Introduction

Congress has maintained an interest in policy issues related to the internet, particularly universal, reliable, high-speed internet access to support online applications and services. These applications and services have become essential to economic, educational, research, and social activities in the United States.¹ The internet facilitates communications and data flow that support these activities as well as the creation of new digital products and services that "now permeate every aspect of our daily lives."² An estimated 91% of the U.S. population³ and 59% of the world's population used the internet in 2021.⁴ Internet users aged 16 to 64 in the United States reportedly spent an estimated average of seven hours per day online to retrieve and generate information, communicate and share information, consume multimedia content, and conduct business transactions.⁵ The International Telecommunications Union (ITU) has described the internet as a source of "opportunities for personal fulfilment, professional development, and value creation."⁶ Users access the internet through desktop and laptop computers, smartphones, and tablets to use text-and-image-based websites, email services, social networks, and online marketplaces.⁷ The internet also enables computer-simulated environments that users can interact with via an interface, often referred to as a virtual world, virtual space, or virtual reality.⁸

There has been sustained congressional interest in technologies for users to access and interact with computer-simulated environments and participate in virtual activities on the internet.⁹ These technologies include augmented, mixed, and virtual reality technologies (see the "Extended Reality (XR)" section below) that show potential for innovation in a variety of application areas such as entertainment, healthcare, engineering, real estate, retail, military, education, and collaborative work.¹⁰ For example, doctors could be trained in a virtual environment¹¹ and view patients' biometric information in augmented reality glasses during procedures. Augmented, mixed, and virtual reality technologies, some enthusiasts argue, may support new ways for users to interact, work, socialize, transact, and access services in an immersive virtual world, which has come to be called the metaverse.¹²

The founding Members of the Congressional Caucus on Virtual, Augmented, and Mixed Reality Technologies (referred to as the Reality Caucus)¹³ have asserted that "[a]s these technologies develop, questions will inevitably rise in privacy, intellectual property, and other areas."¹⁴ Given the importance of the internet to the domestic and global economy and for health, education, work, and social interaction, this report seeks to elaborate key concepts, technologies, and implications of the metaverse to assist Congress in making informed policy decisions.

This report first introduces concepts that many believe will shape the metaverse, focusing on three core aspects—an immersive user experience, persistent network access, and interoperability. The report then describes key technologies supporting the metaverse in three categories—extended reality, fifth-generation (5G) and next-generation wireless communications, and blockchain.¹⁵ Next, the report highlights select companies that currently engage in the development and investment related to the metaverse. The report concludes with a discussion of selected policy issues for congressional consideration, including content moderation, data privacy, market power and competition, and the digital divide.¹⁶

Key Metaverse Concepts

The concept and idea of a virtual world as we currently understand it can be traced to the 1960s when scholars proposed a kinesthetic human-computer interface with interactive graphics, force-feedback, body movements, and sound.¹⁷ After decades of advances in computing power and networking and communication technologies, some technologists, innovators, entrepreneurs, investors, and journalists believe that the physical world and computer-generated virtual worlds are converging.¹⁸ The term metaverse has been in use since at least 1992¹⁹ and currently it generally refers to the concept of an immersive and persistent virtual world where users can communicate and interact with other users and the surrounding environment and engage in social activities, similar to interactions in the physical world.

Some business and technology leaders assert that the metaverse does not refer to any specific technology but rather a shift in how users interact with online technologies, services, platforms, and each other.²⁰ Under this framework, the metaverse represents changes that, if actualized, might eventually transform the architecture (e.g., communications and network infrastructure, hardware and software, and human-computer interfaces) and operation of the internet (e.g., content production and consumption and user interaction with platforms and services).²¹ Others assert that the metaverse is inevitable, given the shift to virtual environments sparked by the COVID-19 pandemic and the expansion of massively multiplayer online (MMO) games such as Fortnite and Roblox.²² These MMO platforms are sometimes seen as "proto-metaverses," offering some virtual interactive user experiences (e.g., virtual concerts with fewer than 100 participants), but limited by current technology and network capabilities from offering truly immersive and persistent virtual experiences for large numbers (potentially billions) of users simultaneously.²³

