Publication date: October 25, 2023

The advent of conception Next Generation Virtual Worlds has ushered in a new era of technological innovation and transformative possibilities. However, with these opportunities come a myriad of challenges that span across various dimensions. From societal implications to technical complexities, economic considerations to legal intricacies, as well as management-related hurdles and political dynamics, next generation virtual worlds present a multifaceted landscape of hurdles to navigate. In this article, we delve into the diverse challenges that accompany the rise of next generation virtual worlds, examining the social, technical, economic, legal, managerial, and political aspects that require careful consideration in order to harness the full potential of these immersive digital realms.

Societal challenges

Recognizing the forthcoming era of virtual worlds’ novel possibilities for multifaceted advancement, it is evident to both the research realm and civil society that several nascent challenges are beginning to surface on the societal front.

For the mitigation of the emerging challenges, the European Commission proposed a set of ‘Digital rights and principles’, which function as an inter-institutional declaration that will complement existing rights, such as those of the Charter of Fundamental Rights of the EU, taking into account developments of the digital decade.

Digital Rights and Principles for the Digital Decade:

Putting people at the centre of the digital transformation: Digital technologies should protect people’s rights, support democracy, and ensure that all digital players act responsibly and safely. The EU promotes these values across the world.

Solidarity and inclusion: Technology should unite, not divide, people. Everyone should have access to the internet, to digital skills, to digital public services and to fair working conditions.

Freedom of choice: People should benefit from a fair online environment, be safe from illegal and harmful content, and be empowered when they interact with new and evolving technologies like artificial intelligence.

Participation in the digital public space: Citizens should be able to engage in the democratic process at all levels and have control over their own data.

Safety, security and empowerment: The digital environment should be safe and secure. All users, from childhood to old age, should be empowered and protected.

Sustainability: Digital devices should support sustainability and the green transition. People need to know about the environmental impact and energy consumption of their devices.

Within this context, the European Commission orchestrated ‘The European Citizens’ Panel on Virtual Worlds’ during the initial half of 2023. This initiative involved a diverse assembly of EU citizens placed at the core of a participatory endeavor. Their task was to contemplate and formulate recommendations pertaining to the secure, equitable, and trustworthy traversal of next-generation virtual worlds. The outcomes of the Citizens’ Panel contributed to the establishment of guiding principles, aligning with the European Declaration on Digital Rights and Principles. These principles comprehensively encompass eight fundamental dimensions:

1. Freedom of choice

The use of virtual worlds is a free choice for individuals – without disadvantages for those who are not participating.

2. Sustainability

The set-up of virtual worlds, implying an unprecedented use of interaction devices, servers, clouds and other computational infrastructures, is environmentally friendly.

3. Human centered

Technological development and regulation of virtual worlds are serving and respecting the needs, rights and expectations of users.

4. Health

Physical and mental human health as a fundamental pillar for the development and use of virtual worlds.

5. Education & Literacy

Education, awareness-raising and skills on how to use virtual worlds are put in the centre of virtual worlds’ development.

6. Safety & Security

European citizens need to be kept safe and secure, including the protection of data and preventing manipulation and theft.

7. Transparency

1) Transparent regulations are protecting people, their personal data, and psychological and physical health.
2) The use of data (by third parties) is transparent.

8. Inclusion

Equal accessibility for all citizens is granted – regardless of age, income, skills, technological availability, country etc.

Ethics and human rights

Threats to human agency can lead to extreme surveillance capitalism (private sector) or government surveillance (authoritarian governments). Also amplified discrimination, changes/amplification in social order (inequalities), digital divides/ gaps, hate speech, harassment, misinformation and generally human rights need to be preserved online as in real life. There is a need for ‘trustworthy virtual worlds’.

Below are some examples to illustrate emerging challenges in relation to human rights in the context of next generation virtual worlds.

Freedom of choice:

The immersive nature of systems within the upcoming generation of virtual worlds, coupled with the intricate linkage between virtual and physical realms, is poised to exert a significant influence on the dynamics of human interaction both with machines and with one another.

Perception systems are progressively gaining enhanced capabilities to perceive and comprehend human behavior by amalgamating perceptions through diverse modalities. With machines becoming increasingly adept at detecting intricate nuances of human behavior, there arises a potential for heightened vulnerability among humans to be influenced by machines and subjected to their control within the realm of decision-making processes.

