Insights on Metaverse

16 June 2022


Introduction

The word "metaverse" was originally coined by an American writer, Neal Town Stephenson, in his 1992 science fiction novel Snow Crash. In his book, Stephenson described the Metaverse as an all-encompassing digital world that exists parallel to the real world.

The Metaverse is a highly scalable, persistent network of interconnected virtual worlds where people may work, connect, do business, play, and even create in real-time. It immerses the user in the virtual environment completely using virtualization and advanced technologies (Augmented Reality (AR), Virtual Reality (VR), haptic sensors, and so on). This means that the user can interact in real-time with a world that is constantly available and accessible.

It's essentially a computer-generated three-dimensional world where users may interact with one other and items. The Metaverse has no limits or bounds because it is a virtual universe. Nothing is off-limits, and anything is possible in the Metaverse, where people can attend a virtual concert, buy a virtual gift for someone, and even vacation with a relative on the other side of the planet.

Use Cases

  1. Non-Fungible Tokens and Real Estate

NFTs are digital art and assets. These are created when a digital file (an image, video, or GIF) is minted. These are essentially certificates of ownership on the blockchain. An NFT can represent a song, a video, piece of art  or digital real estate. An NFT gives the owner a kind of digital certificate or proof of ownership that can be bought or sold in the metaverse. 

Through Metaverse, NFTs can be given a platform for their display and trading through the following:

  1. Virtual Marketplace: VR Spaces can also serve as a fertile trading ground for NFTs where the sellers would be able to easily provide links and previews to NFTs on the web or mint NFTs directly in the VR landscape. The renowned brand “Nike” has already dipped its toes into the metaverse with its own virtual “Nikeland” and has acquired a studio for making NFTs of their products.

  1. Art Gallery: VR is perhaps the best possible alternative for actual brick and mortar buildings for viewing art. This type of solution differs from a marketplace as the prices are already set, the assets are all of one type and the atmosphere is much more relaxed. 

The metaverse's real estate is a virtual ecology that mimics real-world situations. Every land parcel in the metaverse is one-of-a-kind and irreplicable. Land can be purchased as non-fungible tokens (NFT) using cryptocurrencies in the real estate metaverse. Buyers who are interested in purchasing a property can do so by attaching their wallets to the platforms dealing in Metaverse real estates such as Decentraland and Sandbox.

These are viewed as tradable digital assets with ownership documented on the blockchain, which is a decentralized immutable ledger for recording a digital asset's origin. The data on a blockchain is insusceptible to any alterations due to its inherent nature and design. This virtual property can also be sold on a third-party exchange or through the metaverse ecosystem.

  1. Learning Space and Virtual Work

Students and teachers can connect in the virtual world via their virtual reality headsets, regardless of where they are in real life. Such functionality can lead to enhanced experience and improved education. Teachers can create virtual environments based on their lesson plans, boosting a child's learning by allowing them to interact with them rather than just reading from a book.

Perhaps the most significant impact of the metaverse on all of us will be in the workplace. Building on the pandemic-related trend of remote work, combining in-person interaction and the spontaneity it provides with the freedom to work from anywhere, at any time, might be genuinely revolutionary for businesses and employees.

Virtual workplaces in the Metaverse would be extremely helpful in becoming acquainted with one's worksite (or sites), learning the ropes by walking around digital twins of offices, factories, retail shops, hotels, and airports and being instructed along the way by other colleagues or by holograms / bots, adding their bits and pieces of information, learning about the colleagues, management, and company values.

Metaverse can be used to meet with customers or partners in order to assist and guide them in a more immersive setting. This opens up possibilities similar to those in a situation room (bring in relevant information and tools), but also situations such as remote assistance with Mixed Reality. Remote meetings in financial services are common these days, but incorporating virtual space will expand opportunities for engaging and interacting with customers. This can easily be extended to job interviews and other customer-facing situations.

  1. Virtual Business and Markets

Users of the Metaverse can also shop, socialize, and engage in leisure or educational activities. Brands could benefit from exclusive marketing opportunities in various virtual worlds in the metaverse. Many brands have successfully capitalized on metaverse marketing opportunities. Roblox has recently begun to place advertisements for brands such as Paramount+ and Warner Media. These ads in the metaverse resemble real life and blend in well with the gameplay, where they can be found in the right places.

