This article has been authored by Abhimanyu Kasana, an LL.M. candidate at National Law University, Mumbai, specializing in investment and securities law. His academic and professional interests lie at the intersection of corporate regulation, financial markets, and legal technology
Introduction:
It would not be wrong to say that, people discussing ‘what is metaverse?’ in 2025 is no different from people discussing ‘what is the internet?’ back in the 1970s.[1] The stepping stones of a new form of communication had just started to get laid at that time and no one was aware of how the reality was going to look like. The experts believe that we are in the middle of a big transition and the change we are going witness will impact our lives hugely. The metaverse is not just any other new technology that comes now and then and is not just limited to one specific technology, but rather it is a broad shift in how we interact with the technology. It would not be surprising if in the near future, the term ‘cyberspace’ gets completely substituted by the term ‘metaspace’. We have heard the big guns in the technological space such as Mark Zuckerberg and Satya Nadella talk about it quite often recently. But what is all this hype about?
What is Metaverse?
Metaverse in laymen’s language is an augmented reality that combines the aspects of the physical world with the digital world. We live in a world where a lot of platforms already have the concept of virtual identities, virtual avatars and even virtual inventories but the catch here is that all of this is just limited to that one particular platform. The metaverse will create a digital ecosystem that will connect all these platforms and we will be able to take our digital avatar from one social network to other. It will also allow us to possess digital assets like cars, clothes, digital real estate and do transactions using digital currency. But are we prepared for this shift?
Every big change brings even bigger challenges with itself and this case is also no different. In the coming future, we are going to see a lot of issues arising around the metaverse and a huge chunk of those issues is going to be in the legal domain such as:-
Privacy Concerns:
If we look at the previous trends, we will observe that for formulating the laws related to technology, India has always been dependent on the foreign developed countries. For instance, the European Union’s General Data Protection Regulation has influenced the Personal Data Protection Bill (PDP Bill), which is the most important law in our country when it comes to the protection of personal data in the digital environment. But with the rapidly increasing internet penetration in India, it becomes immensely important for India to adopt a proactive approach towards formulating laws for ensuring the privacy of its citizens in the digital space.
Currently, there is no clear law in our country that would specifically deal with incidents of privacy breaches in the metaverse. The closest law we have regarding this is a small part of the PDP Bill which deals with sensitive personal data (sensitive personal data is any data that contains biometric information).
Also, in the current legal framework, there are no provisions for the protection of sensitive and personal data of children over the metaverse platforms but India already making moves in this direction, recently the Central Board of Secondary Education tied up with Meta. This partnership will ensure that around 10 million students are provided with a curriculum in Augmented Reality experience.
Shortage of Data Storage Centres:
According to a report by Credit Suisse, the transition of the digital ecosystem to the metaverse would increase the data usage by 20 times in the coming years and for storing this enormous amount of data, a lot of new data centres will also be needed. So, there is a need for a specific law that would enable us to build more data centres, increase their capacity and at the same time adhere to the environmental protocols
Concerns over Digital Assets:
A recent study shows that a piece of land in the metaverse was sold for 4.3 million dollars.[2] This figure is in itself enough to indicate the interest people are showing in buying virtual real estate, all thanks to the backing of tech giants like Meta and Google.[3] One of the conditions mentioned in the sale deed of this land was that the land can be bought in cryptocurrency only and if the company’s server fails to operate, the land will no longer exist. So it is not very difficult to guess that people can use virtual assets as a means to commit fraud. And since crypto is still illegal tender money, it would be nearly impossible for the investigating agencies to book the culprits as the shreds of evidence will be extremely weak.
Not only this, since the crypto is non-traceable, it would allow the criminals to purchase real estate in the metaverse with their illegally procured cryptocurrency. It would also provide a safe harbor to the criminals who indulge in money laundering.
Concerns Surrounding Horizontal Platforms:
Users interacting with their avatars give rise to certain situations involving a breach of the law as if it took place between two people in the real world. How can an avatar be made liable for his actions online and how can he be sued under the existing laws is a matter of great concern.
By the end of last year, Meta launched a metaverse platform named the Horizon Worlds. An incident of a male avatar groping a female avatar has come into the limelight. Another similar incident involving a woman avatar in Meta’s Horizon Venues metaverse disclosed that she had been gang-raped by four male avatars.
This has put forth a great question of law as to whether a virtual body can legally be considered the same as a physical body and can penal provisions be used for addressing the crimes inflicted upon these virtual bodies. As in the instant case, can Section 375 of IPC be used for a virtual person whose modesty is in itself a question of doubt? Whether a women avatar possesses modesty and can be outraged virtually is also a grey area? There is no law confirming the modesty of a virtual avatar. The current IT acts and legislations regulating cyber-crimes against women were not formulated keeping in mind the possibility of crimes occurring in the metaverse. Furthermore, there is currently no law that punishes sexual assault committed via the internet. It’s also tough to track down the perpetrators of such crimes because each person in the metaverse is given a unique identity.
Also, The Competition Act must be well acquainted with while dealing with the unfair competition that may arise due to the new technology of metaverse where the user’s data could be used to know their taste and preferences, thus giving a competitive edge to one brand than other. It could jeopardise the government’s efforts to create a fair and competitive economy.
Need of the Hour:
There are many concerns and apprehensions surrounding this new technology of metaverse and all the legal ramifications it will bring along. Metaverse has thrown a slew of hurdles, ranging from the groping of a female avatar to the million-dollar sale of virtual assets that anyone can buy. At the same time, it would be too early to predict its boon and bane considering it to be simply the initiation of an internet revolution. Therefore, the full ramifications of the giant technology can only be realised in another 10-15 years down to come.[4]
Legislators, on the other hand, will have to be proactive in ensuring that metaverse technology is compliant with data protection standards. This necessitates an early draught of the metaverse law so that technology evolves within legal bounds and people are rest assured while trying this new technology.
Metaverse is merely a stepping stone in the broader evolution of digital spaces. Various such type of technologies have already started transforming the virtual landscape or are about to do so. It is imperative for the legislators to not be reactive to the challenges and rather be proactive in formulating appropriate framework to address potential challenges in advance.
[1] MARTIN SCHWIRN, A Legal Minefield Called the Metaverse, COMPUTER WEEKLY (2022), https://www.computerweekly.com/feature/A-legal-minefield-called-the-metaverse.
[2] SIDDHARTH CHATURVEDI & PRIYANSHU BHARADWAJ, Why India Should Start Forming a Law for the Metaverse, THE LEAFLET (2022), https://www.theleaflet.in/why-india-should-start-framing-a-law-for-the-metaverse/.
[3] CIARÁN MCCOLLUM, Metalaw: The Law of the Metaverse, IOT FOR ALL (2022), https://www.iotforall.com/metalaw-law-of-metaverse#:~:text=2022%20will%20witness%20the%20birth,been%20dubbed%20%E2%80%9Cthe%20metaverse%E2%80%9C.&text=The%20metaverse%2C%20by%20means%20of,imitation%20of%20the%20real%20world.
[4] PIN LEAN LAU, The Metaverse: Three Legal Issues We Need to Address, THE CONVERSATION (2022), https://theconversation.com/the-metaverse-three-legal-issues-we-need-to-address-175891#:~:text=International%20law%20firm%20Reed%20Smith,permission%20from%20the%20true%20owner.