In contrast, many critics assert that the idea of the metaverse has been over-hyped, and its promise and significance to the internet have been exaggerated. They argue that some companies are merely attaching the label "metaverse" to long-existing human-computer interaction technologies and their applications, such as online video games.²⁴ Some skeptics have raised concerns about the possibility that problems similar to those that some MMO games have faced—inability to sustain user interest, lack of sustainable business models, and the prevalence of inappropriate and unlawful content—might be replicated in the development of the metaverse.²⁵

The trajectory of metaverse development is unclear. The myriad devices, platforms, applications, and services that may contribute to it are developed by a heterogeneous set of global actors with different business models, objectives, foci, and priorities.²⁶ A single metaverse may emerge with collective virtual spaces with shared protocols and standards, like the current internet ecosystem, to support applications and services from different companies and service providers. Some executives of Meta Platforms, Inc. (formerly Facebook, Inc.) have asserted that the metaverse will not be created by one company, but rather by many companies, each contributing various building blocks with a consideration of interoperability with other companies.²⁷ Alternatively, some experts anticipate "a multiverse of metaverses," each with different focus, business model, and form and currently developed by leading platform players in the sectors including online games, digital commerce, virtual collaboration, and entertainment.²⁸ In the latter scenario, if the companies that develop metaverse platforms and services opt for proprietary technologies and standards,²⁹ they may preclude interoperation with the platforms and services of other providers.³⁰

This report uses the term "the metaverse" to refer to the general concept and its related technologies but not a specific configuration of devices, platforms, applications, and services. The metaverse is likely to feature three key characteristics that differentiate it from two-dimensional (2D) online applications: (1) an immersive, three dimensional (3D) user experience; (2) real-time, persistent network access; and (3) interoperability across networked platforms. The remainder of this section examines these three concepts.

Immersive User Experience

The concept of an immersive user experience is to provide users with an enhanced, individual feeling of presence and immersion within a virtual 3D world, expanding the human-computer interface beyond a 2D (sometimes referred to as "flat") computer or smartphone screen.³¹ Academic research on virtual presence has shown that the sense of embodiment may contribute to users' positive experience in the virtual environment.³² Some enthusiasts describe the metaverse as the "embodied internet"—where users are within the internet, "not just looking at it."³³

Persistent Network Access

Users' experience of presence in the metaverse could be further enhanced if the virtual environment is persistent—it does not "disappear" when a user has finished using it (e.g., when the user logs off).³⁴ A persistent virtual space would continue to exist and evolve even when no users interact with it.³⁵ Moreover, it is available to users whenever and wherever they want.³⁶ Achieving persistence would require computing and data architectures capable of hosting always-on, interconnected virtual spaces as well as high-bandwidth,³⁷ low-latency,³⁸ wireless networks to support user devices and provide real-time access to the metaverse.³⁹

To achieve this requirement, services and platforms in the metaverse would likely require high-performance computing devices.⁴⁰ A virtual environment would generate an immense number of textured, high definition 3D objects, as well as their positions, motions, sounds, surroundings, and simulated interactions with other objects and users.⁴¹ The amount of data created and transmitted in the metaverse at any time would be likely at the gigabyte (GB) scale.⁴² Data volume could increase rapidly during a real-time event (e.g., a live online concert) involving a large number of geographically dispersed participants generating dynamic input (e.g., text and voice comments), actions (e.g., interacting with others), and reactions (e.g., cheering). An Intel executive suggested that the metaverse would require "a 1,000-times increase in computational efficiency from today's state of the art."⁴³

The data architecture supporting the metaverse would also need symmetrical network bandwidth—not only a high download speed but also a high upload speed to transfer user-generated rich media data from their devices back to the network.⁴⁴ The current speed benchmark for fixed broadband service adopted by the Federal Communications Commission (FCC) is asymmetrical—25 megabits per second (Mbps) for download and 3 Mbps for upload (25/3 Mbps).⁴⁵ Most broadband services using coaxial cable or digital subscriber line (DSL) technologies provide greater download speeds than upload speeds, while service providers using the fiber technology claim their network bandwidths are nearly symmetrical.⁴⁶