Furthermore, the diverse modalities and intricate character of interactions within the forthcoming generation of virtual worlds are anticipated to wield substantial influence as a potent tool for shaping and guiding human decision-making towards desired outcomes. These advancements have the potential to jeopardize one of the most fundamental human rights: the freedom of choice and free will, especially for vulnerable groups like minors. One notable domain where this risk could become prevalent is advertising, which will undergo a transformation from a discrete activity into immersive experiences.

Privacy:

With the emergence of next generation virtual worlds, concerns related to privacy and ownership appear to adopt distinct forms compared to those existing within current online environments. The invasive gathering of personal and sensitive data, as well as the pervasive surveillance conducted within public or private domains, can manifest in both the virtual and physical realms. While current studies focus on how machines capture detailed information about the user’s facial features, vocal qualities and eye motions along with information about the user’s environment, a most recent study shows that the perception of human motion by AI systems based on wearables or other devices can result in the identification of the user in ways similar to fingerprints. The research analysed more than 2.5 million VR data recordings from more than 50,000 players of the Beat Saber app and found that individual users could be uniquely identified with more than 94% accuracy using only 100 seconds of motion data. In addition, motion data can be used to accurately infer a number of specific personal characteristics about users, including their height, handedness and gender.

Consequently, the advent of next-generation virtual worlds amplifies the intricacy of addressing the challenge of safeguarding human privacy.

Safety and security:

The protection of users’ safety and security becomes challenging in the context of next generation virtual worlds. Abusive behaviors extend beyond text-based communication and encompass multimodal aspects like synchronous voice chat, intensified sensations of presence and embodiment, and avatar motions that may evoke a sense of personal space violation, including simulated physical contact or grabbing. Research demonstrates that through training in virtual environments, perceptual sensitivity can reach a performance level comparable to that attained in physical settings, particularly within diagnostic and training contexts. Consequently, this implies that immersive world experiences can evoke perceptions akin to those in physical environments. As a result, perceived threats within virtual spaces could be processed by the user’s brain as genuine threats. Another illustration of burgeoning safety and security risks within next-generation virtual worlds pertains to novel forms of phishing techniques that could potentially evolve into more sophisticated strategies. In virtual worlds, users create their avatars and deal with other users’ avatars representing actual humans. Pictures or 3D models are used to build avatars based on real or preferred appearance. These avatars can be easily copied and used in phishing like avatar acting like users’ friends or family in the virtual space. Lastly, akin to the concept of the ‘dark web’, given the accessibility of interconnected virtual worlds to all users, malicious individuals can establish a ‘darkverse’ within these virtual realms. The identification of illicit or criminal activities by law enforcement agencies will become more complex due to the quasi-physical presence of users within these virtual environments.

Accessibility and inclusion:

Ensuring inclusivity, representation of diverse individuals, and accessibility to resources and services are integral components of fundamental human rights within digital environments. In the development of next-generation virtual worlds or metaverses, a recent study has revealed that prospective users of virtual worlds expect equitable representation encompassing individuals of various ages, cultures, abilities, genders, languages, and religions. Nevertheless, the pursuit of accessibility and inclusivity necessitates deliberate design choices that honor the unique attributes of specific user groups. For instance, virtual environments designed for children or with child accessibility potential should incorporate dedicated safety measures catering to this particular demographic. Increasingly, the scientific community is recognizing the imperative to formulate methodologies for designing structures and content in next-generation virtual worlds that are all-encompassing for individuals with physical and cognitive disabilities. Additionally, there is a growing emphasis on crafting interactions that mitigate potential disadvantages.

To conclude, we observe that next generation virtual worlds will come with certain challenges regarding the protection of human rights, such as freedom of expression, safety and security, accessibility and inclusion. However, the psychological aspects of immersive advanced technologies and the blending of the physical and cyber worlds bring important distinctions and new challenges that need further considerations regarding the protection of human rights.

Challenges on human health, cognition and psychology

The Next Generation Virtual Worlds can have a powerful impact on human behavior. Based on design choices and immersive technologies, there are both positive and negative impacts on human health, cognition, and psychology. These potential effects encompass isolation, loneliness, digital twins tied to real individuals, addiction, impacts on vulnerable populations (especially youth), consequences for human connections and intimacy, shifting moral norms, and cyberbullying. While we observe shifts in human behavior, research on the direct impact of next-generation virtual worlds on the human brain’s structure and function is lacking. This necessitates further investigation, especially in long-term contexts.

