Leading metaverse trade group the XR Association warns in a report today that the U.S. runs a dangerous risk of falling behind the rest of the world in promoting the technology’s growth. We’ve heard a few versions of this story before — about artificial intelligence, and semiconductor manufacturing, among many other things, and varying degrees of official policy response. But the metaverse, and the extended network of “XR” (industry parlance for “extended reality”) technologies, are a particularly interesting lens through which to view global tech competition because they’re still very early in their timeline of development and adoption. That’s why the XRA says the U.S. is at a “significant disadvantage” when it comes to metaverse policy despite being home to almost all the industry’s leading companies. “The best possible scenario, if the U.S. doesn’t engage on this, is that Europe sets all the standards and guidelines for the technology,” XRA president Joan O’Hara told DFD. “Chances are, they would be stricter than what we might put together in the United States, and in any event we would be a regulation taker, so to speak, rather than a leader on it.” As for her worst-case scenario, take one guess: “[It] would be that China gets ahead of everyone and they sort of own the field… That would probably raise concerns around privacy and what's being done with the information that might be collected.” The report, authored by O’Hara, XRA public policy director Miranda Lutz, and two George Washington University researchers, is a sweeping analysis of how other countries have explored metaverse policy, from the European Union’s citizens’ councils to Seoul’s efforts to integrate VR into city government. By comparison, they find “the United States has done little to target research and development support to XR specifically,” despite some isolated research efforts and a mention of the tech in last year’s CHIPS and Science Act as a “key technology focus area” for federal agencies. O’Hara said she's been disappointed with Washington’s metaverse policy since, pointing out the absence of any VR-focused regional tech hubs among the 31 announced by the Biden administration last month. “I haven't given up hope yet, but I haven't seen anything very exciting at this point,” she said. Some of the delay in policy could be due to a $7 billion funding gap that Congress has yet to fill to execute the CHIPS and Science Act. Still, the XRA said there are incremental measures that lawmakers could tuck into the National Defense Authorization Act or an appropriations bill. The group said a particularly achievable “win,” through appropriations or the National Defense Authorization Act, would be the development of virtual “digital twins” for government use. The concrete recommendations in the report mirror those that have emerged around other emerging tech areas like quantum and AI, including authorizing a metaverse advisory council at the Department of Commerce, or hosting a global summit. The XRA also calls for a comprehensive data protection law — notable given the massive volumes, and novel nature, of the data that VR devices require to function properly. The XRA calls for more oversight in language that regulation-friendly tech executives like Brad Smith of Microsoft — an XRA member organization — have used in previous cases: “Businesses and individuals will benefit from the certainty of an overriding federal data protection law, as opposed to the current patchwork of municipal and state legislation,” the report’s authors write. That’s a big ask considering the manner in which previous efforts to pass comprehensive privacy legislation have failed to achieve liftoff. Still, as distant as these risks in the metaverse might be, the major companies like Meta, Microsoft, and Google that sit on the XRA’s board are treating it like a here-and-now issue — making this report a shot across the bow for the next round of large-scale policy debates. “This is not a new gaming technology, it’s something that's going to change the way we operate,” O’Hara said. “For the U.S., it's really important that people start to recognize that and get in on the ground floor before we lose that first-mover advantage.”
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