Grant Paterson, Head of Gaming and eSports at Prism Wunderman Thompson, asks us to consider the implicit risks of the metaverse and whether or not regulation could be the answer.
Imagine that you and your partner plan to buy a new car and travel to your local car dealership. Upon arrival, the salesman who warmly embraces your cautiously sceptical handshake knows more about you and your entire life than the partner holding your other hand.
Your entire purchase history, cars you drove ownership, social group, demographic profile, what football team you support, your favourite food, and what brands you buy. He knows it all. He also knows your live biometric data - your heart rate, pupil dilation and respiration rate.
On top of all that, he has been 'engineered' from the start to speak exclusively to you. His height, weight, hair, eye and skin colour, gender, tone of voice and accent are all carefully calibrated to appeal exclusively to you as much as possible.
He already knows the probability of you making a purchase that day and exactly what to say to increase that probability continually to the point of maximal likely conversion.
Doesn't it sound pretty dystopian? Yet this is a feasible future scenario within the confines of the more idealistic visions of the ‘metaverse’.
Indeed, the metaverse does not yet exist as envisioned above. Much of the speculative 'theories of maybe' that make up the overall metaverse discourse are only loosely rooted in a realistic notion of what's technologically possible.
But if our shared collective experience of social media's problematic commercialisation is anything to go by, regulation of the metaverse (both its beta components as they exist today and the consolidated potential metaverses of tomorrow) is going to be essential if we want to avoid an exponentially more harmful consumer experience than we are witnessing on social media today.
The critical 3 Cs to consider while exploring the ‘metaverse’
As with social media companies, the regulatory challenge lies less in monitoring and managing individual user behaviour than in controlling how far metaverse companies can go in commercialising their customers.
Irrespective of how likely or unlikely the realisation of a truly ‘metaverse-like’ future is, any company seeking to build its parts - however big or small - should have to reckon with an established regulatory framework that has built-in consumer safeguards from the start.
This is essential because the risks presented by immersive virtual or ‘metaverse’ style worlds are more significant than those offered by traditional ‘linear’ forms of social media. These risks can be divided into three categories - Consumer, Cognitive and Commercial.
Consumer risks
Consumer risks are intimately connected to a core challenge social media companies face, the importance of striking the right balance between individual privacy and collective accountability. The challenge is exponentially more important in immersive virtual worlds as the potential for abuse, harassment, fraud, and criminality is significantly greater.
The importance of ensuring consumers are aware, informed and empowered about who holds and can utilise their data is equally as crucial, given the potentially intimate nature of it - where you go, who you talk to, what you buy, watch or touch, where you look and even how your mind, body and behaviour reacts to interactions with other people. The involvement of brands and advertisers in these spaces is also critical to regulating.
Cognitive risks
The phenomenon of social isolation, groupthink and echo chambers has been well documented in social media platforms with varying degrees of impact on both pop culture and the social community.
The endless possibilities of potentially limitless virtual worlds amplify the risk of social isolation and cognitive dissonance within these virtual spaces, as well as exposure to more intimate forms of cyberbullying, abuse or trauma within virtual experiences or personalised through virtual avatars. These are those with the potential to have a greater impact on communities and society.
Commercial risks
These transactional risks are more acute but equally impactful, particularly given they involve personal finances. The exposure of cryptocurrency investors to market volatility and fraud is significant and many of the culturally potent ‘virtual products’ (such as NFTs), which are theorised to be the bedrock of the future metaverse, are presently little more than high-risk, zero-recourse, unregulated, speculative financial assets.
The lack of formal recourse or regulation in the overall decentralised finance world (including cryptocurrency) is a hugely problematic issue that much of the industry is designed to circumvent via its ideology of ‘decentralisation’.
Practical advice
Regulation of both these DeFi ecosystems and ‘metaversal’ virtual worlds is essential as they may eventually integrate to converge, grow and commercialise at a scale beyond management.
There are several elements to any discussion about regulatory solutions in the metaverse. As with any regulation, the ambition should be to drive transparency, accountability and credibility. In the metaverse, this will involve resolving several key issues, such as:
- Informed Agency - The right of consumers to know if they are talking to or participating in a conversation, event or experience designed to promote or market a brand.
- Data Privacy - hyper-personalised data monitoring can enhance virtual experiences in a unique way, but this must be balanced with privacy considerations which limit the time this data can be stored for or utilised.
- Restrictions on the type of physiological tracking that virtual platforms can carry, including, facial expressions, vocal inflexions, vital signs, and cognitive function should all be severely limited.
- From a financial and consumer safety perspective, ‘metaversal’ worlds of all kinds (including decentralised finance) should implement rigorous Know Your Customer (KYC) rules, establish managed safe spaces for vulnerable users, and implement fraud prevention and exploitation monitoring protocols.
These are only the tip of the iceberg, and the essence of this regulation will fly in the face of what many in the Metaverse & Web 3 space consider the ideological nexus of the future - ‘decentralisation’.
Balancing the rights of metaverse creators and its consumers will also be tricky but regulation of some kind in ‘The Metaverse’ is critical and must happen whilst it is being built. The lessons learnt from our struggles to regulate social media platforms are indicative of the greater challenges we will face in the future. Perhaps the time has come for a fresh approach.