  1. Virtual Tourism

The primary distinction between visiting a location in person and watching it on video is the first-person perspective. The metaverse, virtual reality (VR), and augmented reality (AR) may be combined to create an immersive digital environment. People can have the perfect platform for elevating the imagination of the audience with an immersive digital reality featuring realistic content. As a result, they can experience the location as if they were physically present.

One of the emerging metaverse use cases with the potential for mainstream adoption and recognition is VR tourism. Popular video streaming platforms, such as YouTube, and a variety of other content hosting services, are expanding their collections of 360-degree video content.

However, there is a significant drawback with the use cases of metaverse for virtual tourism in the limited freedom. People are unable to move around a tourism destination because they can only view recorded content.

  1. Web Real-Time Communication

Web real-time communication is an open-source initiative that allows mobile applications and web browsers to communicate in real time. It is one of the metaverse's promising use cases that has the potential to transform traditional approaches to audio and video communication.

People don't need intermediary servers to transfer communication between clients when using web real-time communication use cases. The value of peer-to-peer communication in the metaverse may open up new avenues for browser-to-browser communication. The use cases for metaverse technology provide a solid foundation for defining new web communication standards. Furthermore, the value of web real-time communication can be multiplied by multiple media streams, which are critical for developing a virtual world.

  1. Healthcare

Regardless of geographical limitations, the metaverse offers promising prospects for enabling interaction between patients and healthcare professionals. The virtual worlds in the metaverse can assist healthcare professionals in interacting with patients in real-time settings. Furthermore, virtual reality simulations in the metaverse can provide medical students with engaging and comprehensive learning experiences.

  1. Gaming

Several gaming platforms now offer virtual stages for concerts, exhibitions, and brand promotion, normalizing the idea that social and cultural experiences do not have to be limited to in-person interactions.

  1. Entertainment

Artists can perform anywhere in the world in the metaverse, as people attend their concerts from the comfort of their own homes. While wearing a VR headset and watching the concert alone, one will still interact with others in the concert's shared virtual space or via live chats during the performance. The metaverse provides musicians with a sense of community ownership, a decentralized approach in which no single entity dictates terms. Metaverse is audio/visual art, community-created 3D worlds, the right to own and sell digital items and property (or NFTs), Avatars, digital merch, and fashion in the context of the music industry.

  1. Online Shopping

Online shopping is highly prevalent in today's day and age, but in the Metaverse, this experience can be enhanced as one would be able to go on virtual shopping tours – from a grocery store (digital twin of the fish counter and / or available products in the display) to shopping for more furniture or appliances by using mixed reality to place them (in the right size) in our rooms and see if they fit – and in which color.

Challenges 

  1. Data Protection and Privacy

The metaverse will add to the ongoing debate about data protection and privacy. The existing internet has already gathered massive amounts of consumer data for the benefit of multinational corporations and governments all over the world. The amount of data generated by the metaverse will be unprecedented by any other technology. The protection of this data will be extremely difficult for an ordinary user of this meta universe.

The metaverse is likely to be explored by people of all ages, from children to corporate executives. It is critical to authenticate data from all of these users. For example, under the EU GDPR, processing personal data of a child under the age of 16 would necessitate consent. As a result, a 12-year-old who wants to fight an opponent as an avatar of his favorite cartoon character must consent to the collection of his or her Personal Identifiable Information (PII). The Metaverse has the potential to transform the healthcare industry by allowing complex surgeries to be performed in virtual environments, providing immersive surgical experiences to health practitioners, assisting isolated elderly people in interacting with others, and enabling interactive experiences that improve mental health. However, major jurisdictions such as Europe and the United States have laws such as the GDPR and the Health Insurance Portability and Accountability Act that strictly protect sensitive health-related data. As a result, gathering and processing data that includes real-time interactions, facial gestures, and results can be difficult.

Furthermore, massive amounts of data will be generated and processed in real-time, which means that while users are exploring the metaverse, their gestures and physiological responses will invariably change and be monitored or recorded. Anonymization or pseudonymization of real-time data can be difficult. If this data is not safeguarded, it may fall into the 'sensitive' category and be used to violate privacy via social engineering or other cyber-attacks. Unregulated organizations or intermediaries may abuse it for targeted advertising, such as health policy promotion.

