Metaverse Majlis 2: Beyond the aspirational and romantic notions Policies, Law & Order, and Value Systems

Background

From Metaverse Majlis 1, we concluded: “What will be needed for companies to thrive in the metaverse is a careful balance between protecting the rights of various stakeholders, without impeding technological growth and development, which shall be a difficult juggling act for lawmakers.”

As virtual worlds pierce our physical reality, the code that these worlds run on may prevail over law. Law will need to rise to the challenge of ensuring that code adheres to the rules applicable in the physical world and conventional cyberspace. In the alternative, code may rise to become the prevalent normative order in the metaverse, devoid of any link back to established legal orders. Such a shift will see private actors potentially exerting control over our metaverse activity and depriving us of protections developed in our legal orders over centuries.”[1]

At the same time, how can we make sure that regulation does not stifle the benefits that mixed reality environments could bring about in our lives? These are the top trends of the metaverse: the deep integration of the digital and real economy, data becoming a core asset, and the globalization of digital and decentralized finance.

Will a handful of tech giants monopolise the metaverse, as they have done with web 2.0? What legislation and organizations will protect people, especially minors, from abuse? What will we lose as we accelerate unhindered into the metaverse? Will ads be forced upon consumers to unlock new experiences? Will the metaverse be a privacy-conscious, decentralised ecosystem, or whether it is destined to devolve into a dystopian nightmare?

The second metaverse discussion took place under Chatham House Rule, a closed-door roundtable, with thought leaders from diverse perspectives such as policy thinker, lawyer, futurist & philosopher, academic, tech and digital expert, consultant and advisor.  The purpose of the roundtable at Capital Club Dubai, was to put the brakes on and examine the many layers of this rapidly evolving realm, including data protection, AI ethics, the socioeconomic force, emerging technology, digital infrastructure, policy, law and governance.

Will policy and regulation catch up with a train that has already left the station and is speeding up? Or will we, as the passengers, figure out collectively how best to navigate the train to a destination still unknown?

Concerns       

In the metaverse context, the legal issues are complex, and law by is nature is precedent based, and looks to yesterday to try and work out what to do today. Whereas policy asks what we want to achieve. Another concern is that technology moves faster than policy and regulation. And with data growing exponentially, how this is going to be used in the metaverse raises questions about AI ethics.

What is the philosophical perspective of responsible AI? The moral examination does not look at the same things that the legal lens sees, and so this dialogue is important for an honest investigation about the good, bad and ugly that the different technologies and changing face of the Internet will have on society. Will it be human-centered and predominantly benefit humanity?

There is a theory in behavioural economics called ‘prospect theory’ which assumes that losses and gains are valued differently, and thus individuals make decisions based on perceived gains instead of perceived losses. Also known as the “loss-aversion” theory, the general concept is that if two choices are put before an individual, both equal, with one presented in terms of potential gains and the other in terms of possible losses, the former option will be chosen.[2] The understanding is that losses cause a greater emotional impact on an individual than does an equivalent amount of gain, so given choices presented two ways—with both offering the same result—an individual will pick the option offering perceived gains.[3]

Many decision makers don’t quite understand AI, and they make decisions based on the popular narrative. This is the status of the metaverse currently, with the behaviour of many evangelists (fulfilling the prospect theory claim) pushing more about what it can do positively, looking only at the gains, but unwilling to clarify what is unknown and needs to be articulated and shaped (the possible losses).

The metaverse is a parallel world, where you may have access to healthcare and doctors that mirrors and augments the services available in the real world, but there is also a fantasy world. The concern is about those that spend too much time in that world, how will they live in the real world? What will happen as these lines blur? Children especially are vulnerable, and entry into these worlds is difficult to control. How do we prevent exploitation in a tech-enable AR or VR world? Or realistically even check for the entry age limits?

A case in point is an example of human trafficking in Philippines, where they have been able to effectively control and prevent the spread through controlling the physical check points. However, human trafficking has moved online, and the organization is finding it impossible to police this.

The metaverse is actually just an entry point, and in the next 50-100 years we will not need our bodies. Once we go down this track, the future is connecting brains to machines, a matrix reality, and the next generation does not yet have enough information to make the right decisions, and how quickly do we want to get there. There are some serious and interesting dilemmas that humanity is facing.

Laws, Governance, Policy and Regulations

Who is going to be responsible for governance in the metaverse? Many young people want to participate in this realm because they want the freedom from bureaucracy and rules. Will it be the great economic equalizer? Can we create separate verticals with governance for good services in the healthcare and education sector?

