Discover more from Metaverse EU
[Document] IMCO's Draft Report on Virtual Worlds
A brief explainer
23 August 2023—The European Parliament’s Internal Market and Consumer Protection (IMCO) Committee published a Draft Report, “Virtual worlds – opportunities, risks and policy implications for the single market.” The document, Parliament’s first motion on the topic of virtual worlds, sets out key areas of focus for the single market—strategic autonomy, accessibility, consumer protection, connectivity, and sustainability—and calls on the Commission to publish regular ‘fitness checks’ to monitor the development of virtual worlds.
How did we get here?
24 June 2022: The European Parliament Research Service provides a briefing—Metaverse: Opportunities, risks and policy implications—for staff and members of Parliament.
19 January 2023: IMCO Committee announces its own-initiative procedure on “Virtual worlds: opportunities, risks and policy implications for the Single Market.”
27 April 2023: The Committee on Culture and Education (CULT) submits its draft Opinion (a non-binding position) on IMCO’s procedure.
18 July 2023: CULT Committee submits its final Opinion.
23 August 2023: IMCO Committee publishes (date of submission: 4 August) its Draft Report.
What is an Own-Initiative Procedure?
Own-initiative procedures — or “INIs” — allow MEPs to take the initiative on a topic without a concrete legislative proposal to scrutinise. An INI report often calls on the Commission or Council to act on a new policy area or request a revision or amendment to existing legislation.
What does IMCO’s Draft Report say?
The report does not provide or point to definitions. Instead, it laments “the lack of a universally recognised or agreed definition of virtual worlds” and recommends future work addresses this. Nevertheless, the Committee takes on the European Commission’s recent Web 4.0 phraseology.
“[The Committee] asks the Commission to pay attention to the potential emergence of problems in the Web 4.0 that already exist in the Web 3.0…”
Europe’s place in the digital world
According to the Committee, EU institutions have established digital rules in line with European values and principles—“such as data protection, privacy and security, and putting citizens in the centre, especially minors”—and, in consequence, moved “away from the path followed by other geographical areas such as the United States and China, among others.”
The report acknowledges that non-EU companies currently lead the development of virtual worlds but believes that, with the EU at the “forefront of digital regulation,” the rest of the world will follow the EU’s example. Meanwhile, the report highlights the importance of attracting non-EU talent and innovation to the bloc.
Priority areas and the question of anonymity
The report considers several areas where virtual worlds pose “significant risks,” including consumer protection, competition, privacy, and cybersecurity.
It focuses on the topic of identity and anonymity, in the end advocating for anonymity-lite: users of virtual worlds should be anonymous under an alias (otherwise known as pseudonymous), but “competent authorities” should be able to identify the person behind the mask.
The Committee calls on developers and regulators to address barriers users face accessing digital worlds, such as their “geographical location, socio-economic status, digital skills, or physical condition.”
The report stresses that virtual worlds ought to contribute “to the greater participation of people with disabilities” and offer ways to increase the participation of people with disabilities in activities, citing the example of virtual tourism overcoming mobility barriers. For this, the Committee urges developers to consider adequate accessibility features and designs.
The Committee paid particular attention to the impact of virtual worlds on the youth. The report cites the outsized potential of immersive experiences; for example, such tools may help young people “develop their appetite for learning” and learn skills such as “collaboration, communication, critical thinking innovation and confidence.”
At the same time, the report warns of new risks of harassment and bullying in virtual worlds, as well as novel health concerns around “addiction, cybersickness or disturbances in sleep patterns.”
In the context of these technological developments, the Committee brings attention to the need for high-performing infrastructure, “in particular 5G and 6G networks with low latency and high bandwidth,” and a “true single market for telecoms.”
“Data usage is expected to increase twenty-fold during this decade, and data traffic is also expected to increase very significantly. Significant investments will therefore be needed to adapt and upgrade telecommunications networks.”
The report states that virtual worlds can positively impact the EU’s climate goals by, for example, encouraging remote communication.
But, the Committee warns, virtual worlds will require substantial raw materials, so the EU should ensure immersive technologies are built on sustainable supply chains and with advanced recycling techniques in mind.
The Committee considers a comprehensive regulatory framework of “vital importance” and that possible fragmentation needs to be monitored and avoided. The report urges the EU to strike the “right balance” between regulation protecting fundamental rights and providing a flexible ecosystem for developing virtual worlds.
Regarding data protection and privacy, it warns, “the General Data Protection Regulation might not be enough to address the challenges posed.”
“There is no need for ex novo regulation of virtual worlds for now.”
What is the Committee asking the Commission to do?
The report calls on the Commission to:
Assess how to deliver the necessary infrastructure that consumers need.
Publish regular fitness checks outlining how existing regulations deal with virtual worlds.
Report bi-annually on developing virtual worlds and emergent policy risks.
Where necessary, put forward legislative proposals.
Does this Report matter?
INIs are an agenda-setting tool—and a highly political one. Although not a formal decision-making procedure, an INI allows Parliament to endorse or reject the Commission’s approach to a topic. And while the Commission is not obliged to follow the report’s calls to action, it is hard to ignore for political reasons.
INIs are also a valuable indicator of Parliament’s priorities, interests, and concerns. Those MEPs, especially rapporteurs and shadows, involved in INIs meanwhile signal their interest and develop their expertise on a topic—strong candidates, therefore, to cover the topic in the future.
That said, this text is a draft and will be altered before its final version is published.
What happens next?
The Committee will receive and consider amendments and compromise amendments to its draft before voting on the final report. The report will then be sent to the plenary, where Parliament will either endorse it—in which case it will sent to the Commission—or vote it down and end its journey.
Should the Commission receive the report, it has three months to either submit a proposal on an issue the INI sought to address or notify Parliament that it will submit a legislative proposal. Should it decide on legislative action, the formal decision-making procedure will follow.
18 September 2023—Consideration of the draft report.
21 September 2023—Deadline for amendments.
25 October 2023—Consideration of amendments.
13 November 2023—Consideration of compromise amendments.
28 November 2023—Committee vote.
January 2024—Plenary vote.
Join readers from the European Parliament, European Commission, Meta, Microsoft, Google, Snap, Lego, Epic, Qualcomm, and elsewhere—and subscribe!