The Metaverse Creates a Multiverse of Legal Concerns

The idea of a virtual world straight out of Ready Player One is rapidly becoming a reality. Whereas the Internet today is largely a 2D platform, the metaverse opens the door to a 3D online experience whereby users could partake in more life-like experiences, potentially turning what was initially a novelty entertainment technology into a major facet of modern life. Metaverse-equipped VR headsets in public could become commonplace. Meta Platforms, Inc., formerly Facebook, rebranded itself in October 2021 to pivot and capitalize on the burgeoning virtual reality (VR) and augmented reality (AR) market. For his part, Apple’s CEO Tim Cook said it will be a critical part of his company’s future as well.

Wall Street has taken notice of this latest development. Since the Meta rebranding was announced, Meta’s share price has gained 6.7% and Apple’s 18%.

Even governments are hopping on the metaverse bandwagon. South Korea’s ministry of science, for example, even formed its own metaverse partnership and could roll out phase one as early as this year. However, there are legal implications and concerns across all corners of the metaverse.

Users’ virtual avatars present new, intersecting issues of intellectual property, fraud, and “meta-personhood.” For example, what sort of ownership rights do creators have over avatars in the metaverse, and where is the line between developing a creative avatar and false representations or illegal impersonations? This likewise raises, and complicates, the question of whether avatars can serve as legal representatives. Metaverse companies have an interest in keeping people in the metaverse for as many hours a day as possible. Avatars being able to be legal representatives for dealmaking, legal proceedings, and processes requiring a unique person could encourage a greater presence and commerce in the metaverse, perhaps creating an entire market of “m-commerce.” However, substantial concerns exist over our ability to verify avatars as legal representatives. Someone could detrimentally rely on the promise of an impersonator of a real-life person using an avatar – and who will enforce metaverse agreements is a whole other puzzle.

Jurisdictional and accompanying bureaucratic matters are also a major concern of the fledgling metaverse landscape. As mentioned above, if an issue arises over a meta contract, whether over potential impersonation of a party or over its substance, it is unclear who has jurisdiction over those issues. Furthermore, taxation could quickly become complicated. If a user obscures their real-world location and makes purchases in the metaverse, local governments may need to fight to collect sales taxes, as many did for Amazon sales.

Additionally, the matter of what behavior is permissible implicates civil and criminal enforcement across the globe. For example, in a video game, destroying virtual environments can be part of the entertainment experience, and would likely continue to be so, in some contexts, within the metaverse. However, outside of entertainment contexts, destroying metaverse property using AR/VR tools could be comparable to destruction of real property. New metaverse crimes are certain to arise, and they may be impossible to predict until they occur. Outside of meta-crime, the metaverse could create problematic consequences for the real world. For example, if another user flashes strobing lights while a user with epilepsy is using a VR headset, that could cause serious medical consequences in the real world.

The creation of the metaverse results in a regulatory vacuum, not unlike the vacuum created by the Internet itself. Governments slowly figured out solutions to some of the legal issues posed by the internet, such as sales taxes. However, the plethora of unresolved questions of online governance indicate that certain regulatory vacuums were never fully addressed. While many characterize the metaverse as a potential way for people to escape from reality, it seems likely that the metaverse may simply trade one set of legal concerns for another.