As long as there are real world actors who are sitting somewhere in a physical place, there will be laws that regulates them. And most of the time, the same laws would apply in the metaverse, which is similar to how the Space Court has been developed which adopts laws used on earth for outer space. However, the question is are they fit for purpose? If not, then we need to discuss what are the biggest scenarios that we are afraid of?

Principles of law and legislation can accommodate new worlds, but those scenarios and facts need to present themselves. And then the judiciary legislative powers can make tweaks to those laws. We don’t need to reinvent the legal books. It’s just a case of working out where the deficiencies are, and these need to be done on a case-by-case basis. The distinction is whether the laws are fit for purpose or whether the executive infrastructure is able to enforce the laws.

The debate: Should you wait and see and then regulate VS. Should you go ahead and provide a platform that enables it? Many consider it important to be bold, to try and shape things. And the metaverse is as good or as bad as you make it.

To envision Dubai as a global digital economy it would be prudent to start regulating this realm. Some policies and frameworks need to be put in place to facilitate useful services like medical treatments in the metaverse. We can then be in a position to create a new market in Dubai where we attract the best doctors and the best hospitals to join us. This is a great opportunity for Dubai to become a soundly regulated metaverse platform for digital health and digital education, which have services to offer and enhance for the good of humanity. One might feel safer getting treatment from a doctor in Chicago, who’s sitting on the Dubai platform, than who’s sitting on the Facebook platform. However, what are the laws required to make this into a reality?

It is to worth noting that though the Internet has been around for nearly 40 years, regulators have found it challenging to provide digital safety and protection from misinformation and dealing with data privacy. The metaverse, which is even more decentralized, is going to amplify the regulators’ challenges and it would be prudent to understand the limitations of effective governance.

Though blockchain claims to provide more transparency, and there is value to this, decentralization is a huge challenge. Facebook is a centralized network and might make it a safer place than the countless different decentralized metaverses without any controls. Yet, there is already too much data in the hands of one player, and it is vital to understand the ethical, societal and legal consequences of the Meta movement.

We do need an Authority for the metaverse. Facebook has an authority, and if you are one of the 2.8 billion users, you do know the rules and regulations, and can be kicked out. It can moderate users’ content and have controls of what happens on their platform. As soon as you are outside of the Facebook system, you could find yourself in a wild-no-rules world.

The example of Estonia is an interesting one. It has a great digital government, and all services can be accessed online – company registration, opening a bank account, renting an office – all without ever visiting the place. What was the driver behind this small country’s highly tech-savvy ecosystem? The fear of Russia! The geographical proximity of a tiny nation worried about a Russian invasion drove them to go fully digital.

Law-making as a principle, involves thinking about the worst-case scenarios, such as things we definitely want to avoid as a society. It these is a consensus about that then you can move the law and policy to address this. Generally, there isn’t a need for a new set of laws. Most problems today can be addressed through the legal principles that have evolved over centuries. However, the issue about how the law can be interpreted, fragmented and implemented by different jurisdictions is another matter.

Basically, governments have very clear judicial accountability and judicial review based on unreasonableness, inconsistency, applying their own policy, etc. You can take it to the court, and the court has the power to say you, the government has got it wrong and needs to fix it. In our region, we don’t have those public law remedies. When you compare what is happening globally this is going to be a challenge for this country. We trust the government, but they are not accountable here, as in a democracy. At some point, this will be challenged, with digitalization interconnecting everyone in the world.

Seoul recently announced that to become the very first Metaverse city; Bahamas have set up their own embassy in the metaverse. The questions keep increasing: will we need a digital twin ID, an avatar ID or a citizenship in the metaverse, which is accessible or monitored by the government? Or is it possible that you can create an identity in the metaverse that is not linked to you in the physical world, and you can continue to exist in that realm even after you die in the real world?

Education      

The technologies are being deployed at such scale and speed that it has been impossible to adapt or revise the education system to keep up. And it is important to understand the implications of this because students are getting a lot of their learning from Twitter and social media, which is dangerous.

The governments, worldwide, have lagged in resolving this issue. For informed and empowered decisions, education is must. Like the old adage warns, ‘a little knowledge is a dangerous thing’, because then there isn’t an acknowledgement that we need to step back and take time to first learn and then act accordingly. The ‘firsts’ in this race may not be winners.  Dubai and the nation have an opportunity to be the best rather than the first by taking the approach of wait and see, experiment and learn, educate and communicate, discuss and debate and work on policy, law and order before triggering the metaverse world.

What is being communicated, how is knowledge being shared, are there checks on age-appropriate ed-tech platforms and applications for learning…? These questions need to be answered and someone needs to put the brakes on critical decisions being made by the pressure of ‘popular’ opinions. The government needs to protect society, put accountability measures in place and be the gatekeeper, making education of all these new technology-driven realities a priority.

