By Bradley Tusk, co-founder of Tusk Venture Partners, political strategist, philanthropist and writer
It’s a term on the tip of everyone’s tongue and yet still a concept that lacks clear definition. It’s an idea that is capturing the brightest minds at the biggest technology companies – Apple, Facebook, Microsoft – and yet no one really knows what it will be.
The metaverse.
While questions remain, what we do know is that it’s coming. Arguably, it already exists. We know it will integrate today’s internet with virtual reality (VR), augmented reality (AR), and blockchain technology. We know it’s going to be a place where people will interact with each other, where they will buy and sell goods, services, information and access. It’s also a place where communities will form around education, culture, entertainment and faith, and where the traditional boundaries of personal data, property, and privacy will be thrown wide open. We know it’ll resemble, in some ways, the digital world we already know and in others, it will be completely different.
Finally, it will be a place where our current social structures — our governments, our schools, our religious institutions, our social service agencies, our cultural and political organizations — will have to quickly adapt if they want to play a meaningful role.
It’s obvious to us that issues of safety, privacy, taxation, worker classification, and consumer regulation that already preoccupy the tech world today will all be critical to the functioning of the Metaverse. We also know that it will function around and beyond traditional sovereign borders. All of which makes it both really exciting and potentially dangerous.
While policymakers can’t develop specific, detailed regulations for the Metaverse until we have a better sense of what’s actually coming, we can avoid making the same mistakes we did with Facebook, Instagram, Twitter and social media generally if we can develop an intellectual framework for regulating the Metaverse now.
As we have seen so often with all types of emerging technology, especially social media platforms, regulators always arrive late to the game. Now is the time for leaders to begin asking the right questions. This is the chance to be thoughtful about how to regulate the Metaverse.
Hard questions like: who runs the Metaverse? Who maintains it? Who’s in charge? How do you regulate a digital entity designed to transcend sovereign borders? How do you ensure safety in a digital, non-sovereign concept? How do you prevent consumer fraud and protect against online predators? Who has the legal power to do this? What are the risks of terrorism in the Metaverse? How would counter-terrorism work? How should privacy rights work? How about taxation? Consumer protection? Do people own their own data? Is it portable? How do you handle worker classification? How do you regulate industries that move largely online, like gaming? How do you avoid another digital divide? Can you move government services onto the Metaverse? If so, which ones? Education? Health care? Voting? The DMV? There are so many questions and at the moment, so few answers.
So let’s get out ahead of it. This is the chance to get it right.
I. What is a Metaverse?
Before diving into the legal framework that underlies the Metaverse, it makes sense to broadly define what a Metaverse is. For this memo, what we call a Metaverse is a 3D, fully immersive, virtual representation of the world that “represents a broad shift in how we interact with technology.” Unlike most existing games and simulations, a metaverse is persistent. Like a public street or a neighborhood, it’s there even when you’re not, and things keep happening.
Up to this point, technology has mostly been about building tools and experiences. Now we’ll be building worlds. And though they won’t be completely divorced from the physical world like, say, Animal Crossing, the boundaries between the real and the virtual will be in flux. Each Metaverse will draw these boundaries to suit its particular purposes.
Yes, we think the odds are extremely high that there will be more than one Metaverse. A likely scenario is that we’ll move from one to the other, like we do now with streaming services. Many, presumably, will be built and controlled by private companies, like Meta and Microsoft. Governments may create their own, too. It won’t all be about leisure and entertainment. Some may serve very specific technical purposes, such as a Metaverse of air traffic: an immersive environment that shows everything in the sky — aircraft, helicopters, drones, flying cars — including detailed schematic of airports, flight plans, traffic rules (including no-fly zones), and other data that allow all kinds of aircraft to interact with one another rather than relying on each vehicle’s own internal routing. Such a system could enable the sharing of our airways to a far greater extent than is now possible. This is something the Federal Aviation Administration needs to start thinking about before a private company — like one that aims to dominate the delivery of goods via drones — tries to gain de facto control over this critical public resource.
II. Our Thesis
Based on what we know about the metaverse, we believe:
- The problems we have regulating technology companies now will be reproduced and amplified in the Metaverse. You think policing state-sponsored disinformation is hard on Facebook and Twitter? Wait until you try it in 3-D.