  1. User Identity

Another danger is the theft of a user's identity. A new data set could be created, for example, if a young person in the EU adopts the digital avatar of a Hollywood celebrity. Furthermore, if the Hollywood character promotes a perfume brand in real life, adequate safeguards must be in place to ensure that the data collected and processed (from the child's physiological parameters to his digital avatar) is regulated and does not reveal the Hollywood character's personal information or link the child to the perfume brand.

  1. Data Transfer

Data transfer can also be extremely dangerous. If a user in the United States digitally associates with a shoe brand in the metaverse, information about the virtual experience may be sent to the brand owner in the European Union. There may also be concerns about the security of sensitive data obtained from dementia patients who have been actively participating in the metaverse.

  1. Intellectual Property Rights

The concept of metaverse has the potential to exacerbate an already-existing intellectual property issue because it is unclear whether or not existing intellectual property rights apply to metaverse. Even if they did, enforcing this legislation in the metaverse will be extremely difficult.

  1. Hate Speech and Harassment

Hate speech and violence against women and minorities would almost certainly rise in the Metaverse. Politicians and other entrenched interests will be able to simply construct virtual avatars and deliver subtle and inciting remarks via the metaverse. Sexual assault can be particularly dangerous for women. Several women have already claimed groping or sexual assault in the metaverse, which has resulted in heinous experiences. Another woman claimed to have been sexually abused in the metaverse. Other cultural and sexual minorities may be subjected to similar incidents.

Legal Implications 

  1. Data Protection Laws

Under the Information Technology Act of 2000, the present data protection system is governed by a set of rules known as the Information Technology Rules, 2011. A corporation must demonstrate code compliance by having written security plans and information security policies that encompass technological, operational, and physical security measures, according to these recommendations.

The government issued the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (IT Rules) on February 25, 2021, with the primary purpose of regulating and safeguarding consumers from various potentially hazardous materials. The organization must follow precise technical and design criteria to meet with the standards for data accuracy, choice, consent, disclosure, portability, and security. Furthermore, the organization must implement management tools to enforce privacy standards, update rules, and make suggestions that are appropriate for the amount of data required.

India must also streamline its Personal Data Protection Bill, which has been stalled for years. 

  1. Security and Privacy Laws

Given the estimated number of Metaverse users, the platform is likely to collect massive amounts of sensitive personal information. Any AR-VR device's privacy policy states that it will collect data on an individual's biological information, physical surroundings, and other personal information. Because such biometric data is being gathered, it would come within the IT Rules' definition of "sensitive personal data."

The government can make orders authorizing the interception/decryption of information to "protect the security, sovereignty, or integrity of the state," according to Section 69 of the IT Act. Data in the Metaverse environment can be monitored by the government, and if it is found to be against public policy, it can be withheld, and the corporation can be fined for breaking the laws. The law is intended to insert itself in a way that balances fundamental rights, like freedom of expression, with the protection of the public interest in the metaverse era, albeit it is unclear how successful this will be in practice.

Physical contact or approaches are primarily punished under Section 354A. It excludes harassment in digital contexts based on advances or groping. Similarly, cyberstalking is not gender-neutral under Section 354D. Only when a man follows a lady and contacts her despite her evident refusal is stalking considered a crime. If a stalker's gender isn't identified or verified, the clause may become obsolete. In metaverses, which are bound to become hotspots of deep-fakes or hacked avatars, the traditional issues of online anonymity will grow more complex

  1. Anti-Trust and Competition Laws

The application of existing laws has been fraught with dispute due to the metaverse's peculiar character. Since the metaverse's birth, anti-trust has been involved in existential concerns.

Antitrust laws are enforced under the Competition Act of 2002, which prohibits "any contract, combination, or conspiracy to obstruct commerce, as well as monopolization, attempted monopolization, or conspiracy or combination to monopolize." Unnecessary constraints are also prohibited. As a result, this lawsuit can be used if multiple apps compete in a market and one unfairly dominates or threatens to form a monopoly.

While the majority of anti-competitive acts that occur in the real world can also exist in the metaverse in some form, the metaverse's core nature and the blockchain make such activities impossible to detect and penalize, allowing firms to engage in such practices with impunity. 

