Five myths about the metaverse

Everyone is talking about the opportunities and risks of AI. The revolution of the internet through the metaverse, on the other hand, almost seems to have been forgotten. That would be a mistake.

"We believe that the metaverse will be the successor to the mobile internet. We'll be able to feel present, like we're right there with people, no matter how far apart we actually are." With these words, Mark Zuckerberg presented his version of the metaverse in October 2021. The idea is that the virtual and physical worlds will merge in the future using augmented and virtual reality glasses, haptic VR suits or even just a browser (like with Decentraland). Virtual interactions will be combined with experiences in the physical world so that users can, for example, visit an exhibition in the Louvre in Paris without having to be in France. The closer the virtual replica is to the original, the stronger a person can feel the sensation of actually being there. The socio-political objective here goes far beyond intensifying entertainment experiences (like in gaming, for example). The metaverse aims to improve social participation for people who are cut off from certain experiences in the real world (e.g. people with physical disabilities, older people or those who live in remote areas). It also aims to revolutionise the working world (link only available in German) by replacing video conferences with meetings in virtual (3-D) rooms. Use of blockchain technology, the cryptocurrencies based on it and non-fungible tokens (NFTs) makes it possible to create and trade virtual assets whose ownership (link only available in German) is verifiable through NFTs (link only available in German).

"The metaverse is here, and it’s not only transforming how we see the world but how we participate in it - from the factory floor to the meeting room."
Satya Nadella, CEO of Microsoft

Myth 1: The metaverse is the product of a single company.

Wrong: Since 2021 at the latest, the metaverse has been associated with certain companies. However, the first idea of a "metaverse" goes back to the novel "Snow Crash" by Neal Stephenson, published in 1992. In it, he describes a global, parallel virtual world as an evolution of the internet, in which users can move around in virtual space using virtual reality headsets and other aids (e.g. tactile gloves, treadmills, etc.). A number of virtual worlds have emerged since then which are often referred to as the "metaverse".

"Metaverse isn't a thing a company builds. It's the next chapter of the internet overall."
Mark Zuckerberg, CEO of Meta.

It is correct that there are not several "metaverses", just like there are not several "internets". The metaverse isn't the product of a single company, but rather a concept, or even a vision of the internet of the future. Just like the internet is composed of a multitude of individual websites, the metaverse is composed of a multitude of virtual worlds. One of the best-known virtual worlds is Decentraland, but there are numerous other examples. Each of these virtual worlds represents a piece of the puzzle that, together with countless other pieces, forms "the metaverse" in its entirety.

The lack of an identifiable originator and the fact that it cannot be traced back to a single company means there is no generally accepted definition of the metaverse, which in turn leads to diversity. While some see the metaverse as being about virtual worlds where we will eventually live our daily lives in the future (from our first date and going to concerts, to virtual doctor's appointments) (associated technologies and trends: VR, AR, MR, spatial computing), others expect that we will soon be able to buy, use, hire out, sell virtual items or plots of land, or hand them down to subsequent generations (associated technologies and trends: blockchain, Web3, non-fungible tokens). Others in turn see the metaverse less as a frontend development than as the evolution of technologies used in the backend. For example, they expect an internet which, as a semantic web, can not only re-produce the content of websites, but also understand it. This would enable the metaverse to deliver individualised results to users, or even generate content itself (associated technologies and trends: Web 3.0, semantic web, generative artificial intelligence (AI)). Another scenario would be an internet in which humans and machines are connected and can interact (associated technologies and trends: smart wearables, smart home, automated driving, automated drones, Industry 4.0, Internet of Things). The truth is that each of these visions is correct, because like the internet itself, the metaverse has thousands of faces and is dependent how it is specifically used. Therefore, from the perspective of a company, the metaverse can indeed primarily mean virtualisation and automation of existing production facilities, whereas for a private user it can mean a virtual visit to a museum. The technologies required for this are a composition of all the technological developments and megatrends of recent years and decades - from the telephone to generative AI. In summary: the metaverse is the work of a multitude of players and, consequently, it is what results from the interaction of all these players and their technologies.

Myth 2: The metaverse is a dream of the future; in any case, it will be decades before it is introduced.

Wrong: Blockbusters such as "Ready Player One" suggest that the metaverse is a future in which every aspect of life only takes place in virtual worlds and everyone therefore wears a virtual reality headset all the time, while life in the "real world" has virtually come to a standstill. In truth, however, the metaverse does not have a target structure, nor does it require a specific technological breakthrough (or the demise of civil society, like in the film Ready Player One). There is therefore no "day X" from which the metaverse suddenly becomes "reality" and is no longer just science fiction. The metaverse already exists today and every virtual world (Second Life, Fortnite, World of Warcraft, Pokemon Go) and every device or app that merges virtual worlds and real worlds form part of what is to be understood as the metaverse in its entirety (this includes not only virtual reality headsets, but ultimately even the satnav in your car!).

To be clear - since the metaverse has does not have a target structure, a certain proportion of society does not have to use VR headsets or a certain number of companies does not have to offer virtual business premises before the metaverse becomes a reality - just as it is not necessary to have a certain number of connected household objects to have a "smart home". For this reason, there is no "version 1.0" of the metaverse that we will look back on in the future: We are already living in and with the metaverse.