Moreover, to be truly immersive and persistent, a user's experience of the metaverse should have an imperceptible lag between the user's actions and simulated reactions; for example, some experts suggest a network latency of 20 milliseconds (ms) or less.⁴⁷ According to the data collected by the FCC in September and October 2020, latencies of DSL networks ranged from 21 ms to 37 ms; latencies of cable networks were between 12 ms to 26 ms; and latencies were lowest for fiber networks, from 8 ms to 13 ms.⁴⁸

Interoperability

Interoperability—the ability to deliver an immersive and persistent virtual experience seamlessly across multiple networked platforms or interconnected virtual spaces—is a key concept for proponents of a unified metaverse. Interoperability would allow users to move between virtual spaces and access different platforms and services using the same devices and digital assets (e.g., digital identity, currency, and objects).⁴⁹ Common technical standards and protocols would be necessary to enable interoperability and portability of data and content between platforms and services.⁵⁰ Some experts argue that mass adoption and success of the metaverse will require it to be built on open standards and globally accepted protocols.⁵¹ This approach could potentially lead to a unified user experience in an interconnected metaverse system.⁵² Some technical standards groups are working on projects for "open metaverse interoperability."⁵³

Technologies Supporting the Metaverse

While many aspects of the metaverse are emerging, technologies that support an immersive user experience and other potential metaverse functions exist and are evolving. This section surveys some of major technologies that could serve as building blocks for the metaverse, including extended reality, advanced wireless communications, and blockchain.

Extended Reality (XR)

An immersive user experience, as discussed in the previous section, depends on a host of human-computer interface technologies, known by the umbrella term extended reality (XR). XR—the extension of the reality perceived by users—refers to any technology that can alter the reality by adding digital elements to the user's environment.⁵⁴ Some experts compare the early adoption of XR wearable devices to the introduction of personal computers and smartphones, asserting that XR technologies may become "the next major computing platform," providing entry points and means to experience the metaverse.⁵⁵ XR includes technologies on a spectrum from devices that project a digital overlay over physical objects (augmented reality, AR); devices that enable users to interact with virtual objects displayed in the real-world environment (mixed reality, MR); to devices that work only with a computer-generated virtual environment (virtual reality, VR).⁵⁶ AR and MR can use holographic projection technology to render 3D images and superimpose them on the user's view of the physical world.⁵⁷ VR requires more computing power than augmented reality and mixed reality (both discussed below) to render a real-time, high-definition, 3D virtual world and process virtual objects and activities in it.⁵⁸

Augmented Reality (AR)

Within the category of XR, AR provides an enhanced version, not a replacement, of a user's perception of physical reality. AR technologies enable the overlay of computer-generated content (e.g., digital information, images, or sounds) onto physical world objects in real time.⁵⁹ The level of augmentation can vary from a simple information display to the addition of virtual objects.⁶⁰ To access AR functions, users use smartphones or tablets with cameras, wearable see-through AR glasses, or heads-up displays (HUDs).⁶¹ AR technologies often display contextual information based on the real-world environment (see Figure 1).

Figure 1. Example of Using AR Technology in Navigation

Source: Miroslav Lysyuk, World-Scale AR Navigation with ODG Wearables, Mapbox, January 19, 2018, at https://blog.mapbox.com/world-scale-ar-navigation-with-odg-wearables-b344d0b17afc (with permission from the author and Mapbox.com). Notes: This image viewed in an AR wearable display integrates maps, location, and turn-by-turn directions with the physical world around the user.

