Emerging Tech Law Issue #3
Meet the metaverse, I want my UAV - FAA grounding drone innovation, new curbs on enthusiasm in biotech ... and more
Welcome to the third issue of Emerging Tech Law — a slightly irreverent view of regulatory developments (and other interesting stuff) relating to emerging technologies including AI, IoT, robotics, blockchain/crypto, 5G, artificial/virtual/extended reality, biotech and quantum computing.
In this issue:
· Meet the metaverse.
· I want my UAV! DC bureaucrats are keeping you from getting your Uber Eats delivered by drones.
· Curb your enthusiasm? A new paper calls into question results of apparent prior success in regenerating nerve cells
Quote of the Week:
“We are all susceptible to the pull of viral ideas. Like mass hysteria. Or a tune that gets into your head that you keep humming all day until you spread it to someone else. Jokes. Urban legends. Crackpot religions. Marxism. No matter how smart we get, there is always this deep irrational part that makes us potential hosts for self-replicating information.”
― Neal Stephenson, “Snow Crash,” a 1992 novel that features a virtual, persistent world and introduced the term “the metaverse”
The Metaverse: An Introduction
Facebook is so committed to founder Mark Zuckerburg’s vision of a virtual “metaverse” that it’s reportedly on the verge of changing its name to reflect its new focus. Facebook also announced it is planning to hire 10,000 people in the E.U. to help build the metaverse. So, it seems like the right time to take a look at what the metaverse is and how it will impact the law.
What is it? First, imagine an open-world video game in which participants are free to explore a virtual environment (like Minecraft, Roblox or Fortnite for readers who are gamers or who like the author have a tween-aged son). Then, make that world immersive so that you can interact within others in that world as a three-dimensional character via some sort of viewer (but hopefully something considerably less dorky than the current VR headsets), and “haptic” clothing that allows you to experience sensations. (And I bet you can imagine where that leads.) Cultural references include Stephenson’s Snow Crash novel quoted above and the movie Ready Player One.
The metaverse is one of those things that needs to be experienced to be fully understood, but since it doesn’t really exist yet, you have to settle for what you can imagine. If you want to go deep in learning about the metaverse, you should start with the extensive writing of Matthew Ball, an essayist and managing partner of an early-stage VC fund. Ball wrote a 9-part primer on the metaverse that is cited by industry leaders including Zuckerberg. Read his forward to the primer first.
In short, Ball described the metaverse this way:
“The Metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”
When lawyers hear words like data, identity, entitlements, communications and payments, they think money, money, money and more money. So, not surprisingly they’ve been quick to offer themselves up as the go-to experts on the metaverse. One firm – Reed Smith – has even published a 76-page white paper on legal issues that will emanate from the metaverse.
“There can be no doubt that from a business perspective, the metaverse is now a critically important consideration and influence. People exist there and there is money to be had. Deciphering the law pertaining to these new online environments and being able to guide, advise, and support companies and individuals who operate in them will require both a strong handle on centuries of legal precedent and a mind that is open to adapting and learning new legal skill sets.”
Here are some of the key legal issues that those who venture into the metaverse will have to consider:
Intellectual Property: Will IP rights from the real world be respected in the metaverse? For example, if I open a movie theater in the metaverse and show “Ready Player One,” am I violating Warner Brothers’ copyright rights in the movie? Can I open a shop in the metaverse and sell Nike-branded shoes without violating Nike’s trademark rights? Will patent owners spoil the party by claiming parts of the metaverse violate their rights? Patent issues are particularly a concern if the metaverse combines many elements from many different contributors. Almost certainly, there will need to be agreement on standards for the metaverse to function, much like the TCP/IP protocol that allows computers to communicate in a network enabled the modern Internet.
Privacy: What privacy regulations will govern the metaverse? Europe’s GDPR? China’s Personal Information Protection Law? The California Consumer Privacy Protection Act? Perhaps most importantly, will the commercial interests behind the metaverse depend on users trading personal data for free services (see Facebook, Google, Twitter, etc.) or will other business models prevail, making privacy much less of a worry?
Property: How will property ownership rights be determined? Will they be similar to property rights in the U.S. where individuals own property, or will there be a more communal ownership of property? Will there be such abundance that property rights don’t matter or will technology like blockchain, which has the capacity to produce unique digital goods (such as non-fungible tokens) prevail and create scarcity?
Identity: Identity is fundamental under current laws to the allocation of rights and benefits. In a metaverse where identity may be very fluid, with users likely having the ability to assume many different identities, how will rights and benefits be managed? Will there be a central manager of identity – like a Social Security Administration, the IRS or DMV? Conversely, identity has been used to discriminate against groups and individuals. Will the fluidity of identity possible in the metaverse reduce long-standing discrimination against members of certain groups? Will lack of access to the metaverse set certain groups even further behind?
Commerce: Will there be a universal currency used for the exchange of value in the metaverse? How will national banking laws, such as anti-money-laundering and know-your-customer rules, that are currently snags, if not obstacles, to use of crypto today, be applied in the metaverse? And if the current cluster-f*ck of international taxation that allows trillion dollar U.S. companies to avoid billions in taxes by moving assets to low-tax jurisdictions isn’t bad enough, how will that work in a virtual world? Will there be an equivalent of the Cayman Islands or Galt’s Gulch from an Ayn Rand novel where regulation is lax and taxation is non-existent?
