Alarmism Should Not Be the Guiding Principle Behind Metaverse Public Policy

Former Federal Communications Commission (FCC) Commissioner Tom Wheeler last month called for proactive regulation of the metaverse. A report Wheeler authored for Brookings argues that without early, proactive policy interventions, the metaverse will become “the next generation of privacy-violating, competition-thwarting, and truth-killing platforms.” But the regulatory interventions Wheeler proposes would do more harm than good. Indeed, similar regulations enacted or proposed by governments in Europe have limited the viability of their tech sector, introduced onerous compliance costs and legal uncertainty, and—in the case of the UK—could significantly erode users’ privacy.

The former commissioner expresses concerns over a variety of policy issues surrounding AR/VR tech, including privacy, market concentration, interoperability, safety, content moderation, and fraud. According to Wheeler, policymakers failed to sufficiently address risks from social media in its early days—and to avoid repeating that mistake, they need to regulate the metaverse now. Rather than wait to create new regulations to address tangible harms when they materialize, Wheeler argues for proactive regulation to minimize any potential harm to users in the future. He also dismisses concerns that regulation could stifle innovation in the tech industry as fearmongering among policymakers who lack technical expertise.

Wheeler is right that social media can provide lessons on how to build a safe, equitable, and inclusive metaverse. The metaverse will largely be built on the foundations of “2D” social media, so it is likely to inherit similar cultural norms, content moderation practices, and, unfortunately, most of its unresolved issues. But users and platforms are also better prepared to tackle these issues now than they were in the past—partly thanks to their experience with social media. For example, some users are more cognizant of their privacy online, which has resulted in a market response from tech companies that have introduced new privacy-enhancing technologies.

Those who advocate for heavy-handed regulation of the tech sector often praise the European Union and the United Kingdom for their precautionary approach to regulation—prioritizing harm reduction over innovation—but they often overlook the costs involved in this type of regulation. Bills like the Digital Markets Act, the Digital Services Act, and the General Data Protection Regulation have stifled the European tech sector’s growth because they have proved to be costly to implement, complex to interpret and comply with, and hostile to platforms that grow beyond “large platform/large gatekeeper” thresholds. The UK’s proposed Online Safety Bill could potentially undermine users’ privacy by forcing messaging platforms to stop using end-to-end encryption.

U.S. metaverse policy should not follow Europe’s path. Policymakers should instead opt for a targeted approach that tackles specific harms or problems after they manifest. Congress should prioritize tackling the current barriers slowing the development and deployment of augmented and virtual reality devices. For example, a federal data privacy law would clarify for individuals and organizations what rights and responsibilities they have with respect to personal data, including what data can be collected, how it can be used, and how it will be protected. The patchwork of federal and state privacy laws has failed to provide clear, consistent, and predictable guidance to the industry. Additionally, it is not clear if currently enacted privacy laws cover certain types of data, such as inferred data—the type of data, such as eye movement and gaze data, that seems to concern Wheeler the most—increasing uncertainty for users and tech companies alike.

Policymakers should not rush to prematurely regulate the metaverse and the AR/VR industry based on unfounded fears, because doing so really could stifle the development of a nascent market that needs experimentation and innovation to continue growing. But that does not mean the United States needs to “sit back and allow the others to do the heavy lifting,” as Wheeler says. There are opportunities for policy interventions to benefit consumers and industry without unnecessarily targeting AR/VR technology—starting with creating a federal data privacy law. The United States will be better positioned to lead immersive tech innovation if policymakers prioritize light-touch interventions rather than emulate Europe’s costly regulation regime.