Authors
Niklas Melzer

Niklas Melzer

Associate

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Stephan Manuel Nagel, LL.M. (EUI)

Partner

Read More
Authors
Niklas Melzer

Niklas Melzer

Associate

Read More

Stephan Manuel Nagel, LL.M. (EUI)

Partner

Read More

29 November 2022

Article series

Competitive Metaverse - Why we write this blog

  • Briefing

Welcome to the first article of the "Competitive Metaverse" blog for competition law, policy and regulation in the metaverse! In our first post, we will look at why we are writing this blog and what you can expect in the posts to follow. We will publish new articles on a weekly basis.

So, why are we writing a blog that deals with competition law and regulation in and around the metaverse? The answer is actually quite simple and based on three considerations:

1. Here to stay with overwhelming economic significance

First, we believe the metaverse has come to stay. McKinsey estimates the potential revenue from this digital world to a total of USD 5 trillion by 2030, of which USD 2.6 trillion is e-commerce. Over USD 120 billion has already been invested in the metaverse (of which USD 15 billion since 2021 alone by Meta Platforms, Inc.).

It is unclear what the metaverse will exactly look like in the future. Will it be Mark Zuckerberg's vision of a world full of avatars in virtual spaces, with people hanging out with each other in their free time? Is the metaverse more likely to be limited to augmented reality projects for the next decades? Will the digital new world conquer our living rooms or will it be limited to e.g. the business sector? And above all, when will this all happen? (We will answer the question of what is generally meant by metaverse in our second post).

The next few years will show where the journey is headed. But the enormous potential of the metaverse is already obvious today. Looking at McKinsey's figures, we can say that the digital universe will be with us for the foreseeable future for sure.

2. Competition law and regulation form the legal framework of the metaverse

Secondly, competition law and regulation form the legal framework in which the future development of the metaverse will take place. Competition law and regulation already set the boundaries within which companies will operate and develop in the metaverse. This is confirmed by the European Commission.

The European Commission wants to seize the opportunity to help shape competition in the metaverse from the beginning not only with competition law, but also with tools such as the DMA and the DSA. As one of the most far-reaching measures, the Commission's Key New Initiatives for 2023 even envisage a legislative initiative on the metaverse.

The exciting question will be whether and how competition law, regulation and its watchdogs manage to create a competitive and interoperational metaverse. Will there be such things as geoblocking and avatar costumer allocation within this virtual world? Will there be an internal market of the metaverse? It is certain that the importance of competition law and regulation for the metaverse cannot be overestimated.

3. Our insights are not limited to the metaverse

Last, many competition issues which are relevant for the metaverse are relevant for digital markets in general: the significance of data or network effects, multi-sided platforms, hybrid business models, R&D, standardization, cooperation, IP rights and trademarks, online sales, data pooling, killer acquisitions and many more. However, it seems that competition authorities are much better prepared for new digital markets today than they were 20 years ago. Competition law itself has adapted to the digital world and is supplemented by digital regulation, such as the Digital Markets Act (DMA), Digital Services Act (DSA), Artificial Intelligence Act (AI-Act).

Where do we go from here?

With our blog, we want to answer the questions outlined above "on the pulse of technology". From a practitioner's perspective, we will take you on an exciting 360° competition analysis of the metaverse. We will look at all relevant aspects of competition law, from the prohibition of cartels, merger control and the prohibition of abusive practices to the DMA and Section 19a ARC. And we will keep you updated on how the European Commission is doing in its attempt to "form" competition in the metaverse. Stay tuned!

In this series

Competition, EU & trade

Meta Quest – The competition law battle for the gate to the metaverse

The world is meeting up in the metaverse, only Germany isn’t there yet?

15 December 2022

by Stephan Manuel Nagel, LL.M. (EUI), Niklas Melzer

Competition, EU & trade

Markets of the metaverse - Part I

Markets of virtual reality headsets

23 December 2022

by Stephan Manuel Nagel, LL.M. (EUI), Niklas Melzer

Metaverse

Markets of the metaverse – Part II

Markets of OS for virtual reality headsets

12 January 2023

by Stephan Manuel Nagel, LL.M. (EUI), Niklas Melzer

Metaverse

Markets of the metaverse – Part III

App store markets from an OEM perspective

2 February 2023

by Stephan Manuel Nagel, LL.M. (EUI), Niklas Melzer

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