Metaverse Innovation Could Suffer Under Strict Regulation
In India, a contentious debate is underway concerning the regulation of the metaverse and emerging technologies. Metaverse companies and experts are asserting that stringent laws and regulations may stifle innovation in this rapidly growing ecosystem. Their stance follows the recent release of a consultation paper by India”s telecom regulator, which aims to establish regulatory guidelines for this evolving digital realm.
One significant point of contention is the potential need for strict regulations in the metaverse. Many in the industry argue that the government”s recent introduction of the Digital Personal Data Protection (DPDP) Act of 2023 and the forthcoming Digital India Bill already provide safeguards for online safety and security. They express concerns that additional laws could hinder innovation. However, there is an acknowledgment that certain measures, such as mandatory authorization of digital identity in Web3 for traceability and verification in law enforcement, investigations, and financial or e-commerce transactions, could be considered.
The consultation paper issued by the Telecom Regulatory Authority of India (TRAI) primarily focuses on addressing the unique challenges posed by the metaverse and Web3, including data privacy, content moderation, intellectual property rights, digital identity, cybersecurity,. TRAI emphasizes the importance of proactive regulation to ensure the orderly growth of the metaverse sector and to prevent issues like online abuse, hate speech, and mistrust.
Some experts suggest the adoption of a digital identity mechanism to establish ownership of virtual assets, such as NFTs, and enable the portability of user data across digital services within the metaverse. The paper also raises concerns about the tracking of real-time emotional data, which can predict a person”s emotional state using factors like facial expressions, vocal inflections, and vital signs. The potential for abuse in ad targeting has sparked discussions about policies to moderate such tracking and address the associated challenges.
While the industry generally supports TRAI”s recommendations for guidelines and principles concerning the use of real-time emotional data and digital identities in the virtual world, there is an emphasis on TRAI”s role as a suggester rather than a regulator. Data protection, they argue, falls under the purview of the Data Protection Board as per the DPDP law.
Suggested approaches include adopting a cautious stance, with experts advocating for TRAI to observe the metaverse sector”s development before introducing stringent regulatory guidelines. They also suggest that TRAI can play a role in suggesting policies to consent for using emotional and biometric data, particularly for ad targeting.
There is recognition of the potential for India”s Aadhaar-based digital identity system to become central in the metaverse, and the idea of licensing to moderate content, particularly in games that may expose children to dark or violent themes, is also considered.
The protection of sensitive data, especially in fields like healthcare and finance, is another area of concern. To address this, suggestions include the use of technologies like selective disclosure and zero-knowledge proofs with verifiable credentials, empowering consumers within metaverse ecosystems and enabling notice- and consent-based data exchange systems.
The debate over metaverse regulation in India continues, with stakeholders weighing the importance of innovation against the need for safety and security in this evolving digital landscape. The outcome of these discussions will shape the regulatory framework for the metaverse and its associated technologies in the country.
