Big-tech & Metaverse Part 2 - Are existing laws sufficient or are new ones required?

Last year, the European Union passed The Digital Markets Act, aimed at regulating the internet and enabling smaller players to compete with tech giants. EU Competition Commissioner Margrethe Vestager, who in the past has taken on the Big-Tech with a couple of high-profile anit-trust suits, said The Digital Markets Act will set the rules of the game for companies that play a role as gatekeepers.

Often, countries find it difficult to keep up with the dominant power of Big Tech, and anti-competitive legislation is often implemented too late. The question is, can existing laws effectively address the potential domination of the metaverse by Big-Tech, or is it necessary to create new country-specific laws for this purpose?

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Big-tech & Metaverse Part1 - Will tech giants be the gatekeepers of Metaverse?

Experts are unanimous in their opinion that the existing laws are not sufficient to deal with the potential dominance of big-tech players. Sameer Dhanrajani, President, 3AI, explains that under the proposed Digital Markets Act, Apple would be forced to open up its App Store to third-party payment options instead of users being forced to use Apple’s own payment system; Google will be asked to offer people who use smartphones, which run on the company’s Android operating system, alternatives to its search engine, the Google Maps app or its Chrome browser. Apple would also be forced to loosen its grip on the iPhone, with users allowed to uninstall its Safari web browser and other company-imposed apps that users cannot currently delete.

“The EU wants to give users more choice over how people send messages. The new rules would require that technology make their messaging services interoperable with smaller competitors. The proposed laws are stringent and put quite a bit of regulations on dominant players to curb any malpractices or monopolistic situation,” says Dhanrajani.

A yawning gap

The EC’s Digital Markets Act (DMA) has ignited a contentious debate over not only its capacity to regulate anti-competitive behaviour by Internet giants, but the place of legislation in general, says ReelStar Co-founder Navdeep Sharma. “The metaverse is global and transcends jurisdictional boundaries; thus, to be effective, regulation must be global in nature. The DMA, by its confining EU scope, will have minimal impact on the metaverse’s globally driven development, and in all likelihood will, despite its intentions, further disadvantage those within the EU,” he adds.

Sharma points out the yawning gap between the frenetic pace at which technology is advancing and the countries’ inability to catch up with that pace.

Globally, Sharma adds, lawmakers have failed to grasp the massive disconnect between the speed with which legislation is affected, and the pace at which the digital revolution is proceeding. According to him, the metaverse, as just one aspect of the digital revolution, has an exponential growth rate, while legal frameworks struggle to achieve even a linear growth. Further, he says, the DMA exemplifies a global propensity by lawmakers for rigid regulatory frameworks that are often irrelevant (even before their application), due to the dynamic and agile nature of the digital landscape.

“The digital revolution necessitates a different type of law, one that changes from a rigid prescriptive perspective on regulation to a more flexible, forward-looking approach, that is around policies and guidelines, genuine general principles, proactive collaboration and direction, and that demonstrates cohesion with other legislation as well as changing social norms and technological capacities. Current legal frameworks, not just within the EU but globally, are unsuited to the demands that the digital revolution is creating. Effective laws and regulations are hindered even more because the vast majority of lawmakers and legal practitioners are completely unfamiliar not only with the technical subject areas related to the digital revolution, but also with the reasoning and problem-solving skills required by this domain,” he says.

According to Sharma, the solution for lawmakers is to change their focus from control to empowerment. “Only by providing a genuine fertile digital landscape within their jurisdictions will lawmakers be able to effectively answer the challenges that they not only face today but those that they will face in the future. Every lawmaker should prioritize fostering a competitive and innovative environment that encourages home-grown tech companies to thrive not just in the metaverse, but for the foreseeable digital revolution.”

Sumit Ghosh, CEO and Co-Founder, Chingari, feels that the existing antitrust laws and regulations may not be adequate to address big-tech companies like Google, Meta and their potential dominance of the metaverse. However, he feels that the EU’s Digital Markets Act can be seen as a positive step in the direction of regulating big-tech companies from ensuring that fair opportunities are provided to all for growing in the digital economy.

