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AMBIGUITY OF LAWS IN THE CONTEXT OF METAVERSE: IS INDIA ALL GEARED UP?

INTRODUCTION

Given the advancement in technology, the expansion in the realm of virtual reality is quite apparent with the COVID 19 pandemic further amplifying the magnitude of online platforms. Metaverse is one such advancement that is speedily gaining popularity, becoming a buzzword among netizens. In simple terms, Metaverse implies a network of virtual worlds that provides its users with the opportunity to interact with the help of digital avatars. The word made its first appearance in Neal Stephenson’s novel 1992 titled Snow Crash. The concept of the Metaverse that was defined in the novel and its vision in the present can hardly be distinguished. In the novel, it is described as a world of virtual reality where users as 3D avatars can purchase and sell real estate. The form and shape of these avatars can be chosen by the users themselves. While all this sounds fascinating, a few questions that surface from amongst the plethora of uncertainty are- (i) who essentially regulates the Metaverse? (ii) How will the rights of users be protected lest legal disputes arise? (iii) What and how rules and regulations are administered in the Metaverse?

GROWTH OF METAVERSE AND THE UNDERLYING PROBLEMS

Facebook founder Mark Zukerberg brought the name Metaverse to the headlines in October 2021. Since then, tech giants like Google, Microsoft and Meta itself are investing in this virtual ecosystem which has led to increased investment in digital assets by the common population. People from different countries would come together on one particular digital platform along with different and contrasting laws of data protection in their respective countries. The formulation and application of a common data protection law seem to be very challenging when the sensitive data of individuals are put at stake. For example, the brand Oculus explicitly states in its privacy policy that the data that it will collect will be about “environment, physical moments and dimensions when you use an XR device.” If this is looked upon from the perspective of Indian laws, this would directly fall under the definition of “sensitive personal data” of the IT Rules, 2011. But in the Metaverse, the problem that is posed is that there exists no common data protection law that users are subjected to and thus no enforcement of the right to privacy.

Another legal issue is the purchasing of digital assets. In the Metaverse, digital products could be purchased with the help of NFTs that are nonfungible tokens. It is possible to own and swap these tokens. With the help of these tokens, one can purchase items that are available in the physical world in a 3D form and can subsequently claim their own that no one else can. Now if someone from India purchases any asset from someone belonging to a different country, it cannot be taxed under customs duty as it is not levied when intangible goods are imported. A similar problem is raised when real estate is bought on the virtual reality platform. Singer Daler Mehndi recently bought land in the Indian Metaverse platform called Partynite and designated it as “Balle Balle Land.” Another instance is when the land was sold for 4.3 million dollars on the Metaverse platform called Sandbox which generated headlines as being the “costliest land” to be sold in the Metaverse. The question that lies herein is whether the peculiar aspects of property law can be administered onto the property purchased virtually? This question is unanswered and leaves a lot of uncertainty regarding ownership of property and taxation on immovable property in the virtual world.

How are these assets bought in the Metaverse? One of the conditions on Sandbox declares that the only way to buy land is through cryptocurrency. Axie Infinity allows players to purchase and breed digital pets and works on blockchain technology. Thus, it shows that cryptocurrencies are the way of dealing when purchasing anything in the Metaverse. However, Indian laws do not currently accept cryptocurrency as a “legal tender” and thus it poses another problem. Along with the legality, it is quite possible to convert anyone’s illegal proceeds into cryptocurrency as blockchain technology ensures that the identity remains unknown. This can lead to malpractices like money laundering. The problems do not end here, as an infringement of intellectual property rights poses a new threat in the virtual world. It is fairly easy to replicate products on a digital platform which may lead to the infringement of trademarks. People have the leeway to design their 3D avatars in the Metaverse and are thus prepared to spend money on fashion items. There are a few instances that rationalise this point. On a virtual game called Roblox, a Gucci handbag was sold for $4,100 which is more than its price in the real world. Thus, companies can choose to file for separate trademark registration for their virtual goods to prevent trademark infringements.

PROBABLE SOLUTIONS TO THE AFOREMENTIONED PROBLEMS

To overcome or prevent the problems of the Metaverse, the following can be the probable solutions-

  1. A common data protection law that is administered to all the users of Metaverse along with the setting up of enforcement agencies. This should include an all-encompassing policy of privacy established through an agreement between the merchant and the user.
  2. To prevent uncertain issues around ownership of assets, decentralised ledgers and smart contracts can be used as evidence.
  3. With regards to currency, a common digital currency can be introduced with the introduction of a system that helps in the conversion of fiat money into digital currency and vice versa effectively and securely.

CONCLUSION

Metaverse has three pillars namely its presence, interoperability and standardisation. The existence of different virtual worlds along with their digital avatars and economies amalgamating into one platform makes the Metaverse a unique and highly intriguing subject of research. The laws of the country should be at an equal pace with the level of progression of technology. While it is certain that current Indian laws have a dearth of provisions that counter the problems posed by Metaverse effectively, India may prove to be contributing to the development of Metaverse internationally with the introduction of laws that specifically focus on Metaverse.

Author(s) Name: Nikita Ambwani (University Five Year Law College, University of Rajasthan)