According to Gibson’s theory of affordances, human behavior and corresponding psychological aspects are influenced by our interactions with the environment, daily experiences, and social interactions. The integration of interconnected digital experiences within next-generation virtual worlds and their seamless integration into people’s daily lives has the potential to reshape human behavior and psychology in unforeseen ways. Research in this domain suggests that actions in the virtual world can impact those in the physical world, and vice versa. In immersive interconnected settings with prolonged interaction, there’s a risk of blurring the lines between the virtual self and the interactive elements. While this intense experience can be beneficial in therapeutic contexts, it may pose challenges in other scenarios, such as violent gaming, where this fusion could become problematic.

Human immersion in virtual environments activates various sensory channels, much like navigating the physical world. The inherent trust humans place in their senses heightens the potential risks of adverse effects on human health, cognition, and psychology when dealing with poorly designed virtual worlds. Some areas where we anticipate that next generation virtual worlds might bring certain challenges in terms of human psychology include the following:

• Human cognition: decision-making in the context of a fractured view of reality.
• Social interaction: digital escapism, cyberbullying through the use of avatars.
• Affective engagement: avatar-mediated communication, visually expressing emotions through avatars in VR
• Human neuroscience in the form of brain-to-brain individual attunement: VR and AR activate the same brain-to-brain individual attunement occurring during natural social interactions affecting empathy and the recognition of intentions
• Self – awareness and perceived reality: disconnection from the physical reality and construction of new types of realities.

Identity concerns, especially among teenagers with developing cognition, can arise. A user’s digital twin or virtual avatar might not align with their real identity in appearance or mental state. Greater virtual immersion could blur the lines between these two worlds, potentially fostering harmful ideologies like bias, discrimination, violence, and viral propaganda.

While research on the effects of next-gen virtual worlds on human well-being is nascent, their potent nature calls for careful design considerations. Collaboration between designers, developers, and human development experts is vital to minimize negative impacts. Further research, especially long-term studies, is needed to understand these effects on human behavior and cognition.

Challenges in the field of education

The education sector holds promise with the emergence of next-gen virtual worlds but faces challenges, particularly when integrating immersive tech into primary and secondary education. As discussed earlier, both technical and societal challenges are relevant in education. For instance, technical hurdles may exacerbate educational disparities and strain school resources. The computational demands of next-gen virtual worlds, particularly in simulating teaching scenarios and interactions, pose significant network and cloud computing challenges. There is a set of education-specific challenges as they appear in the current literature. These challenges encompass technical aspects like network issues and the need for unified rules among schools for digital coexistence. However, there are also pedagogical challenges, including a lack of expertise in designing activities within educational metaverses and the necessity for educator training. Additionally, challenges involve the cost of developing the required infrastructure and the current absence of comprehensive analysis regarding the risks and benefits for the educational community.

With next-generation virtual worlds, education will extend beyond physical classrooms into interconnected physical and virtual environments, potentially blending with entertainment and other activities. While this offers motivation and new learning possibilities, challenges arise in protecting students’ rights, data privacy, and offline safety. Connecting students globally synchronously raises safety concerns in cyberspace, requiring protective measures. Educator roles may need re-evaluation, focusing on pedagogically grounded content in educational virtual worlds for students’ benefit.

Sustainability

On the one hand, virtual worlds have the potential to positively impact different Sustainable Development Goals (SDGs). They could contribute to SDGs ‘Climate Action’ and ‘Affordable and Clean Energy’ by reducing the carbon footprint in several ways. They might narrow the frequency of physical commuting (e.g. through flight, train, personal transport) for meetings or touristic activities. Industrial XR, including digital twins, enhances work productivity by reducing resource and time consumption associated with travel. It supports the ‘Industry, Innovation, and Infrastructure’ Sustainable Development Goal (SDG) by simulating factory scenarios to assess energy consumption and optimize production and supply chains, as demonstrated by Renault and PepsiCo. Finally, as mentioned in previous sections, virtual worlds offer potential benefits to the SDGs ‘Good Health and Well-Being’ and ‘Quality Education’.

On the other hand, next generation virtual worlds risk negatively affecting key SDGs, and action should be taken to minimise this impact starting at the earliest stages of conception and development. Virtual worlds demand energy-intensive computing, high broadband speed, and robust server infrastructure, which may pose challenges to the ‘Affordable and Clean Energy’ SDG. If not managed appropriately and efficiently, this could lead to a significant increase in power consumption, primarily from non-renewable sources of energy.