- The first order of business must be to do no harm to children. We have allowed the digital world to evolve in ways that are uniquely harmful to young minds. We must avoid perpetuating this grave error.
- Governing the metaverse will necessitate the active involvement and coordination of three main constituencies and a new paradigm of cooperation and accountability. It starts with the companies themselves who need to develop their own safeguards and protections from the ground up and not wait to feign surprise at the bad things that emerge. Then we will need contributions from private groups with specific interests and expertises, such as parents, mental-health professionals, free-speech advocates, constitutional-law theorists, civil rights activists, futurists and many more. Finally, there is our government, which must ditch its own timid, wait-and-see approach and proactively guide this process.
The metaverse, after all, is a human endeavor and as such it will attract and harbor its share of destructive human behavior. That is no reason to be afraid of it or to come out against it; rather, it’s a reason to develop innovative ideas about governance alongside its construction. The clearer we make the rules, the better the Metaverse will be for everybody.
III. What Rights Do We Have in the Metaverse?
In a virtual world, you are no more than the sum of your data. Which is a troubling concept. Forget worrying about your credit card number being stolen. If someone else has access to all your data, they can essentially be you. Protecting your rights on the Metaverse begins with protecting your data. So how do we do that?
- Data Ownership: It’s taken a long time, but regulators in the EU, and increasingly in the United States, are waking up to the idea that people have a right to own their personal data online. In today’s internet, personal data like name and likeness can’t be processed in the EU or California without approval from the individual. In anticipation of what’s coming, regulators should expand these rights to ensure people have full rights, ownership and control over their personal data in every Metaverse. These rights should include not just your direct identifiers, but also your unique creations – if you have a screen name or image (or imagine yourself in a fantastical way), you should have a set of basic [data] rights to avoid misidentification in the Metaverse.Right now, whether your personal data extends to data about personal property is less than clear under the law. And the Metaverse will raise tricky questions about how you stretch these rights; what if, for example, the Metaverse represents the world only vaguely – where will the limits of your rights end? Should protocols (like KILT) be required to ensure that individuals maintain control of their identity?Both of these questions raise another. Right now, you can’t sell your identity, but you can sell your property. In the Metaverse, will you be able to sell either? Both? Can you sell your Metaverse property rights without selling the physical world property? What systems of property tracking will arise to track these property transfers? Will this tracking system be its own Metaverse?
- Privacy?: Questions of your right to own your data also call into question how to protect your data in the Metaverse. The Metaverse may exist outside of sovereign borders and jurisdictions, but it will be hard to function effectively if companies have to adhere to different privacy standards for users sitting in different jurisdictions. Common privacy standards are needed, at least within and across the United States.Furthermore, the Metaverse presents the potential for a massive increase in both the quantity and quality of the personal data being generated (think of a VR headset that can tell exactly what catches your attention by tracking your eyes), further increasing the likelihood of that data then being abused. This makes establishing consumer-centric privacy protections from the outset a pressing matter.Overall, the Metaverse would benefit tremendously from universal privacy standards that protect everyone using it, giving clear guidelines for entities operating in the Metaverse and laying out repercussions for violators. Adopting the GDPR (the European privacy framework) doesn’t have to be the standard for the Metaverse, but elements of it could set a solid floor for data protection: determining what kinds of data can be collected, switching to an opt-in regime, and giving users the right to access, rectify and erase their collected information establish a good starting point.
- Portability?: Unless there’s somehow just one Metaverse that encapsulates everything, each Metaverse would be less meaningful or valuable if you have to have a new identity in every platform. In order to protect consumers from monopolistic capture, regulators need to act early to ensure that every Metaverse allows for interoperability (something like a crypto wallet) so that users can keep track of all of their data and transfer that data among metaverses.Yes, there will be translation issues, but it will be in the interest of all metaverses to allow consumers to move among Metaverses in a way that puts them in control of their identifiable information and data. That way, they can choose from among the many Metaverses depending on which representation of the physical world best suits their purposes.
How realistic is this politically?
Not as bad as you may think. Yes, enacting any sort of federal legislation in the United States seems virtually impossible, but if one issue unites both parties, it’s that they hate Facebook. In fact, they hate social media platforms in general. While they rely on them, some blame the platforms for their own safety being placed in jeopardy on January 6. And unlike vaccines, guns, immigration and seemingly everything else these days, there’s pretty broad consensus among voters that their data should be protected and that their interests should be prioritized ahead of really wealthy companies. It’s way past time for federal action on privacy and data rights and though it would be premature to tailor these new laws to the Metaverse, a precedent can be established for future legislation.