Antitrust/Competition: Regulators around the world are now champing at the bit to take action to reduce the concentration of power among tech giants such as Facebook, Apple and Google in the U.S. and Alibaba and Tencent in China. Will we tolerate having any of these companies (or any future large tech businesses) play a dominant role in the metaverse?
All of these and more will be key questions and issues that will need to be addressed as we enter the era of the metaverse. More to come ….
FAA is grounding innovation: Wing, a drone company that is a corporate sister of Google, announced last week that it’s teaming up with Walgreens pharmacy to deliver orders to homes in the suburbs of Dallas-Ft. Worth, the first time drone deliveries have been permitted in a more densely populated area in the U.S. Wing launched a trial of drone package deliveries in Southwestern Virginia in late 2019, and Amazon and UPS have also received approval to run drone delivery trials.
But trials are limited and the former top lawyer for the FAA says the lack of clear regulations from the agency is hindering drones (also known as unmanned aerial vehicles — UAVs) from reaching their full commercial potential.
Arjun Garg, former FAA chief counsel and now a partner at law firm Hogan Lovells, argues in a piece in Bloomberg Law that regulation must be expedited so the U.S. can realize the benefits of drones. Garg says regulations should be calibrated to the level of risk posed by the specific drone operation. For example, drones used in agriculture in a remote area should be subject to less stringent rules than drones operating in busy airspace over dense urban areas.
“Regulation should also reflect that drones are more akin to a mobile phone than to a jetliner,” Garg wrote. “Safety standards for drones should be adaptable, setting performance benchmarks without dictating how to meet those benchmarks, so that innovators have latitude to find solutions that may change over time. And regulation should allow for iterative evolution of an authorization as operations expand and technology improves.”
Two of the primary issues the FAA should address, according to Garg, are:
Line-of-Sight Requirement: Generally, the FAA prohibits flying a drone beyond the line of sight of the operator or other designated people stationed along its route. This makes it impossible to realize a vision in which fleets of drones are operated remotely, perhaps through a 5G connection, or primarily autonomously.
Drone Certification: The FAA does not have a standard rule for the certification of drones. Instead, there is a bespoke certification framework that has to be adapted to each model.
“As a result of such limitations, beneficial but complex drone operations are only possible in the U.S. today at a very limited scale through one-off, cumbersome FAA waivers that industry must pursue in the absence of appropriate enabling rules,” Garg wrote.
Curb Your Enthusiasm: This newsletter recently reported on some setbacks in gene therapy, and now a new paper from a group of scientists at the University of Texas Southwestern calls into question some recent apparent breakthroughs in treating nerve cell loss caused by neurodegenerative diseases and brain injury.
The journal Science called the paper a “real hand grenade lobbed into this field of research.” As with many other emerging technologies, we are in an interim period where the potential is not fully realized and hazards and setbacks dampen initial enthusiasm.
The piece in Science said:
“[T]his is a warning for people who might get too enthusiastic about all the new technologies that we're trying out now. We have not flipped some sort of switch that suddenly makes everything work. mRNA, CRISPR, and viral-vector gene delivery are not unstoppable magic wands, and the insides of living cells and of living tissues are just as much of a blacked-out minefield as they ever were. It's true that we now have opportunities to do things that no one has ever tried before, but that also gives us new opportunities to make mistakes, to fool ourselves, and to take shortcuts that will make us rue the day. There is no substitute for careful experimentation and painstaking attention to detail - and we're never going to invent our way around that one.”
Better Connection: The FCC announced the release of $1.1 billion in emergency funds to be used by schools and libraries to improve broadband connectivity. The money will be used for Wi-Fi hotspots, modems, routers, connected devices and accompanying telecom services, to meet remote learning needs of students, school staff and library patrons.
V-to-Everything: Verizon (one of the author’s former employers) announced a successful test with Nissan of technology that demonstrated that sensor data from vehicles and surrounding infrastructure can be processed at the edge of Verizon’s wireless network and communicated back to vehicles for urgent driver notifications in near real time. The technology – cellular vehicle-to-everything communication (C-V2X) – could help drivers avoid collisions with obstacles that the driver can’t see. Imagine the annoying and sometimes scary scenario in which you’re attempting a left-hand turn at a traffic light and oncoming traffic is obscured by another vehicle; C-V2X technology could alert you to the obscured traffic.
Don’t Do Stupid Things You Read About on the Internet: Last week, an online publication called Bitcoin Warrior published a guide “How to Start Your Own Crypto Sportsbook.” Hopefully, Bitcoin Warrior is planning a follow-up article: “How to Survive in Prison After Starting Your Own Crypto Sportsbook” with a “Pro Tip: Make a Razor-Sharp Shiv from a Bar of Soap in 3 Easy Steps.”
“You need inspiration, and you need a team where risk taking is promoted but most of all wrapped around the team,” said Oracle VP Cherie Ryan in an interview with Women Love Tech. “We talk about trust a lot, but it is extremely important to be trusted and empowered to drive to an outcome.”
Obligatory disclaimer: Any opinions are those of the cited source or the author of this newsletter, not the author’s employer. If for some reason you think any legal advice is given in this newsletter, you’re sadly mistaken.