Web 3.0 and XR/AR/VR technologies may outpace the development of clean, non-fossil energy sources. This energy demand could lead to increased carbon emissions, worsening climate change. The rapid growth in Web 3.0 technologies may strain energy infrastructure, risking shortages and slowing sustainability efforts. To address this, investments in clean energy research, renewables, and energy-efficient tech are vital.

In addition, as virtual worlds expand, so will electronic waste. The increased demand for hardware like VR headsets, IoT devices, and graphic cards raises environmental concerns related to production, disposal, and recycling, affecting the ‘Responsible Consumption and Production’ SDG. Besides energy issues, the SDG ‘Reduced Inequalities’ could also be at high risk. While virtual worlds might offer, e.g., more educational opportunities for all, this could be a dual-edged sword. Widespread adoption of virtual worlds could worsen existing inequalities in technology and internet access. Ensuring equal access to virtual worlds for everyone, regardless of their economic or geographic situation, is crucial to prevent new forms of exclusion and injustice.

Technical challenges

New technologies

Societal changes associated with next-generation virtual worlds will be closely intertwined with technological advancements and emerging technologies. While there is some uncertainty about the technical aspects of future virtual worlds in the coming years, we can already anticipate several key technologies that will be central to their development and will transform our interactions with them. Some of these technologies will be entirely new, while others will require adaptation from existing ones. In the following section, we highlight five technological domains that will have a critical impact on the future evolution of virtual worlds:

• Computer graphics will allow the creation of increasingly immersive virtual, augmented and eXtended reality experiences and environments. Graphic engines will play a pivotal role in the development of next-generation virtual worlds. They will be leveraged to animate expressive avatars in real-time, aiding in the creation and exploration of unique virtual environments. These engines will also be instrumental in accurately simulating the laws of physics, including aspects like gravity, fluids, thermodynamics, and natural phenomena. Moreover, graphic engines will be involved in devising data formats and compression techniques for three-dimensional scenes, as well as pioneering innovative visualization methods, such as 3D holograms.
• Human-Machine Interaction (HMI) and IoT devices, like VR/AR headsets, haptic feedback gear, Brain-Computer Interfaces (BCIs), and motion capture systems, will revolutionize how we connect the physical and virtual realms. These devices enable advanced, real-time, and multimodal communication, allowing avatars to interact with the environment using text, voice, gestures, touch, and even smell. IoT devices, such as connected sensors, facilitate real-time information transfer between the physical and virtual realms via objects. For example, a digital twin of an industrial machine or a temperature sensor can replicate real-world conditions in the virtual environment.
• Artificial intelligence, including computer vision, machine learning, and depth sensing, will play a crucial role in creating realistic and intelligent elements within virtual worlds. This includes virtual agents, NPCs (Non-Player Characters), and autonomous systems that understand and simulate human behavior, respond to natural language inputs, and adapt over time. These AI technologies may evolve to cater specifically to virtual environments, such as virtual scene understanding, virtual affective computing (detecting emotions from avatar data), and 3D generative models for automatic scene generation.
• Blockchain and cryptocurrencies will underpin a decentralized infrastructure, eliminating the need for central control. This infrastructure will facilitate interactions, transactions, and asset ownership in virtual worlds. Blockchain ensures a secure, transparent, and verifiable record of digital asset ownership, akin to physical assets. This is crucial for trustworthy virtual economies where users rely on the security of their assets and transactions.
• Next-gen virtual worlds demand extensive computational power for real-time functions, including rendering, data sync, and motion tracking. Efficient, parallel processing over complex distributed systems is crucial for minimizing latency and processor load. Edge and cloud computing will support timely processing. Future mobile tech like 5G/6G will enable remote, real-time connections between real and virtual realms.

Next-gen virtual worlds demand a step beyond current tech, integrating and scaling these technologies for millions of concurrent users, each with unique interactions and assets. Maintaining high immersivity, low latency, and availability presents a significant challenge.

New types of data and digital contents

Users and connected devices in future virtual worlds will generate novel and diverse data types, differing from those in current digital platforms. Let us explore some examples and their impact.

A prime example of this transition is avatar data. Avatars, representing users in the virtual world, will generate valuable data encompassing user behavior, preferences, interactions, and even emotional states. This user-generated data offers valuable insights to enhance and personalize user experiences.