Anti-competitive businesses can utilize private blockchains to share economically sensitive information, such as pricing information, among themselves. These blockchains can only be accessed by those who have the blockchain's owner's permission. Authorities will be unable to access these communications and, as a result, prosecute such behavior; but, authorities may request such material through a demand under the appropriate statutes. This is in contrast to the current situation, in which authorities have easy access to enterprises' premises to obtain proof of such violations.

  1. Contract Law

Smart contracts, which can establish license terms, pay automatic royalties in the event of resale transactions, limit the use of copyrights, and track subsequent purchases of an NFT, are used in the bulk of NFT transactions. The Contract Act of 1872 and the Information Technology Act of 2000 both have authority over smart contracts. The essentials of a lawful contract under the Contract Act are an offer, acceptance, and consideration. The consideration component of a smart contract, while it contains the offer and acceptance components of a lawful contract, may be troublesome. NFT transactions are typically compensated for with bitcoin via a smart contract. However, as previously said, the legality of cryptocurrencies in India is still up in the air. This makes determining the validity of a smart contract and the transaction on which it is based difficult.

  1. Copyright Act

Although NFTs are an attempt to establish "ownership" of a virtual object, having an NFT does not necessarily imply ownership of the work of art represented by the NFT. The owner of the NFT does not receive the copyright on the underlying piece of art when the NFT is purchased. A formal sale contract expressing explicit assignment of copyright must be present to transfer copyright and be considered an owner, according to Section 19 of the Copyright Act of 1957.

Only the owner of a work has the right "to reproduce and distribute copies of it," according to Section 14 of the Copyright Act. As a result, resale or copying of the NFT is unlawful unless the buyer and seller specifically agree. Unless the parties agree otherwise, the copyright usually belongs to the creator of the work. 

As a result, unless the possessor expressly transfers their rights, the buyer will be unable to demonstrate ownership of the property. Instead, the buyer's digital item is simply protected under the Copyright Act against others illegally copying or disseminating the image, albeit this hasn't stopped many people from right-clicking and saving an NFT image as a jpeg file or simply taking a screenshot (though features have been built into NFT images of late whereby taking a screenshot of the NFT image would lead to a blurry image, which would be useless).

The sale of physical artwork does not entail the sale of the related IPRs, and the artist retains ownership of the IPRs. In the same way, an NFT is nothing more than a possession that one individual obtains and has the right to sell to another individual. The ownership of the artwork, not the IPRs related to it, will be shown by the transaction that will be recorded in the blockchain. An NFT, in technical terms, is metadata that provides information on the underlying asset. If a person buys an NFT connected with an artwork, he or she cannot print that artwork on a shirt or a cap because the owner's ownership rights remain with him or her, resulting in copyright infringement.

Copyfraud is when someone falsely claims copyrights to a work that is already in the public domain. If a person mints an NFT of a work in the public domain by falsely claiming copyright over it, he may be held accountable for copyright infringement or copyfraud, as well as infringing on the moral rights of the original author. There are currently no laws relating to NFTs, and the only remedies available to the work's creator are those provided by the Copyright Act. Section 51 of the Act specifies the circumstances in which a copyrighted work is considered infringed. Interlocutory injunctions and reparations for copyright infringement are among the remedies available.

Court injunctions and damages are available under Section 55 of the Copyright Act. Section 63 states that anyone who willfully infringes on a copyright will be imprisoned for up to three years and fined up to two lakhs. The main disadvantage is that these remedies would only be successful if they were applied to a physical counterfeit in a jurisdiction where the infringer's identity was known. NFTs, on the other hand, are sold in cryptocurrencies and have the potential to be entirely anonymous. In NFT trading, many purchasers utilize pseudonyms.

As a result, protecting and enforcing the author's copyrights in relation to the original work would be impossible without real knowledge of the infringing entity or the identity of such person.

  1. FEMA Regulations

The treatment under the present Foreign Exchange Management Act (FEMA), which controls cross-border transactions, would be determined by the classification of the underlying asset being transferred via the NFT, whether physical or digital. To clarify, NFTs may be classified as "intangible assets" and governed by the FEMA regulations' software and intellectual property laws. Because they are supported by "global ledgers," which implies that the information is logged, exchanged, and synchronized across data stores, knowing their location is critical.