Data & Digital Assets

There is an emerging recognition of the value of your own data. Data is being used, with or without your knowledge, and so now the rationale is on how you can benefit from this, such as converting your health data into an NFT, deciding how many times people can use it, etc. The consent model for data is broken while society continues to debate on whether data privacy can every be a reality. This is not a specific metaverse problem today, but as every aspect of the digital realm goes more mainstream, it is definitely a government problem. And it is accelerating too fast for governments to keep up. Our life in the metaverse will be made up of many varieties of digital assets, so it is important to start putting the right frameworks and laws in place.

If we can manage to start with one idea, like healthcare in the metaverse or digital realm, resolve the issues that come up, and prove its success, then we might be able to build trust and value in the system. And then expand to the next service until slowly and pragmatically we can build a whole city.

Jurisdictions

Let’s imagine a scenario of a billion people on a global metaverse platform (like Meta) within five years up. They are trading in digital assets as well as physical assets, and this is going to have real impact. How do we legislate this? Nations still haven’t really been able to work together to create laws for cyberspace or for the Internet. How will the different legal regimes and different culture align? Depending on who you have got in the room, they will legislate for different things. How will you keep the two worlds separate or will they merge?

It would be a reasonable assumption that what will happen in the metaverse/digital realm will start filtering into the real economy, as we are seeing with cryptocurrency trades. How do you legislate this because it also depends on where you are?

There is a case study in digital platform ‘Second Life’ where people go and sit in real time in a virtual real estate space for a few days, because algorithmically, the value of the real estate in the metaverse rises the time people are inside it. So, if you are the landlord, you would pay somebody to go sit in your virtual properly to falsely raise the price of your property.

The metaverse could become the ramp for the emergence and need of global governance systems, though AI-based regulations, and smart contracts that are approved by global financial authorities… it’s like creating a one-world government! Does it seem too farfetched?

Being Human

How do you define what is human in the metaverse or in the matrix? Or is that even relevant? Yet can this be ignored since our laws are based on our humanness. As we start embedding interfaces, such as brains linked to machines, and bodies are no longer needed, and in fact you don’t even need to be technically alive, are we still human? Is being human related to your physical body or brain or both?

If we extrapolate this thought process and look at the privacy debate and legislation, it used to be the domain of celebrities who could prove commercial value to who they were – the concept of zonal privacy rights. The similar commercial manifestation could occur if you are able to create value beyond being tangibly human… a spinoff on zonal privacy rights, and laws might develop around this. Maybe you never stop being human – whether body or brain – however the makers of laws and policy will need to debate this further. And the people of faith and religion will have their say.

Socioeconomics & Next Gen

This is a challenge, not so much about technology or law, but of the economic system of capitalism, where inequity creates the great division of wealth. There are many young people who feel that they are unable to succeed in this real economy. “We don’t really want to go into the metaverse and would prefer to have normal high jobs, but we are being pushed out of the real economy. We can’t get jobs, we can’t get property, we are being excluded and the real world no longer offers us viable alternatives. We are now building a new frontier for our survival.” And since these same young people are already spending a lot of time in the gaming world, they feel they can make it financially more viable for them.

There are serious socioeconomic outcomes of the metaverse that need further examination. It could indeed become the great economic equalizer bringing more wealth to more people. Take the case of the metaverse Axie Infinity[4], where more people are ‘playing to earn’ and are able to get out of poverty. However, who is studying the long-term social impact of this way of living and livelihood?

And is there a case of deploying digital wealth in the physical world and creating inflation repressions? The cryptocurrency evangelists discourage you from storing your money in the bank and promote a shift to digital assets as a way to hedge against hyperinflation. But in reality, how can you speculate on virtual assets that are so volatile that they jump from zero to millions overnight and call that ‘hedging’?

The Big Tech

The metaverse will accelerate the overarching dominance of big tech in the world even further and it might become impossible to reverse their level of control.  The 5 big tech – Google, Microsoft, Amazon, Facebook and Apple – have massive data center footprints.

Like with ‘Big Oil’, ‘Big Tobacco’, and ‘Big Pharma’, ‘Big Tech’ is here to stay and shape today’s society in more areas than just technology.  These are the leading companies that bring sociocultural evolution at a big scale and drive social change at full speed.

Over the years, the big five tech companies have acquired numerous companies and made them subsidiaries.