Currently, data from individual users on social networks are aggregated and analyzed to extract information about things like friendship networks, interaction patterns, and user communities. We can reasonably expect to expand this social data analysis by incorporating data generated by users’ avatars in virtual worlds.

Next-generation virtual worlds are likely to produce new types of spatial and spatio-temporal data. This would involve capturing virtual environment layouts, avatar movements, and other spatial aspects like spatial computing, navigation, and geolocation within these virtual worlds.

Regarding next generation virtual contents, their evolution is likely to be driven by advances in AR/VR/XR as well as artificial intelligence and blockchain technologies.

However, beyond technical considerations and specific data format challenges, it’s crucial to grasp the potential social shift in how we perceive the value of digital and virtual content. In future virtual worlds, items like digital fashion for avatars (as seen in Renault 2023), virtual or digital art, assets, and products, possibly registered as Non-Fungible Tokens (NFTs), could attain a value comparable to real-world objects.

Economic challenges

Virtual worlds or metaverses are poised to revolutionize the production, advertising, transactions, distribution, and consumption of goods and services. While the magnitude of these changes could be substantial, predicting the ultimate form of economics within metaverses remains uncertain. This section offers key insights into the potential characteristics of economic activity within virtual worlds, based on emerging trends.

Virtual worlds have the potential to revolutionize online activities like work, shopping, and entertainment, offering immersive and enhanced digital experiences. E-commerce is at the forefront of this transformation, with fashion and home decor brands exploring 3D virtual stores as innovative marketing and distribution channels. These virtual stores enhance the buyer’s experience, translating into tangible benefits for vendors entering the virtual and extended reality space. Visitors can try on clothes using avatars and visualize how objects fit into their personal space, resulting in a more comprehensive and enriching virtual shopping experience.

Virtual shopping experiences offer a multifaceted approach to engage consumers. Shoppers can interact with product creators, participate in themed games, and make purchases. This elevated level of buyer engagement enhances brand awareness, fosters loyalty, and guides shoppers toward making real-world purchases. Moreover, virtual shops serve as innovative testing grounds for new product designs, providing valuable insights into consumer beliefs, values, and preferences.

While the shift to 3D virtual stores and malls may not significantly impact GDP by displacing sales from existing channels, it can bring market expansion and efficiency-related benefits for vendors. A parallel can be drawn from the music industry, where digital streaming disrupted physical media stores but expanded music access and artist discovery. Similarly, metaverses are poised to transform music consumption patterns, driving demand for virtual concerts and live events hosted on platforms like Roblox and Fortnite.

Virtual worlds are not just about selling physical products differently. They can create a whole new digital economy within virtual spaces. This includes in-game items, collectibles, avatar customizations, digital art, and virtual land. While currently a niche market, this digital economy has the potential to explode into a multibillion-euro industry if more people spend time in virtual worlds. Luxury brands are already exploring this by designing limited-edition virtual fashion items, certified using non-fungible tokens (NFTs). The unique aspect of virtual goods is their minimal production costs compared to their physical counterparts. For example, virtual houses and vehicles don’t require costly physical materials. This low production cost could lead to more competition, as there are fewer economic barriers to entry. However, incumbents may try to restrict competition through technical or contractual means.

Virtual world payment systems will likely rely on blockchain technology. Currently, most transactions involving virtual goods and assets, like land, are stored on the Ethereum blockchain and use cryptocurrencies, often stablecoins. Blockchain transactions are fast and transparent, with commissions paid to validating nodes. The distributed ledger ensures reliability and eliminates the need for banks as intermediaries. However, blockchain faces challenges like scalability, interoperability, and environmental concerns. Security can also be an issue due to software bugs and hacking. While stablecoins reduce volatility compared to government-issued currency, cryptocurrencies are generally less trusted than fiat money.

These issues must be addressed for mass-scale transactions in the metaverse economy without sole reliance on private cryptocurrency providers. Trust is tied to convertibility to fiat money and the necessary reserves for stablecoin providers.

In addition stablecoins may face liquidity runs. To address trust concerns, shifting from private stablecoins to government-backed currencies like Central Bank Digital Currencies (CBDCs) is an option. Smart contracts and DLT technologies enable conditional payments and contracts. Communication between DLT and the financial system requires technical standards. This shift can also streamline tax regulation across virtual and real assets, goods, and services, but tax collection in the metaverse economy poses challenges for scalability and institutional arrangements.

