In a new strategy published on July 11, the European Commission has identified Web 4.0 and virtual worlds—often also referred to as the metaverse—as having the potential to transform the ways in which EU citizens live, work and interact.  The EU’s strategy consists of ten action points addressing four themes drawn from the Digital Decade policy programme and the Commission’s Connectivity package: (1) People and Skills; (2) Business; (3) Government (i.e., public services and projects); and (4) Governance.

The European Commission’s strategy indicates that it is unlikely to propose new regulation in the short to medium-term: indeed, European Competition Commissioner Margarethe Vestager has recently warned against jumping to regulation of virtual worlds as the “first sort of safety pad.” Instead, the Commission views its framework of current and upcoming digital technology-related legislation (including the GDPR, the Digital Services Act, the Digital Markets Act and the proposed Markets in Crypto-Assets Regulation) to be applicable to Web 4.0 and virtual worlds in a “robust” and “future-oriented” manner. 

What Are Virtual Worlds and Web 4.0?

The Commission defines virtual worlds as being “persistent, immersive environments, based on technologies including 3D and extended reality (XR), which make it possible to blend physical and digital worlds in realtime, for a variety of purposes.”  It considers Web 4.0 to be the “fourth generation of the World Wide Web,” which will feature “advanced artificial and ambient intelligence, the internet of things, trusted blockchain transactions, virtual worlds and XR capabilities.”  These will enable digital and real objects to integrate and communicate with each other to “seamlessly blen[d] the physical and digital worlds.”  According to Internal Market Commissioner Thierry Breton, the EU will “connect virtual world developers with industry users, invest in the uptake and scale-up of new technologies, and give people the tools and the skills to safely and confidently use virtual worlds.”  The EU is keen to ensure that it establishes itself as a leader in Web 4.0 and virtual worlds, and that the emerging metaverse reflects EU values, principles, and fundamental rights. The strategy is the latest in a series of metaverse-related EU initiatives and announcements.

Below, we outline several key features to the EU’s new strategy:

(1) People and Skills

The European Commission is looking to increase the numbers of Web 4.0 and virtual worlds specialists in the EU, as well as knowledge and awareness of these technologies amongst the general public. It envisions building a European talent pool of developers and content creators through increased funding as well as the Digital Europe and Creative Europe programmes.  Adding to the talent pool by attracting skilled professionals from outside the EU is also a priority.

Regarding the general public, the Commission aims to create a virtual worlds “Toolbox.”  Drawing on existing programmes such as the European Digital Media Observatory and the Code of Practice on Disinformation, the Toolbox will increase public understanding of virtual worlds—including how to manage virtual identities, creations, assets, and data, and how to guard against disinformation.  The Commission will ensure Virtual Worlds are child-friendly by design through its upcoming age appropriate design code, whilst enabling young people to learn about them through the “Better Internet for Kids” Portal.

(2) Business

According to the Commission, Europe has “strong industrial potential” in Web 4.0 and virtual worlds.  However, the fragmentation of technical expertise, slow uptake of new technologies and limited access to finance hampers this potential.

The Commission seeks to address these challenges by enhancing collaboration between entities at all levels of the virtual worlds production chain.  For example, the proposed “New European Partnership” between key virtual worlds stakeholders is to create a pathway to investments in cutting edge technologies, European data spaces, and the Next Generation Internet initiative.  The creation of regulatory sandboxes to test virtual world technology and services is intended to foster an accommodating business environment by giving developers an opportunity to assess their compliance with regulations in a risk-free setting.  

The Commission is keen to ensure the virtual worlds business environment remains competitive: wary of the prospect of “large market players” dominating the space, the EU seeks to ensure the interoperability of platforms and networks by developing interoperability standards with Member States and stakeholders.

(3) Government (Public Services and Projects)

The Commission envisages local and national governments paving the way to Web 4.0 by using digitalisation to “improv[e] the design and delivery of public services” and to “addres[s] major societal challenges such as health and climate change.”  It pledges to support projects with those goals, such as the European CitiVerse project which helps local authorities to streamline the planning and management of cities. The Innovation Friendly Regulations Advisory Group is to help identify future virtual worlds public service initiatives.

(4) Governance

The Commission argues that “close cooperation” between it and Member States is the only way to manage the scale of societal change that Web 4.0 and virtual worlds will bring about.  To this end, it seeks to convene an expert group composed of Member State representatives to share best practices among Member States and in international forums.  It also aims to “support the creation of a technical multi-stakeholder governance process to address essential aspects of virtual worlds and Web 4.0 that are beyond the remit of existing internet governance institutions.”  Lastly, established groups such as the European Centre for Algorithmic Transparency and the EU Blockchain Observatory and Forum will help monitor new developments in virtual worlds and Web 4.0: they will identify new growth and innovation opportunities, encourage best practices and identify new challenges.

Next Steps

The Commission encourages the European Parliament and the Council to endorse the strategy and to work with it on implementing the outlined action points.  It envisions progress on most of the strategy’s action points over the next twelve months. 