  • Google is so interwoven into the fabric of the internet that it’s literally synonymous with internet searches. Owns Motorola, Fitbit, YouTube, HTC, Blogger.
  • How much control should Apple have over your iPhone? Owns Beats, Shazam, NeXT Inc, Siri, Emagic.
  • Amazon dominates the e-commerce world and has a very profitable cloud computing arm. Wholefoods Market, MGM, Zoox, Twitch, Audible.
  • Facebook, now known as Meta, is the social media giant. It makes billions off of targeted ads based on our data and is accused of spending some of those billions to acquire potential competitors, either to kill them off or use them to secure their dominance. Owns Whatsapp, Instagram, Oculus VR, Giphy, FriendFeed.
  • Microsoft is one of the most valuable public companies in the world. Its Windows operating system is by far the most dominant. It’s made some huge acquisitions. Owns LinkedIn, Nuance Communications, Skype, GitHub, Hotmail and Minecraft.

Regulators and government officials worldwide continue to closely scrutinize big technology companies amid potential anti-competitive anti-trust concerns. What accountability frameworks are in place for these country-sized companies?

Will these tech giants monopolise the metaverse, as they have done with web 2.0? What legislation and organizations will protect people, especially minors, from abuse? What will we lose as we accelerate unhindered into the metaverse? Will ads be forced upon consumers to unlock new experiences? Will the metaverse be a privacy-conscious, decentralised ecosystem, or whether it is destined to devolve into a dystopian nightmare?

Concluding Thoughts

The historical analogy is interesting, as a narrative that feeds itself for survival, about discovering new land, make rules, pioneers and followers, some make it rich, others don’t…  it’s worth pausing and examining any lessons learnt from the different economic bubbles[5] that have burst in the past, such as the dot com and US housing bubble… should we simulate the scenarios of repeating NFT and crypto bubbles and what could be the different consequences?

The virtual world or metaverse can deliver a good purpose with relevant useful specific services for society, but the challenge is if everyone tries to take a slice of it and run on their own for pure commercial or entertainment aims, especially with the gaming and social media world capitalizing on in, we might very well replicate the problems from the real world into this parallel world.

The future might see us go to Mars and colonize that planet or we could put our bodies on hold with football fields of jars of brains integrating with AI that will solve the problems and then after decades we could reconstitute our bodies and walk on this planet. Unless the permafrost kills us first.

You could hand over your avatar, your digital twin, to the next generation as a legacy after you are dead and gone… a digital consciousness. This would be a very different society which will require different laws and policies. Humans becoming AI powered brains dominated by algorithms and equations… it is difficult to even understand how to prepare for this or is it too ‘out there’?

Stop Press

On Dec 13, 2021, “Shareholders at Facebook, now Meta Platform Inc., are agitating for a series of changes at the company, including a commitment to address harm on the platform and an analysis of its audit and risk committee, as per the Wall Street Journal.[6] In total, a group of investors filed eight proposals for consideration at the company’s annual meeting, which is usually held in May. Perhaps the most impactful is a call to modify the company’s governance and an independent Chairman; as it stands, Meta’s dual-class structure where Mark Zuckerberg is both CEO and Chairman gives him roughly 58% of the vote.”[7]

At this roundtable, the concluding thoughts were that great things can be achieved in the metaverse with the help of AI, especially if we are able to examine and understand its possibilities from a multidisciplinary lens and bring innovation to solve problems… utopia might still be achievable. In the metaverse, you can cross many boundaries, traverse across different geographies and see many perspectives and make holistic decisions for society. The metaverse has the potential to help governments bring more effective solutions into the real world. It will depend on how we channel the potential, and whether it is being shaped by ethical governance.

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[1] What Does the Law Look Like in the Metaverse? – The Fashion Law

[2] Prospect Theory Definition (investopedia.com) ; National Bureau of Economic Research. “THIRTY YEARS OF PROSPECT THEORY IN ECONOMICS: A REVIEW AND ASSESSMENT. https://www.nber.org/system/files/working_papers/w18621/w18621.pdf

[3] Department of Psychology | CSUF – Cal State Fullerton. “Advances in Prospect Theory: Cumulative Representation of Uncertainty psych.fullerton.edu/mbirnbaum/psych466/articles/Tversky_Kahneman_JRU_92.pdf

[4] Axie Infinity uses cutting edge technology called Blockchain to reward players for their engagement. Play to Earn revolution. Axie is a new type of game, partially owned and operated by its players. Earn AXS tokens by playing and use them to decide the future of the game. https://axieinfinity.com/?__cf_chl_managed_tk__=pmd_aa042adf2332852667f39c98e6fc32984d9308dd-1627333452-0-gqNtZGzNAuKjcnBszQZ6

[5] Biggest Economic Bubbles in History (2020 Infographic) (fortunly.com)

[6] https://www.linkedin.com/news/story/facebook-shareholders-push-for-change-4611577/

https://www.wsj.com/articles/shareholders-press-facebook-for-governance-changes-11639404002?mod=hp_lead_pos6