To carry out automated tax deduction, tax authorities will need to be connected to a distributed ledger as a monitoring node and have an active role in a smart contract governing each blockchain-based transaction.

Competition

Winner-takes-most markets are common in the digital economy due to economies of scale, switching costs, and network effects. Dominant firms have an advantage, leading to competition problems like self-preferencing and foreclosure behavior. These firms can expand into adjacent markets through envelopment attacks, leveraging their market power and offering bundled services. This strategy is effective with overlapping user bases and strong product integration. Multi-product entrants can generate more value, potentially outcompeting single-product providers.

Big tech firms have digital ecosystems based on network externalities. They control data generated by platform services, which can limit innovation and economic welfare. Adding a metaverse layer raises privacy and competition concerns. There is a risk of exclusionary conduct and envelopment of independent metaverse ecosystems, as well as abusive data collection, leading to lawsuits against tech firms.

Taxation

With the metaverse’s success, purchases of virtual items will rise, including in-game items, wearables, digital art, and land, classified as digital assets or consumables for resale. Scarce and unique virtual assets, represented as NFTs, are suitable for investment. They are traded on blockchain for cryptocurrencies. Unlike other digital assets, they won’t be regulated by MiCA, an EU crypto asset regulation. However, NFTs are subject to capital gains or income tax.

Taxation rules for crypto assets, including NFTs, vary greatly across the EU. Some countries use linear tax rates, while others have progressive taxation with tax-free allowances. This results in effective tax rates ranging from 0% to 33% within the EU. There is a general agreement that capital gains from NFTs should be treated like income from cryptocurrency sales on crypto exchanges.

In the coming years, there will be changes in the way crypto assets are taxed, recognizing their international nature. The European Commission (EC) is developing a proposal for a unified tax system for crypto assets in the EU. This proposal aims to establish clear, equitable, and efficient taxation rules for the entire crypto asset sector, including NFTs. It will also address issues related to transaction anonymity. Under these new rules, individuals and businesses holding digital assets throughout the EU will need to provide comprehensive transaction records to tax authorities.

NFTs, as mentioned earlier, currently lack regulation and oversight from financial authorities. This, along with certain technical aspects, makes NFTs potentially vulnerable to money laundering. Key factors contributing to this vulnerability include the semi-anonymous nature of the parties involved, a lack of transparency in cross-border and cross-jurisdictional transactions on public blockchains, and price volatility. Effective regulation of NFTs should also address specific risks, such as providing Intellectual Property (IP) protection measures for creators and enhancing transaction security for buyers, considering instances of theft and fraud related to NFTs. Regarding IP protection, NFTs may grant specific rights to the buyer, such as the right to use, copy, modify, or display the digital asset.

NFTs can embed licensed rights within a smart contract, allowing for automatic tracking, enforcement, and billing when necessary. Misuse of NFTs may involve trademark and copyright violations and should be subject to IP protection laws. However, effectively enforcing digital IP rights is technically complex, requiring specialized tools for IP holders to monitor the actions of legitimate buyers, marketplaces, and unauthorized issuers. It is crucial to develop a comprehensive regulatory framework and the technological means to enforce and monitor contractual obligations between parties involved in NFT transactions promptly. Failing to do so could erode confidence in NFTs, given their susceptibility to criminal activities and weak IP enforcement. This, in turn, could hinder the growth of the metaverse ecosystem.

Policy and legal

While existing laws apply to virtual worlds, the distinctive nature of these virtual realms may require adjustments. Questions arise regarding whether crimes like murder or rape can occur in the metaverse, if human rights extend to avatars, and how evidence can be collected or investigations pursued within this virtual space. The emergence of the metaverse might necessitate the development of new regulations when the current framework proves inadequate in addressing its unique characteristics. Consider the rights of avatars in the metaverse—do they retain their identity when transitioning between different virtual worlds? These examples highlight the potential legal gaps that may emerge throughout various areas of law and legal procedures due to the advent of the metaverse.

