The European Commission’s Communication on virtual worlds - What can we learn from it?
ANALYSIS
- July 2023
Introduction
On 11 July, the European Commission (EC) presented its Communication on Web 4.0 and virtual worlds, with the aim of getting a head start on the next technological transition. The message is clear and expected.
For the EC, virtual worlds will bring unprecedented opportunities in many societal areas (health, services, education, culture…). Nonetheless, the Executive Vice-President in charge of a Europe fit for the digital age, Margrethe Vestager also warned that this technological transition needs to take account of the EU's values, principles and fundamental rights, putting citizens at the centre and countering risks in terms of privacy protection or misinformation.
The EC uses the unusual term 'Web 4.0' which was first used by Commissioner Thierry Breton in February 2023 at Barcelona’s Mobile World Congress. The French Commissioner underlined that the EU expected the Web 4.0 to be enabled by virtual reality and augmented-reality technologies and the ‘symbiotic’ interaction between humans and machines. Hence, Web 4.0 can be understood as the ‘Symbiotic Web’ where humans and machines can interact with mind-controlled interfaces.
The European Commission asserts that, by 2030, many people will be using virtual reality daily in fields such as healthcare, education, art and design, logistics, engineering and manufacturing… Overall, the EU is eager to set the scene regarding virtual worlds. The aim is to shape this disruptive technology from the outset.
In this article, Lighthouse Europe takes a closer look at the content of this Communication.
Source: URECOMM NEWS
A unique opportunity to foster innovation and business
One of the main points to emerge from this Communication is the desire to encourage innovation. The Commission sees this technology as an opportunity not to be missed. The text stresses that overall forecasts for the development of the virtual reality market are promising, citing Bloomberg which predicts that the size of the global market for virtual worlds should grow from €27 billion in 2022 to more than €800 billion by 2030. More specifically, for targeted sectors such as the automotive industry, forecasts predict an increase from €1.9 billion in 2022 to €16.5 billion by 2030.
The EC emphasises the future importance of XR technologies, such as virtual reality (VR) and augmented reality (AR) which are key building blocks of virtual worlds. For the institution, the development of these technologies will have significant benefits for the job market, with an estimated 860 000 new jobs related to XR in Europe by 2025.
For the European Commission, the European Union has a strong industrial potential in the field of virtual worlds and Web 4.0. The Communication acknowledges the business opportunities related to virtual worlds and aims to work with businesses to develop standards.
The EC also focuses on start-ups and their role in the future of the EU innovation process and the development of virtual reality.
Readily available, safe, interoperable and open virtual worlds
However, for the EC, the development of virtual worlds could pose challenges to fundamental rights, in terms of protection of personal data and privacy, misinformation, cyber-security, cyber-crime, cyber-violence (gender-based) and incitement to hatred. For the institution, virtual worlds may also raise questions of liability, as well as the application of current rules on contracts and consumer protection.
The EC also places a strong emphasis on skills development, which can be understood in two ways. The idea is to train the people who will work in and with this industry, but also to 'educate' the public about this new technology.
Moreover, the institution seeks to ensure the protection of children. It aims to empower children to engage in virtual worlds, 'while keeping them safe'. The idea is to teach children the right way to approach virtual worlds.
Finally, the EC intends to define global standards for open and interoperable virtual worlds and Web 4.0, ensuring that they are not dominated by 'a few big players'. Its aim is to engage with Internet governance stakeholders around the world and promote Web 4.0 standards in line with the EU's vision and values. These efforts will be part of the EU standardisation strategy and will build on the work of the High-Level Forum on European Standardisation.
Building on what already exists to develop this technology
The EC mostly highlights existing initiatives and seems keen to play a facilitating role. The European Commission wishes to promote collaboration and exchanges between virtual world clusters. For example, it will be stepping up its work with the Virtual and Augmented Reality (VR/AR) Industrial Coalition, which brings together various industrial players along the value chain. The EC wants to encourage interactions between virtual world developers and industrial users.
Furthermore, the EC is promoting a certain number of initiatives. For example, the EC is currently exploring, in consultation with Member States, a new European Partnership for key stakeholders to develop the technological building blocks for useful, inclusive and trustworthy virtual worlds systems and applications. The EC reflects on how to concretize links between AI, blockchain, IoT, European data spaces to materialise the so-called 'Web 4.0'.
To this end, the EC is looking to put in place a number of regulatory 'sandboxes' and will work with Member States to identify specific areas where experimentation should be a priority in order to ensure a coordinated approach within the EU. For example, the European executive plans to provide Member States with a toolbox on intellectual property and to promote a study on innovative cooperative models in industry. The European Commission wants to support the creation of multi-stakeholder technical governance and will launch an expert group to bring Member States and stakeholders together to share common approaches and good practices.
The Communication also highlights several regulations which will have an impact on virtual worlds and ensure, per the EC, a proper level of safety: the Data Act, the Data Governance Act, the AI Act, the GDPR, the MiCA, the Copyright Directive,.... The European Commission does not mention any forthcoming regulation on virtual worlds per se.
Conclusion
On the whole, many of the European Commission's commitments lack perspectives or encompass existing initiatives. It is unclear who will be responsible for implementing the numerous incentives. For the time being, it draws mainly on conventional methods such as toolboxes and expert groups. Although the Communication revolves around the potential of Web 4.0, where digital, real objects and environments seamlessly integrate and communicate, there is little indication of how this scenario can materialise. The proposed solution consists of adhering to the existing European legislative framework, but does not effectively reflect the need to concretely and properly support innovation in order to develop the massive potential of the virtual worlds sector and its players, nor the appropriation of these technologies by European decision-makers.
Nevertheless, the EU recognises that it must act now to become a major player in the emerging markets linked to Web 4.0 and virtual worlds, to defend EU values and fundamental rights, and to ensure that individuals are protected and empowered. By publishing this Communication, the EU intends to prepare the ground for virtual worlds and be at the forefront of the approach to this new technology. New elements could be presented in the next European Parliament’s IMCO Committee report on Virtual Worlds: Opportunities, Risks and Policy Implications for the Single Market, currently being drafted by MEP Pablo Arias Echeverría (EPP) and JURI Committee report Policy implications of the development of virtual worlds – civil, company, commercial and intellectual property law issues currently being drafted by MEPs Ibán García del Blanco (S&D) and Axel Voss (EPP). The next European Commission, appointed after the European elections in 2024, should also address the virtual worlds’ opportunities.
Contact us
As a public affairs firm based in Paris and Brussels, Lighthouse Europe supports its clients in the analysis of European mechanisms as well as French and European political priorities, particularly in the digital and environmental sectors. The EC’s Communication stresses that virtual worlds offer unprecedented opportunities, which we at Lighthouse Europe endorse. If you feel the same way, or if you simply want a better understanding of the European regulatory framework in relation to your activity, please do not hesitate to contact us: info@lighthouseeurope.com.
By Nicolas Rocher