Legal issues in the metaverse / Part 1 - Introduction to the metaverse

Part 1 - Introduction to the metaverse

In recent months, ‘metaverse’ has become a buzzword, featured in numerous articles and media reports, and has even been referred to as web 3.0, without a precise definition of what metaverse is being offered. However, the term is not new: it already existed in the 1990s, and in the 2000s computer games became widespread, in which users could live a second life with their avatars, buy virtual objects, territories and even advertising space, in a virtual world built for this purpose. Blockchain technology has given a further boost to these developments, making it possible to add value to virtual goods through tokenisation and to link the world of cryptos to these virtual worlds, allowing for real-time exchange and management of goods with real economic value.

What is the metaverse?

The metaverse is a shared virtual world that users can access from any platform via the internet, and where they can interact with their virtual avatars. Access can be via virtual reality, augmented reality or a combination of both, e.g. through VR glasses. An important feature is that it has its own economy, which has real value and is connected to the real-world economy. Some of its sub-services were already available on other platforms; integration is the novelty. The theme and the built world of a given part of the metaverse depends on its provider, and the technology can vary. In practice, the metaverse is used in computer games and social media platforms, but it can also be used for virtual conferences, events (such as livestreamed online concerts, and fashion shows), for entertainment, digital libraries, and is revolutionising e-commerce with virtual shopping malls. In addition to commercial uses, organisations are exploring the use of virtual worlds for other purposes. For example, the metaverse is useful in the healthcare sector to offer virtual therapy and perform remote surgeries. It will also expand the possibilities of online education. The public sector can also use metaverse to provide virtual consultations and civil service. The interconnectivity and interoperability of different areas of the metaverse can be brought about by NFTs (non-fungible tokens), whereby goods tokenised in one part of the metaverse and thus acquired virtually as a token, such as a tokenised garment from a luxury brand, can be used in another part of the metaverse.

The metaverse is not just technology, it is a new business model

The Big5 companies have already invested a huge amount of money in the metaverse and companies supporting it with VR and AR technologies. Selling products and providing services in the metaverse requires a change of business models, the tokenisation of products, artworks, digitalisation, and the virtualisation of services, which also needs new company policies, terms and conditions and a new economic mindset.

Legal issues in the metaverse

There are a variety of legal issues concerning the metaverse, especially given that it is a meeting point for multiple technologies, requiring or linked to servers, hosting, software, platforms, hardware and other peripherals (e.g. VR glasses and haptic gloves for sensing virtual objects), content, graphics, maps, buildings, photos, interfaces, as well as blockchain for acquiring and registering tokenised virtual assets. This diversity also raises a host of legal issues ranging from intellectual property rights to data protection and civil law.

In this series of articles, we explore the key issues concerning the metaverse, including:

Part 2: Trademarks and copyright, NFTs and civil law principles in metaverse
Part 3: Data protection challenges, the importance of cybersecurity, advertising regulation in metaverse
Part 4: Expected impact of the EU Artificial Intelligence Regulation, the metaverse as a workplace

Follow our metaverse series of articles. For more information on metaverse in Hungary, contact your CMS client partner or local CMS experts.