While the above-mentioned issues will need to be addressed at some relevant point, the focus of the EU policymaker today is to first enable the technical functioning of virtual worlds in a secure and value-driven way. The current legal focus is on the following areas:

• Data protection
• Intellectual property rights
• Regulation of virtual assets
• Rules on competition, e-commerce and advertising
• Technology and interoperability standards
• Standards for avats conduct and behaviour
• Human vs. Avatar rights
• Cybercrimes
• Jurisdiction and governing laws
• Law enforcement

Promoting the safe utilization of virtual worlds relies on the continuation of existing policies, which possess the necessary attributes to address numerous immediate challenges associated with these realms. Notably, the GDPR establishes regulations for handling personal data within the EU, the Digital Services Act introduces a layered responsibility system for service providers in content moderation, and the Markets Act maintains competition within digital markets. Additionally, the InfoSoc Directive harmonizes aspects of copyright and related rights in the information society, while the Cybersecurity Act and Network and Security Directive (NIS2) establish governance frameworks and essential cybersecurity measures. The proposed Data Act aims to encourage more entities to participate in a data-driven economy, and the proposed AI Act focuses on responsible AI use. These overarching laws are complemented by sector-specific regulations that emphasize the value-driven adoption of digital services in sectors such as healthcare, energy, telecommunications, and finance. Furthermore, the European Commission is actively developing a regulatory framework for emerging technologies like AI, distributed ledger technology, and crypto assets. Importantly, these regulations are not exclusive to the metaverse but contribute to its facilitation and growth.

The upcoming virtual worlds of the next generation hold the potential to revolutionize our interactions, communications, and work dynamics. To navigate this transformative shift, we rely on governance frameworks and the legal system. Precisely how existing laws will be applied in the metaverse and how our understanding of legal concepts may evolve over the long term remain challenging to predict. However, it is evident that adaptation is not limited to the rules alone; it extends to the judicial system, law enforcement, and even legal education. These aspects will need to adjust to accommodate potential technological advancements within the context of virtual worlds.

Polish Law – virtual worlds*

When it comes to virtual worlds in Polish law, they can be considered on equal legal grounds, such as intellectual property law, copyright law, commercial law, humanitarian law, criminal law, or  tax law. One can observe a significant diversity of legal disciplines in this context.

The number of mentioned legal disciplines attests to the potential establishment of a legal framework surrounding the aforementioned virtual realms.

Virtual Property

If we would like to consider virtual property, we can cite Article 140 of the Civil Code as the foundational regulation, which reads as follows: “Art. 140. Ownership. Within the limits set by the law and the principles of community life, an owner may, to the exclusion of other persons, use a thing in accordance with the social and economic purpose of his right, and may, in particular, collect the profits and other revenues from the said thing. Within the same limits, he may dispose of the thing.” This article elucidates the concept of ownership as a right pertaining to tangible objects and possessing an absolute character. The virtual world, as a distinct entity, leads its own virtual and independent existence but exerts an influence on the real world due to transactions involving real currency within it. Consequently, one may inquire about who and what is being sold. In this context, a plausible answer could be that an avatar, as a virtual fictional entity, engages in the sale of digital content. An avatar, as a subject of legal relations within the virtual realm, can also become the object of such relationships. Virtual property can be tentatively defined as the entitlement (authority) over a virtual creation, digital content. However, virtual property does not pertain to tangible objects, and therefore, it cannot be regarded as ownership in the context of civil law (the classical concept of property under Article 45 of the Civil Code does not encompass the category of digital content). In summary, it must be established that virtual goods cannot be perceived within the category of tangible objects under the definition of the Polish Civil Code. This leads to the conclusion that virtual property, under the current legal framework where the concept of “thing” is limited solely to material objects, as defined in Article 140 of the Civil Code, is not ownership in the sense of Polish civil law. Does this mean that virtual property is not a normative category under Polish law. It is important to consider that the concept of ownership appears not only in civil law but also in other branches of law and the Constitution. Article 21(1) of the Polish Constitution protects property by stating that “The Republic of Poland shall protect ownership and the right of succession.” Additionally, Article 64(1) of the Polish Constitution grants everyone the right to property, and in paragraph 2 of this article, it is stipulated that “property, other property rights, and the right of succession shall enjoy equal legal protection for all.” None of the mentioned provisions in the Polish Constitution provide a definition of ownership. Despite the lack of a definition in the Polish Constitution, it is recognized that the subject of the right to property formulated in Article 64 encompasses a broader scope than ownership in the sense of civil law.