IV. How Will We Be Protected from Censorship, Abuse and Exploitation?
For much of the Metaverse, we should assume that users will have a broad right to free speech. The right to speech has historically been bounded by restrictions on when, where and how people may speak. However, Section 230 of the Communications Decency Act has historically given platform providers immunity from liability for these provisions. But that protection has been so increasingly under threat – even Meta has been advocating for limitations. Change is coming.
An overly simplistic view of the Metaverse is that by expanding a “platform” into an entire digital world, Meta et al are trying to create a new space where they can absolve themselves of the whole moderation mess. We believe this is not the case and that the hosts of any particular Metaverse (or, if you prefer, the points of access to the Metaverse) will still have content moderation responsibilities. These responsibilities will continue to be messy and they will continue to be both under- and over-inclusive. That is the nature of speech regulation. But consider what we have at stake.
Our society is only beginning to grapple with the safety implications of social media platforms. Everything from widespread misinformation that threatens our democracy to live-streamed terrorist attacks are happening online today and could be significantly amplified in the Metaverse. How do we ensure accurate information prevails, especially in a context where the alteration of reality is the point? Life on the Metaverse will not look or feel like real life, and that’s by design. So how do we keep people safe?
The Metaverse has been pitched as a virtual space for social engagement. Although the sensory inputs and outputs will be different from what we’re used to in the physical world, the Metaverse will still be a forum for communicating. That means we need to consider not only the implications of this new technological platform on our right to freedom of speech, but also the responsibility that platforms in the Metaverse have to moderate speech for the safety and protection of others: something which the existing social media platforms have failed to do.
There should be especially strong considerations for how children will participate in the Metaverse. We are learning more every day about the deleterious effects social media platforms have on the well-being of young people, particularly teenage girls. Cyberbullying, sex trafficking, stalking and other corrosive activity could find a very comfortable home in the Metaverse. Conversations need to start now between companies, experts and regulators about guardrails built specifically for the benefit of children.
This is an area that requires particular attention and urgency. Most government child welfare agencies already struggle to handle problems in the real world. They are going to need more resources (and, in some cases, different leadership) to figure out how to protect kids in the Metaverse.
How realistic is this politically?
- Regulations for the Metaverse addressing the risk of sexual harrasment, sex trafficking, stalking and cyberbullying should attract widespread support. Imagine being the politician who votes against that bill? And like data protection/ portability, this type of legislation could be enacted now to apply to the current internet and then incorporate provisions for the expansion into the Metaverse.
- It is also already likely that Section 230 will be changed in some way. Will the changes be substantial enough to really alter the way the social platforms conduct themselves? That is a political process that deserves a lot of scrutiny.
- The speech question is even harder. Since the core issue is what non-speech actions in the Metaverse should still qualify as free speech, addressing those proactively will be difficult. It seems likely that these issues get resolved over time through the judiciary. This is where interest groups can be most effective.
V. How Will We Buy Stuff Without Being Constantly Conned, Ripped Off and Defrauded?
The reason so many smart companies are working so hard to be the first to define the Metaverse is because, like everything else, it presents a new opportunity to sell more people more stuff. The vast majority of businesses that sell things to people are currently regulated, directly or indirectly, by municipal or state government. E-commerce already is regulated in various forms, but in most cases, it’s a real-world good or service that just happens to use the internet for distribution. A garden hose is subject to the same basic framework of regulation whether it’s bought from the local hardware store or Amazon.
The Metaverse, where all goods and services are themselves digital, presents a different sort of challenge. If you’re buying a skin on Fortnite, is that the same as buying a filing cabinet on walmart.com? If an item’s value is solely digital, does it need the same level of oversight from regulators? Do consumers need the same level of protection in the Metaverse that they do in the physical world? Should regulators be tasked with preventing the sale of fraudulent NFTs? Or is it fair to say that’s not their problem?
Our belief is that the market for new things like NFTs will be far more resilient if consumer protections are built in. At some point, there will be no difference between the filing cabinet that sits by your desk and the one that exists on the Metaverse. In fact, you might not even have one by your desk, which makes the one in the Metaverse that much more important and worthy of protection. If we’re really going to be spending major portions of our life in virtual worlds, they have to be safe. It’s like taking the subway in New York City. If it’s not safe, the people who don’t have to use it stop using it.