“The metaverse, however, would require a distinct set of rules and regulations that could ensure strict data privacy and security provisions for users, rules that could grant users censorship rights as well as the right to ownership over the things they create in the metaverse. Furthermore, given the potential for virtual currencies and digital assets like GARI Tokens and GARI Badges to become a significant part of the metaverse economy, a specific framework may be in place to regulate the same,” says Ghosh, who vouches for a universal set of rules.

He feels that it is important to note that the metaverse is still evolving and is being accepted at various paces by countries around the world, and it is imperative that policymakers from around the world work together to create a universal set of regulations while keeping an eye on developments to ensure that regulations keep up with the changing landscape.

At present, notes Kaavya Prasad, Founder, Lumos Labs, the existing laws don’t entirely enforce fair competition to promote balanced growth between big-tech companies and smaller ones. She feels that there is a significant need to identify pain points and adapt laws and policies to enable innovation opportunities in the metaverse ecosystem.

Prasad is of the opinion that The Digital Markets Act has the potential to address a lot more challenges in the metaverse ecosystem, especially considering the impact of the convergence of various other technologies. She, however, adds that specific laws and regulations may be needed for data privacy, intellectual property rights, content moderation, and virtual assets and currencies.

“Essentially, the Digital Markets Act and all other regulations should balance innovation and competition with user rights and interests. In doing so, we can see an ecosystem that promotes collaboration and inclusivity based on a regulatory framework for the metaverse,” she opines.

A beacon of hope

Aahan Dogra, Founder, NoCap Meta, is of the opinion that The Digital Markets Act stands as a beacon of hope to regulate the behaviour of internet giants. He vouches for tailor-made laws to specifically address the challenge posed by the metaverse. “But can it single-handedly prevent Big-Tech’s metaverse domination? As we tread uncharted waters, it is imperative to have a robust legal framework in place. While the Digital Markets Act lays the groundwork, we must consider specific laws tailored to the metaverse’s unique challenges. Margrethe Vestager, the European Commission’s Executive Vice President for Digital, said, “We are writing the rulebook for our digital economy” (Vestager, 2021). After all, “when in the metaverse, do as the metaverseans do!”

As the metaverse continues to grow, it is becoming increasingly clear that we need laws and regulations that are tailored to its unique challenges and opportunities, says Samir Asher, Founder and COO, Tonic Worldwide. For instance, he adds, it is important that companies operating in the metaverse are held to high standards of openness and interoperability, so that everyone can have a positive experience. Additionally, with so much personal information being shared in the metaverse, it’s crucial that we have laws in place to protect user privacy and data rights. By ensuring that the metaverse is a safe, open, and innovative space, we can ensure that everyone can enjoy exploring this new virtual frontier, he points out.

Considering the rapid developments of innovative technology, regulatory bodies need to be quick and efficient in establishing frameworks meant to protect consumer interest, says Anantha Krishnan, Founder, MOI. “While the administrations are considerably aware of Big-Tech and its dominance in certain sectors and are making strides towards limiting their power by pushing them to be compliant, transparent, and fair to enable a free market and data privacy, the scope of these regulations is still restricted to certain facets. The existing laws may be sufficient to bring a few conglomerates under the radar of the government and have some movement on the regulatory front. But these firms have exorbitant amounts of financial and legal resources. Therefore, these might not have the desired universal results as predicted,” he points out.

However, Anantha Krishnan points out that these regulations are necessary to start the journey of inclusive competition, accessibility, and user protection. He further adds that the introduction of these laws had started a much-needed industry conversation of acknowledging and taking active steps to prevent the reign of big-tech and attempting to give an equal opportunity to start-ups and innovations in the space.

“The existing regulations such as Digital Markets Act (DMA) introduced by the EU, Competition Act 2022 introduced in India, and more, are creating the ecosystem for more tech-specific, business-specific, consumer-centric, or country-specific laws that can be expected in the near future,” he says.

(Tomorrow Part 3: Are we heading for an oligopoly with Meta, Microsoft, and other tech giants joining hands for metaverse tech?)