Myth 3: AI is the big new focus, the hype about the metaverse has already faded. 

Wrong: Reports about AI trends and investments have dominated the headlines recently, and AI-related start-ups are currently able to raise capital faster than companies in the metaverse sector. In this respect, the impression that AI has displaced the metaverse as a future technology is understandable and widespread. Thinking a little further, however, this merely reflects the misconception that AI and metaverse are mutually exclusive.

Far from it! The movers and shakers in AI and the metaverse actually come from the same ecosystem. So there is good reason to assume that AI is a major driver of the metaverse and will speed up its development, thus unleashing the full potential of the metaverse. For example, AI could provide support for designing new digital worlds and help to make completely new and different experiences possible in the virtual space (e.g. at events). AI is therefore not "a nail in the coffin" (link only available in German) for the metaverse, but rather a catalyst for its development. 

The figures clearly speak against the assumption mentioned at the beginning: According to a Survey by the German Association for the Digital Economy (BVDW) (link only available in German), one third of all companies are already planning to invest in the metaverse. McKinsey even predicts that the metaverse could be worth up to 5 trillion US dollars by 2030. This should not come as a surprise. In view of the multitude of fields of application presented in the first myth, there is hardly an area, from e-commerce and consulting to virtual working and virtual learning to entertainment, communication and gaming, where the metaverse will not enable new dimensions of interaction and experience and ultimately create new economic potential. That is why the metaverse was named one of the most important future trends at the last Consumer Electronics Show. Significant fields of application arise for end consumers, along the entire value chain and in the world of work as well. For example, training can be carried out in the virtual world and the effect is very close to participating in person. AR applications make assembly and maintenance work easier and optimise processes significantly. Ultimately, the metaverse will expand all areas of our life and work and add a new, additional dimension of reality.

Myth 4: The metaverse is decentralised and therefore unregulated.

Wrong: Rule 4 and Rule 3 of the unofficial rules of the metaverse state that: "The metaverse is open" and "nobody controls the metaverse". A new, free and open reality in which users can move without restriction is therefore definitely the original idea of the metaverse and may at first glance give the impression of an environment detached from the existing legal systems. It may remind you of the early days of the internet. The case is similar, this is not a lawless environment either. This is because the law is always technology-neutral, which is why also new digital universes are subject to the traditional structures of the applicable law and assessed under existing norms.

European data protection law (link only available in German) follows, for example, the "establishment and market place principle" (Art. 3 GDPR). This states that the rules of the General Data Protection Regulation always apply if personal data of EU citizens are processed, and the controller operates an establishment within the European Union or the respective services are also for EU citizens. In a nutshell - when data of EU citizens are processed in the metaverse, the GDPR usually applies. 

The situation is similar with other civil law issues (link only available in German). Private international law, as conflict of laws, regulates the question of which law should apply in cross-border situations. It is also possible to explicitly determine the applicable law in the respective contracts in agreements on choice of law and place of jurisdiction. However, the case differs with mandatory regulations, such as consumer protection regulations. According to Art. 6 Rome I Regulation, the consumer law of the state in which the consumer has their habitual residence applies and therefore, under certain circumstances, it applies in addition to the agreed law. International criminal law must also be observed in criminal matters.

It is clear that there is no lack of applicable rules in the metaverse. On the contrary, in the metaverse the question of "whether" a law applies will arise much less frequently than the question of "which" of the numerous legal systems that come into consideration applies.

Myth 5: While the metaverse has already arrived in corporate reality, it has not yet played a role for law firms. As usual, they are lagging behind.

Wrong: The fairy tale of lawyers refusing to use technology, digging through heaps of files, spending the night in the law firm library and still using Dictaphones and fax machines has long since ceased to reflect reality - at least in larger law firms. Lawyers do use legal tech (link only available in German) in their work and are increasingly open to the opportunities that the metaverse has in store for them. Some law firms have even ventured into the metaverse already. In 2022, for example, a German corporate law firm opened an office in the metaverse (Decentraland) and many law firms have already created internal structures, such as "task forces" set up specifically for this purpose, in which the new advisory field is promoted in a multidisciplinary manner and for which an extra budget item is allocated. Admittedly, these measures are driven by more than just an affinity for technology and curiosity, there are hard-core economic interests behind them. It is not primarily a marketing stunt or recruiting measure to set them apart from other firms. The focus is on the economic necessity to understand the clients, their products and problems in order to ensure efficient and solution-oriented advice. As already stated in the fourth myth, the metaverse holds a colourful array of old and new legal issues that need to be resolved. However, metaverse developers have to take all relevant legal issues into account right from the start and, for example, implement privacy-by-design principles from the very first line of code or transparently stipulate requirements for advertising products in the metaverse in merchants' terms and conditions. If the law is not taken into account in the development phase, major changes may be necessary later on, which can quickly become very costly and possibly even jeopardise the company. 

_{The article is written with the assistance of Johannes Noller.}