*          *          *

Covington’s multidisciplinary team will continue to track these developments and can help advise clients on legal implications and potential engagement opportunities.

__________________________

Edwin Djabatey of Covington & Burling LLP contributed to the preparation of this article.

Photo of Lisa Peets Lisa Peets

Lisa Peets leads the Technology Regulatory and Policy practice in the London office and is a member of the firm’s Management Committee. Lisa divides her time between London and Brussels, and her practice embraces regulatory counsel and legislative advocacy. In this context, she…

Lisa Peets leads the Technology Regulatory and Policy practice in the London office and is a member of the firm’s Management Committee. Lisa divides her time between London and Brussels, and her practice embraces regulatory counsel and legislative advocacy. In this context, she has worked closely with leading multinationals in a number of sectors, including many of the world’s best-known technology companies.

Lisa counsels clients on a range of EU law issues, including data protection and related regimes, copyright, e-commerce and consumer protection, and the rapidly expanding universe of EU rules applicable to existing and emerging technologies. Lisa also routinely advises clients in and outside of the technology sector on trade related matters, including EU trade controls rules.

According to the latest edition of Chambers UK (2022), “Lisa is able to make an incredibly quick legal assessment whereby she perfectly distils the essential matters from the less relevant elements.” “Lisa has subject matter expertise but is also able to think like a generalist and prioritise. She brings a strategic lens to matters.”

Photo of Bart Szewczyk Bart Szewczyk

Having served in senior advisory positions in the U.S. government, Bart Szewczyk advises on European and global public policy, particularly on technology, trade and foreign investment, business and human rights, and environmental, social, and governance issues, as well as conducts international arbitration. He…

Having served in senior advisory positions in the U.S. government, Bart Szewczyk advises on European and global public policy, particularly on technology, trade and foreign investment, business and human rights, and environmental, social, and governance issues, as well as conducts international arbitration. He also teaches grand strategy as an Adjunct Professor at Sciences Po in Paris and is a Nonresident Senior Fellow at the German Marshall Fund.

Bart recently worked as Advisor on Global Affairs at the European Commission’s think-tank, where he covered a wide range of foreign policy issues, including international order, defense, geoeconomics, transatlantic relations, Russia and Eastern Europe, Middle East and North Africa, and China and Asia. Previously, between 2014 and 2017, he served as Member of Secretary John Kerry’s Policy Planning Staff at the U.S. Department of State, where he covered Europe, Eurasia, and global economic affairs. From 2016 to 2017, he also concurrently served as Senior Policy Advisor to the U.S. Ambassador to the United Nations, Samantha Power, where he worked on refugee policy. He joined the U.S. government from teaching at Columbia Law School, as one of two academics selected nationwide for the Council on Foreign Relations International Affairs Fellowship. He has also consulted for the World Bank and Rasmussen Global.

Prior to government, Bart was an Associate Research Scholar and Lecturer-in-Law at Columbia Law School, where he worked on international law and U.S. foreign relations law. Before academia, he taught international law and international organizations at George Washington University Law School, and served as a visiting fellow at the EU Institute for Security Studies. He also clerked at the International Court of Justice for Judges Peter Tomka and Christopher Greenwood and at the U.S. Court of Appeals for the Third Circuit for the late Judge Leonard Garth..

Bart holds a Ph.D. from Cambridge University where he studied as a Gates Scholar, a J.D. from Yale Law School, an M.P.A. from Princeton University, and a B.S. in economics (summa cum laude) from The Wharton School at the University of Pennsylvania. He has published in Foreign AffairsForeign PolicyHarvard International Law JournalColumbia Journal of European LawAmerican Journal of International LawGeorge Washington Law ReviewSurvival, and elsewhere. He is the author of three books: Europe’s Grand Strategy: Navigating a New World Order (Palgrave Macmillan 2021); with David McKean, Partners of First Resort: America, Europe, and the Future of the West (Brookings Institution Press 2021); and European Sovereignty, Legitimacy, and Power (Routledge 2021).

Photo of Sam Jungyun Choi Sam Jungyun Choi

Sam Jungyun Choi is an associate in the technology regulatory group in the London office. Her practice focuses on European data protection law and new policies and legislation relating to innovative technologies such as artificial intelligence, online platforms, digital health products and autonomous…

Sam Jungyun Choi is an associate in the technology regulatory group in the London office. Her practice focuses on European data protection law and new policies and legislation relating to innovative technologies such as artificial intelligence, online platforms, digital health products and autonomous vehicles. She also advises clients on matters relating to children’s privacy and policy initiatives relating to online safety.

Sam advises leading technology, software and life sciences companies on a wide range of matters relating to data protection and cybersecurity issues. Her work in this area has involved advising global companies on compliance with European data protection legislation, such as the General Data Protection Regulation (GDPR), the UK Data Protection Act, the ePrivacy Directive, and related EU and global legislation. She also advises on a variety of policy developments in Europe, including providing strategic advice on EU and national initiatives relating to artificial intelligence, data sharing, digital health, and online platforms.