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Regulation and Innovation in the Metaverse

26th Feb 2024

With the continual progression of augmented and virtual reality (AR/VR) gadgets and the recent surge in demand for Apple Vision Pro (the tech giant’s latest foray into the AR and VR field), discussions relating to regulations and mandates have heightened. Optical components serve a crucial role in enriching the visual, interactive, and perceptual experiences across a diverse range of devices employed for the cyber realm. As a provider of optics for AR-/VR-enabled equipment (for illustration, head-mounted displays [HMDs], AR glasses, smartphones and tablets), we have a deep connection to the subject. Here, we explore the intricate sphere of metaverse regulation, examining its possible implications.


a man wearing a virtual reality head-mounted display in the metaverseThe lines between our reality and the artificial environment are quickly being blurred as inevitable internet maturation takes its following steps and an influx of consumer AR/VR products flood the marketplace. This is amplified by the proliferation of AI programmes such as chatbots like Bard (now known as Gemini) and AI image generators like Leonardo AI and DALL·E 2. Together, these are propelling us in the direction of an increasingly digital future, emphasising the pressing call for safety and security in our online interactions.

A Recent Revival 

Interestingly, there was a notable decline in metaverse initiatives not too long ago as attention shifted towards AI. However, 2024 has marked a resurgence, setting the stage for a welcomed comeback. The statistics speak volumes, projecting a staggering international market effect of up to $5 trillion by 2030 [1]. Given the exponential growth and vast capitalisation prospects, it’s poised for monumental success.

We’ve been treated to real-life examples, ranging from clever applications, including ‘Spatial Vacuuming’, an app that applies game-like elements to household cleaning using Apple Vision Pro, to smart home configurations, featuring multiple screens integrated throughout a living space for work, games, entertainment, and sports.

a laptop screen showing the homepage of online game RobloxGamers have already had a taste of the metaverse first-hand via platforms like Roblox, which enable players to create, play, and trade in a simulated territory, alongside early glimpses of immersive gaming with the groundbreaking Pokémon Go phenomenon in 2016. Cyber pioneers such as Facebook also fully embraced the movement, as evidenced by its rebranding to Meta in 2021, underscoring the immense influence of the transformative tech.

Even commercial companies are getting involved. This month, Forbes announced it has set up a permanent camp in the Sandbox Metaverse, a decentralised gaming world built on Blockchain tech, where it’s created a central meeting point for thinkers, leaders, and innovators.

The Complications of Web 3.0 Rule-Making

As with any newfound technology, evolution naturally brings forth both risks and revelations, and this realm is no exception, with ongoing developments revealing new insights and prospective hazards. As heavyweights push the boundaries, we are beginning to confront an expanding array of concerns jeopardising our identities, privacy, and security.

Regulators continue to grapple with the challenges of overseeing facets of the Web 2.0 era, particularly in the domain of social media, encompassing networks facilitating content publishing, idea dissemination, and information sharing. Nevertheless, further problems await as we stand at the threshold of Web 3.0. For instance, while Web 2.0 presented regulatory hurdles concerning user data, market dominance and cybersecurity breaches, the next revolution introduces an entirely new arena. Considerations such as individuals employing avatars for communication – spanning speech, appearance and gestures – present potential worries and raise questions about harassment, racial discrimination, misinformation, copyright infringement, and more.

a woman wearing a head-mounted display and interacting with the metaverse

The AI Act (AIA) 

Timed meticulously, April marks the slated date for EU institutions to finalise the approval of the AI Act (AIA), anticipated to wield a comparable impact to that of GDPR. In the legislation, we are expected to see a final set of rules – for example, prohibiting certain AI practices such as the manipulation of individuals through subliminal techniques and exploitation of vulnerable groups – that position the EU to “become a global leader in trustworthy AI” [2]. The aim is to form a robust risk analysis framework for identifying ‘high-risk’ AI posing substantial threats to the wellbeing, safety, or fundamental rights. The AI systems will be mandated to adhere to a set of universal prerequisites for ‘trustworthy AI’ and undergo conformity assessment procedures before their introduction to the EU [3].

Corresponding with the need for AI standardisation, the metaverse may soon be in for the same fate. With similar dangers at stake, the finalisation of the act could set a precedent. Matters such as data privacy, identity protection, algorithmic biases, and ensuring fair access to virtual spaces may be focal points of frameworks. Just as the AI Act aims to establish a harmonised approach to regulation within the EU, worldwide attempts may involve collaboration between policymakers, stakeholders, and society to make sure online realms are developed and utilised in a responsible and ethical manner.

a man holding a phone looking a data protection and privacy settings


The EU is at the forefront of regulating technological advancements and has extended its focus on standards for the metaverse. In May of last year, the European Commission initiated a public consultation [4] to “develop a vision for emerging virtual worlds (e.g. metaverses), based on respect for digital rights and EU laws and values”. The goal is to ensure “open, interoperable, and innovative virtual worlds…can be used safely and with confidence by the public and businesses”. In light of the EU’s forward thinking, Forbes emphasised the importance of intercontinental alignment, stating: “The rest of the world needs to get on board as well [5].”

Empowering A Safer Digital Universe

In navigating the complexities of Web 3.0 regulations, it becomes clear that collaborative processes are essential for the morally sound development of online environments. At Knight Optical, our commitment to providing premium, on-spec optics for AR/VR devices aligns with the behind-the-scenes efforts being undertaken, enabling users to access the other realms safely and seamlessly.

high-precision optical components for AR/VR devices made by knight optical