By Bronwyn Howell

The metaverse is the latest phenomenon to storm the world of information technology and innovation. Not unlike past innovations in this space (e.g., the internet, smartphones, cryptocurrencies), the metaverse comes with its own revolutionary discourse. According to Garry Williams, head of the Metaverse Advisory Department for production studio UNIT9,

The metaverse is a whole new age of computing, an evolution in the way we access and explore the internet that will have a similar impact on the way we communicate, shop and socialise as the birth of mobile did.

Equally, the metaverse’s advent has catalyzed a cacophony of apocalyptic doomsayers to call for immediate and proactive regulation, especially in the realms of privacy and disinformation. As businessman Bradley Tusk opines, “The problems we have regulating technology companies now will be reproduced and amplified in the metaverse. You thought that policing state-sponsored disinformation is hard on Facebook and Twitter? Wait until you try it in 3-D.”

Every new technological innovation generates uncertainties as both innovators and users work out how it affects their interactions. After all, while technology firms are looking for new ways to commercialize the innovation, users are working out what the innovation means for the ways they communicate with each other, as well as the additional value it confers compared to past offerings. Yet, as hinted in Williams’s quote, we may not be as unprepared as we think we are when it comes to considering governance (and, if necessary, regulation) of the metaverse. We’ve learned a lot from successes and mistakes in the telecommunications industry.

Lesson 1: Focus on Applications, Not the Technology That Enables Them

Although the metaverse goes into the three-dimensional realm, it is being used for pretty much the same sorts of transactions as the “old” internet, the plain old telephone system, and broadcast media before it. It involves people communicating with each other either interactively and synchronously in real time (e.g., telephone conversations, Microsoft Teams meetings, and WhatsApp chats) or asynchronously (e.g., podcasts, broadcasts, and Facebook posts). Value is generated not by the technology per se but by the applications deployed on it. The applications move between technology platforms as determined by commercial imperatives and consumer preferences.

Yet as we learned (to our cost) from telecommunications, regulating one set of platforms but not others (e.g., cable versus telecoms or fixed line versus mobile) creates distortions in the development of the markets for the platform, rendering rules tied to governing activities on legacy technologies impotent on the frontier. Likewise, regulating the frontier as if it were the legacy is equally flawed. Regulating broadband services provided on cable infrastructure differently from broadband provided on telecommunications infrastructure led to severe distortions in competition between the infrastructures as broadband evolved during the 1990s and early 2000s. Equally distorting was the regulation of voice telephony provided on copper and cable infrastructure, but not voice-over-internet-protocol alternatives. Winners and losers emerge not based on the risks posed by the applications but on perceptions of how the operators of the underlying infrastructures behave.

Lesson 2: Focus on Markets and Transactions, Not the Firms Facilitating Them

Metaverse applications function in markets, where value is created, and which are separate and distinct from the platforms that enable them. It is unfortunate that when offered a new technology, some users may use it for undesirable or even criminal activities. Regulating the firms providing the platforms cannot itself control the behaviors of the platforms’ users, however, and there are some behaviors that platform providers themselves should not be solely responsible for.

Long ago, it was recognized that the content of telephone conversations was the purview of the parties to it—not the provider of the platform over which the conversation occurred. That specific judicial intervention was required to allow only selected conversations to be listened in on facilitated widespread growth in the value-creating use of telephony that would not have occurred if unauthorized intervention was feared. Likewise, Section 230 of the Communications Decency Act of 1996 insulated internet providers from responsibility for offensive and criminal behavior of internet users, facilitating the rapid growth of the internet as a platform on which applications provided by others could be hosted.

Takeaway

The lesson from telecommunications for those calling to preemptively intervene in metaverse governance is that the appropriate focus for intervention should be first on those who use the platforms and their behaviors as they interact on them. If harms arise from these interactions, it is the transactors and not the platforms that should be held accountable in the first instance. Holding the platform operators accountable for actions that are not in their direct control will likely harm the welfare-enhancing diffusion and development of the metaverse.

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