In this regard, companies who are building metaverses have a major incentive to making our belongings feel safe and secure. But we can’t rely on that alone, any more than we can in the real world. There is a major role for government here to define the new era of consumer protection.
How realistic is this politically?
Consumer protection tends to be the purview of state and local government. While passing new legislation or enacting new regulations in so many jurisdictions is daunting, it’s also feasible. You can get things done at the state and local level. Odds are, some enterprising Attorneys General, state legislators, city councilmembers or consumer affairs Commissioners will see the opportunity to create something new, get a lot of attention and start putting ideas out there. That process will create a template of universal anti-fraud protections that can then be replicated across the nation. It will take several years at least, but if a few bold regulators and elected officials start now, the work could be completed in time. This is a big opportunity for politicians.
V. How Are Workers Classified and Protected?
Where we are: Current labor law in the United States puts all workers in one of two buckets — full time employee or independent contractor. This is an outdated, broken system that fails to capture the nuance or reality of the sharing economy. Most Uber drivers or DoorDash delivery people, for example, don’t fit either category.
If we were forming policies based solely on logic and not politics, we would create a third category where workers have many of the protections afforded to full time employees and the flexibility awarded to independent contractors. But the sharing economy companies are afraid of higher operating costs and legal liabilities if a new framework were implemented and the unions need sharing economy workers to be treated as full time employees because that’s how they collect dues from them. So as we head into the 2022 state legislative sessions, the odds of any state taking the lead on an intelligent new model are low.
We have learned something useful from the failures of the reclassification efforts so far. First, workers really do prioritize their own flexibility and seek out opportunities in the sharing economy. Second, workers really do need more access to social safety net protections than they have under our binary system. These two conditions beg to be recognized and accommodated by our laws.
Where We Need To Be: To the extent the metaverse will be a hub of job creation, elected officials and regulators could mandate the companies responsible for this growth pool their resources and contribute to a portable benefits fund, administered by states or the federal government, to cover healthcare, paid sick leave, retirement savings and more.
In the same way that states like New York have been able to levy onerous tax rates on sports-betting apps, policymakers will have their maximum amount of political capital in the early days of this emerging technology. We have seen the same story repeat – when companies get integrated into the lives of their workers and their customers, it can be extremely difficult for government to force them to change. By mandating a high degree of worker protections at the dawn of the Metaverse, we can set a standard that would be impossible to implement later when companies have more power.
We know the Metaverse will open up tremendous opportunities for profit and work. But what will work look like in this context? Could the Metaverse actually be a place where people are free from control and direction of their employers or will it replicate the same labor dynamics as the physical world? If the answer is the former, then our current W2 /1099 system could prevail. If it’s the latter, we will have to think of a truly new way forward to enable innovation while still maintaining workers’ rights.
It’s not as far away as you think. Amazon originally started as a place where people could buy books. It has grown to be one of the largest global corporations and biggest employers of all time, with plenty of its own complex labor issues. The Metaverse obviously has this potential for both growth and abuse. There will certainly be conflict and hardship as new jobs are created and others are lost. It’s fair to say the United States has done a terrible job managing the decline of manufacturing. We need to learn from those mistakes as we look ahead to the Metaverse and give more serious consideration to policies like Universal Basic Income. Finally, we need to ensure all Americans have the hardware and broadband needed to access the Metaverse. We can avoid creating a new digital divide if we think about it on the front end.
How realistic is this politically?
- States can’t even figure out how to classify Uber drivers, so let’s not hold our breath for the development of a new worker classification system for people in the Metaverse. However, there are signs of a movement toward offering piecemeal and targeted benefits, such as New York’s Excluded Workers’ Fund. So we know it’s possible to extend protections to people (in this case, undocumented workers) who are outside of the traditional social safety net. Given the shift toward more creative labor solutions, maybe not impossible.
- Avoiding a digital divide should be easier. The federal infrastructure bill passed in November contains $65 billion for broadband expansion. It may not be necessary for governments to address the hardware issue at all since it’s in the interest of the big Metaverse companies to make sure everyone has the equipment they need, just like how Apple, Samsung, AT&T, Verizon and the others have figured out how to get phones in the hands of most American adults.