Ownership in a constitutional sense can encompass, among other things, rights of an obligatory nature, such as claims arising from the issuance of government bonds. Constitutionally understood, ownership can be treated as a synonym for the concept of property, which has already been elucidated by ordinary legislator in Article 44 of the Civil Code, stating that “property includes ownership and other property rights.” In light of the above, theoretically, there are no impediments to subjecting virtual property to the constitutional regime pertaining to the category of ownership. If ownership, as understood in the provisions of the Polish Constitution that establish its guarantees, has a broader scope than ownership under the provisions of the Civil Code, consequently, it may be equated with the concept of property specified in Article 44 of the Civil Code. Thus, there is no obstacle to affirm that virtual property is, or can be, one of the property rights (other than ownership under the Civil Code) mentioned in the aforementioned Article 44 of the Civil Code. This would allow it to be categorized as property in the civil law sense, albeit not expressly articulated in the provisions of the current law, but rather at the level of ordinary legislation, not constitutional. In such a scenario, virtual property would appear as a normative category, albeit indirectly defined within the framework of the existing legal provisions.

Criminal Law

In virtual worlds, just as in the real world, various crimes are committed, and they are referred to as “cybercrimes.” In the context of computer games (but not limited to them), cybercrimes involve various virtual assets, such as characters, currencies, gold, and individual game accessories. They can be categorized into two groups:

– Those resulting in the loss of control over one’s avatar or other virtual objects by the user of the virtual worlds

– Fraud of privacy involving the copying of others’ virtual assets

In such cases, it is essential to unequivocally reject the classification of theft, burglary, robbery, or misappropriation under Article 45 of the Civil Code. Instead, the applicable regulations will be those that deal with the concept of property, which also encompasses intellectual property rights. The consequence of the behaviors described above will be a violation of the right to use a program or its elements, essentially constituting the right to use a work with economic value, falling within the category of property.

Personal Rights

It is also worth examining privacy protection in the virtual world, specifically the infringement of personal rights in the virtual realm. To delve into this issue more thoroughly, it is essential to understand which personal rights are most commonly violated in virtual worlds. Among these rights are privacy, human dignity, personal data, and one’s online persona or pseudonym. Of course, other personal rights can also be infringed upon, as outlined in the open catalog of Article 23 of the Civil Code.

Potential perpetrators of these violations can include the operator of the virtual world and its participants. It should be noted that some infringements are typically committed by operators for marketing purposes. There are two possible variants of violations:

1. Violations of the personal rights of “real” individuals in virtual worlds (such as one person causing the “disgracing” of another person by revealing their true identity in the real world to “attack” them while using an avatar, as well as disclosing someone’s nickname without their consent or impersonating someone else’s nickname).

2. Violations of the personal rights of avatars, also known as “virtual personalities” (including the use of information about an avatar’s activities for marketing purposes in the virtual world, revealing information about the person behind the avatar in the virtual world to devalue the avatar, or systematically insulting one avatar by another).

Three potential approaches can be considered regarding the optimal construction of personal rights in cases of violations occurring in virtual worlds:

– Extension of Traditional Personal Rights: One approach involves extending traditional personal rights to the virtual context. This would entail treating rights and personal assets in virtual worlds in the same way as in the real world. However, it is important to bear in mind that certain aspects of virtual life may differ from the real world, which might necessitate adapting or expanding the definition of personal rights.

– Creation of Separate Virtual Rights: The second approach is to consider establishing specialized rights or categories of personal assets tailored to virtual worlds. These new rights would be designed with the unique aspects of virtual life in mind, such as avatar control, online privacy, and protection of online identities. This approach could enable a more precise regulation of issues related to violations of virtual personal assets.

– Hybrid Model: The third approach involves creating a hybrid model that takes into account both traditional personal rights and special rights adapted to virtual worlds. This way, conflicts between traditional personal rights and new categories of virtual rights can be avoided. This model could accommodate the unique aspects of virtual life while preserving a general safeguard of personal rights and assets.

Ultimately, the choice of the optimal construction of personal rights in virtual worlds depends on various factors, including technological advancements, societal needs, and legal considerations. It is a matter that may evolve as virtual worlds continue to develop, requiring legislative flexibility.

Sources:

Science for policy report: Next Generation Virtual Worlds. Societal, Technological, Economic and Policy Challenges for the EU.

* Report from the scientific conference “Virtual worlds from the perspective of Polish, EU and international law” by Dr. Daniel Karkut, University of Wrocław

“Virtual property. Definitional problems and the perspective of Polish law” by Dr. Daniel Karkut