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A new home for global commerce is under construction—and it’s virtual. Oft-hyped, virtual reality (VR) was at a low ebb until Mark Zuckerberg’s announcement last October: Facebook would be renamed Meta, Inc. after ‘the Metaverse’, a term coined by sci-fi author Neal Stephenson for cyberspace. Now the buzz is back and buzzier than ever. For some commentators it’s still premature. But there are strong signs that the metaverse is a serious business, and one which will soon require regulation.

In one form or another, alternative reality has been around for decades. The first VR headsets were made in the 60s. Then there’s augmented reality (AR), a 90s coinage. Special glasses allow you to see virtual things in the surrounding world. You might interact with them, a bit like Pokémon Go players, who use their smartphones to find virtual creatures in real-world locations. Imagine doing that without the aid of your phone.

Geeks and gamers, particularly the well-off, may have enjoyed a VR or AR experience, by dropping $30k on a fictional space ship for example, or tying the knot in Second Life, a platform roughly described as an online version of the SIMs. Since 2003 it has offered headset-free access to a simulated world made up of real people. Through their virtual selves or ‘avatars’, players (many of them subscribers) really can lead second lives, even start families. An independent in-game economy emerged and today, despite dips in popularity, this virtual community has a bigger GDP than some small countries.

The metaverse, at least on paper, goes further. It’s AR, VR and theoretically interoperable (i.e. made up of separately created but possibly connected realities). What’s more, while Second Lifers sought escape from the real world, the metaverse promises new ways of integrating with it.

Will it be big? 

The numbers speak for themselves. Meta has committed $10 billion to metaverse operations this year and more in the future. Well, duh! The company is staking its commercial future on it. What about the venture capitalists who have fed so much of Silicon Valley’s growth? They are throwing billions more at the underlying ‘Web3’ technology and pushing for government support. Banks are backing a range of meta-businesses, such that PwC predicts the creation of 23.5 million VR and AR-based jobs in the near future. E-commerce, such as cannabis retail, has found a quirky, almost natural home.

As more of the world’s population plugs in, the trade of digital as well as real-world goods will become commonplace. It might even include digital scented candles. Avatar clothing and accessories will prove a necessity for many metalife addicts. Five-figure rewards from the production of virtual trainers and underwear are setting the world of fashion alight. All the while, gains from user-tracking (down to their eye movement) and ‘hyper-targeted-advertising’ will fill Big Tech’s coffers.

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Various other business models will allow for juicy takings. Microsoft and others are selling technology enabling a virtual workforce. Accenture already asks new hires to start by creating their avatars. Second Life’s enduring success shows that subscriptions can fund entertainment. Music companies have staged huge virtual concerts. In the future more may attend than would be possible in real life.

Government, too, is finding its uses for virtual reality. By 2026, the Korean capital of Seoul will offer a complete array of virtual services, including municipal administration, visits to destroyed historical locations and New Year’s celebrations. Barbados, apparently in a cost-cutting exercise, is opening the first simulated embassy. Even war is racing to the metaverse.

So much speculation around this new reality, yet so little clarity on how it will evolve! A perfect prospect for the covetous. Zuckerberg’s shrewd maneuver is a case in point: the Meta name is like a flag planted on contested territory. The uninitiated may believe, falsely, that the metaverse was Meta’s creation. Despite ‘nice-sounding’ statements to the contrary, it’s in the nature of men like Zuckerberg to desire domination of reality probably more firmly under corporate control than our current one.

Can regulation ensure user safety? 

Some would resist Big Tech monopoly through the creation of decentralized, creative commons-type metaverses. Regulatory chops and changes will certainly affect investment. There is a cloud of legal niggles on the horizon that is fit to burst.

In January, IoT For All published my article on the law of the metaverse, which I dubbed metalaw. This term of art, dating back to the 50s, designates a fantasy legal system that governs relations between humans and extraterrestrials. I argued for semantic reassignment to the norms applicable to VR, where conflicts will cross national borders and even those of reality.

The problems are legion. Which metaverse investments, for example, will be regulated as securities and where will they be regulated? How will companies meet user safety requirements and whose requirements will they be? What happens if an avatar-attached addict seeks compensation for virtual injuries? Metalaw may stretch and bulge into something quite strange: a new, meta-jurisdiction. One thing’s for sure: it won’t be simple, which means plenty of work for lawyers.

The metaverse is, in theory, limitless. If you’re in the business of making money, it will probably be worth a punt. It won’t be easy to figure out where to put your money or when, whether a big investor or small. Advisors familiar with this new market are going to be highly sought after.