 2023

The Commission claimed that Google had abused its dominant position over the past nine years, providing preferential treatment to its AdX exchange and manipulating ad auctions to benefit itself. These actions potentially marginalize rival ad exchanges, breaching Article 102 of the Treaty on the Functioning of the EU.

The Commission suggested that divesting in Google’s technologies might be necessary to deter the company from such practices.

This recent antitrust violation follows Google’s previous payment of a record 4.1 billion Euros in September of the previous year, as regulators compelled Google’s parent company, Alphabet, to pay a significant portion of the imposed fine.