There Are Tradeoffs in Governing the Metaverse

The metaverse is an immersive social communications and gaming platform with an estimated global market value of $344.7 billion by 2027. At last year’s World Economic Forum (WEF) meeting, the WEF created the Defining and Building the Metaverse Initiative—a multi-stakeholder working group of 150 experts—to research governance frameworks and economic models for the nascent metaverse. One year later, the working group unveiled its two reports at the WEF’s 53rd annual meeting in Switzerland. The first report explains the consumer metaverse and the other proposes seven metaverse governance  principles.

Q1: What does the WEF’s proposed metaverse governance framework look like?

A1: The WEF proposed the following seven governance principles: First, the metaverse must be “human-first” meaning that it prioritizes the well-being of all stakeholders when considering privacy, safety, and security preferences. Second, the metaverse must consider child-safety frameworks to balance access and interoperability design choices. Here, interoperability design choices refers to using and exchanging data to facilitate “transactions and participation across systems, platforms, environments and technologies.” Third, a component of building the metaverse must include “informed consent” and educating all stakeholders in a digital literacy effort. Fourth, that the interoperability design choices should be both meaningful and timely. Fifth, that data transmission and management depend on multistakeholder collaboration to create a “common language” for regulation. Sixth, context is a main decisionmaking factor for content moderation and identification requirements; and lastly, that interoperability is a multidimensional issue that exists along a spectrum and deserves respect.

Q2: Are there shortcomings to these seven governance principles?

A2: Yes. Surprisingly, several of the WEF’s governance principles contradict one another. It is important to be clear-eyed that the prioritization of certain stakeholders’ preferences will come at a cost to others; in other words, there are tradeoffs. This is unfortunately not addressed in the WEF paper. Instead, it hastily mentions that “not all facets of the metaverse should be interoperable and metaverse stakeholders should carefully consider decisions mandating as such.” Before discussing how to implement a governance framework, these principles must undergo additional design review and tradeoff analysis.

While proposing governance principles for a decentralized version of the internet is an ambitious undertaking, the lack of discussion on tradeoff analysis here is troubling. In fact, the word “tradeoff” only appears once in the 24-page text in reference to principle four. It merely cautions that “regulation may incur significant tradeoffs that can stifle market innovations.” Also surprising is that after the report introduces these seven principles, it does not explain its decisionmaking analysis. Rather, the reports ends by noting that “more work is to be done, but understanding the foundation that will drive interoperability, and the potential it can unlock, is an important first step.” Indeed, additional work should be done to analyzing the risks, opportunities, and tradeoffs in this ecosystem, before advancing a set of constraints.

Q3: What design principles could help inform policymakers’ thinking?

A3: There is wisdom in the adage by history professor Michael Sugrue that “every insight is partial blindness.” From a systems design thinking perspective, the metaverse ecosystem is dynamic, constantly changing and stretches across public-private sectors, civil society, and the international community.

The United Arab Emirates and South Korean governments are among the first wave of national governments implementing state-sponsored metaverse platforms. The Chinese government is also investing in developing a state-approved “Chinaverse” metaverse platform. Local Chinese authorities in provinces like Shanghai, Hangzhou, Wuhan, and Hefei proposed in their government work reports to incorporate the metaverse to promote China's digital growth and industries. In the United States, the Congressional Caucus on Virtual, Augmented, and Mixed Reality Technologies is beginning to consider the metaverse’s privacy implications, as well as intellectual property and content moderation issues.

While the metaverse stands to foster economic growth and innovation in new Web 3.0 technologies, despite these gains, it also carries data security, governance, and privacy risks. As an example of this duality, from a healthcare industry perspective, the metaverse may help improve access to, and the quality of, patient care telemedicine visits and clinical training simulations. At the same time, the metaverse also presents challenges for preventing online harassment, sexual assault, and the targeting of children, as seen in the 2021 case involving a 30-year-old South Korean man who had falsified his age and was luring minors on the metaverse to send inappropriate images in exchange for metaverse gifts.

Overall, by viewing the metaverse as a dynamic ecosystem, policy and industry leaders can design a system that is more responsive and resilient to the diverse needs and wants of users. Interoperability design choices will require careful tradeoff analysis that can neither be rushed, nor passed over, for every insight into the problem also reflects a partial blindness of it.

Zhanna L. Malekos Smith, JD, is a senior associate with the Center for Strategic and International Studies in Washington, D.C., and Cyber Law and Policy Fellow with the Army Cyber Institute at the U.S. Military Academy at West Point, where she also is an affiliate faculty with the Modern War Institute. The opinions expressed here are solely those of the author and not those of CSIS, the U.S. government, or Department of Defense.

Senior Associate (Non-resident), Aerospace Security Project, and Adjunct Fellow (Non-resident), Strategic Technologies Program