  1. Sedition Laws

Following the repeal of section 66 of the IT Act, PC sections 153A and 295A govern hate speech. It's yet unclear whether these IPC rules would apply to virtual worlds or online games. In India, the Metaverse could help push for particular legislation against online hate speech.

  1. Liability of Enforcement

As previously stated, blockchain technology greatly enhances security because no single user may alter data on a blockchain without the consent of other users. Another essential feature of blockchain technology is pseudonymity, which implies that while a user's virtual identity can be revealed, their real-world identity cannot.

Despite the potential benefits of blockchain technology, it raises a number of unique and specific challenges. If one virtual avatar harasses another virtual avatar, for example. Due to a lack of understanding and application of law in such worlds, authorities would be helpless to hold anyone accountable for their actions in the metaverse, posing a difficulty for law enforcement.

  1. Jurisdictional Concerns

Given that people from many origins, nationalities, and regions are expected to use Metaverse, the question of whose nation's laws will govern the digital domain and Metaverse environment arises. In a borderless virtual realm, jurisdiction will be even more ambiguous, which is a major source of concern for various government agencies.

Companies building the future of Metaverse

  1. META

Meta Platforms wants to distance itself from the concept of social media and instead be known as a metaverse company. The business hopes to exploit its large user base to kick-start this virtual platform, which has more than 3 billion users. The corporation has already made investments in augmented and virtual reality, and is currently developing Horizon, a virtual reality platform that will be accessible through Quest headsets.

  1. MICROSOFT

The Mesh for Teams software, which will be released in 2022, is Microsoft's primary metaverse solution. It is a direct result of the growing work-from-home trend, which coincided with the pandemic's emerging metaverse frenzy. The software will be available on both regular devices and VR headsets to provide a consistent virtual office experience.

The creation of a virtual avatar to serve as one’s digital identity is critical to the Mesh for Teams experience. Following that, one would be able to use their avatar to explore virtual regions and spaces in the digital world, which is an essential component of any metaverse.

  1. BINANCE

Binance is important in the metaverse because of the importance of bitcoin and blockchain. The metaverse is helping to develop new financial systems and processes, and Binance is assisting with the infrastructure. Buyers and sellers can trade virtual asset NFTs from a variety of blockchains on the Binance NFT Marketplace, for example. The interoperability of diverse metaverse ecosystems is aided by this.

  1. ROBLOX

Roblox is working on a metaverse platform that will allow users to do more than play games. In the meta world, users can try on numerous clothes, build homes, connect with friends, and even embark on adventures. Roblox strives to create the most realistic 3D virtual worlds, “Spatial voice chat” is the new Roblox feature which would allow people to use their voices to communicate in three dimensions (the way people do in real life).

  1. NIKE

In collaboration with Roblox, the leading footwear company is experimenting with metaverse technology. It has created a virtual realm called "Nikeland" on Roblox, which is a free game-playing environment. In Nikeland, players will be able to try on new sports shoes and run marathons.

Nikeland is a virtual reality experience created by Nike, the athletic apparel company. Nike plans to create a virtual reality experience that replicates the real-life experience. Players will also be able to wear digitized Nike apparel.

  1. EPIC GAMES

Epic Games has two major goals when it comes to the metaverse. Its first goal is to develop Fortnite into a platform capable of attracting and nurturing a larger audience than the current 60 million monthly users. Epic also intends to generate "more accessible 3D, AR, and VR content, as well as enhance the creative ecosystem, both of which are fundamental to an open and linked Metaverse." Anyone will be able to create good 3D content as a result, raising the metaverse's overall quality.

The Way Forward

Despite its enormous potential, the metaverse, like any other universe, real or virtual, faces its own set of obstacles. As a result, focused regulation and long-term policymaking are critical for its continued expansion while guaranteeing a safe and secure digital environment.

With worries that the metaverse is creating an atmosphere where data exploitation is becoming common, it is critical to establish a solid data protection legislative framework to impose appropriate limits on technology corporations operating in the virtual domain. Strong legislation, paired with a strong cyber security framework, will be critical for guaranteeing swift prosecution of data breaches and establishing deterrence among hackers.

Disclaimer:
The content of this article is for information purpose only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up. The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that the Author / Treelife Consulting is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof.

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