Some smartphone users have experienced basic forms of AR in mobile games and apps, such as Pokémon Go and apps that enable shoppers to visualize furniture in their homes before making a purchase decision.⁶² While AR provides users with a composite view of digital elements and physical-world elements, the technology generally does not involve interaction with digital elements.⁶³ The physical environment acts as a background for the AR-generated view.⁶⁴

Mixed Reality (MR)

In addition to allowing the projection of digital elements onto the physical environment (as in AR), MR allows the user to interact with both digital and physical elements.⁶⁵ This blending of virtual objects with real environments creates a new, hybrid environment in which digital and physical elements co-exist and react to each other, to an extent, in real time.⁶⁶ Some experts assert that in such a hybrid environment users can experience natural and intuitive 3D human-computer interactions.⁶⁷ For example, a user can interact with a digital object in the physical world as if it were physically present there (see Figure 2).⁶⁸

Figure 2. Example of User-object Interaction in an MR Environment

Source: Carols Fy, File: Entrenamiento-industrial-Fyware.jpg, Wikimedia Commons, October 11, 2017, at https://commons.wikimedia.org/wiki/File:Entrenamiento-industrial-Fyware.jpg (used under the Creative Commons Attribution-Share Alike 4.0 International license, at https://creativecommons.org/licenses/by-sa/4.0/deed.en). Note: This image illustrates a scenario where a user via a pair of MR glasses can see and interact with virtual objects in a physical environment; in this example, for training purposes.

MR requires advanced input technologies that can capture a user's body positions (e.g., head, hand, and finger movements), objects, surfaces, distances, locations, boundaries, and ambient lights and sounds.⁶⁹ Through spatial perception technologies, MR can provide users with a more natural, dynamic visualization of a digital object than a fixed-distance 2D display does.⁷⁰ For example, as a user moves away from a physical table on which a digital vase is placed, the vase displayed in the user's MR device would get smaller with increasing physical distance between the user and the table.⁷¹

Virtual Reality (VR)

VR technologies create an immersive, 3D, computer-generated, artificial environment, which replicates either the physical world or an imaginary world (see Figure 3).⁷² VR replaces the user's physical reality with a simulated one with realistic sounds, images, and other sensations. Unlike AR and MR, VR does not incorporate the user's actual physical surroundings.⁷³

Figure 3. Example of Using VR Technology in Scientific Investigation

Source: The National Aeronautics and Space Administration (NASA), Experiments: Technology Development and Demonstration: Pilote, at https://www.nasa.gov/mission_pages/station/research/experiments/explorer/Investigation.html?#id=8347. Notes: NASA's Pilote program studies remote operation of robotic arms and space vehicles. The image shows a NASA astronaut participating in the investigation, wearing a VR headset, using hand-held controllers, and interacting with a computer-generated robotic arm.

A user can see and interact with a VR environment from a first-person perspective or through a digital avatar—a digital representation of the human user, which facilitates interactions with other users, virtual objects, or the surrounding environment.⁷⁴ Users can access VR environments using hardware such as headsets, hand-held controllers, gloves, body sensors, and motion detectors⁷⁵ and via software such as computer games, applications, and operating systems. Advances in haptic wearable technologies⁷⁶ have enabled users to embody their avatars (i.e., make the avatar move and react in response to the user's own movements) and use hand-tracking controllers to interact with virtual objects by making real-world gestures.⁷⁷

VR currently faces some technical challenges. Current graphic rendering is not truly photorealistic, so the user experience, while immersive, may not feel completely natural.⁷⁸ Moreover, some users experience motion sickness after prolonged wearing of a VR headset. Sensations can include "general discomfort, apathy, drowsiness, headache, disorientation, or fatigue."⁷⁹ To mitigate these sensations, some experts suggest that VR needs improved technologies that provide users with graphical displays with fast screen refreshing rates and natural depth and light perception, spatialized audio, and interfaces using natural gestures and movements.⁸⁰

Brain-Computer Interface (BCI)

BCI technology, based on research at the intersection of neuroscience and computing, aims to replace traditional screens and input devices on computers and mobile devices with direct connections to the user's brain, by picking up and relaying the brain's internal electrical activity either through implantable sensors or by capturing electroencephalographic (EEG) activity at the scalp through non-invasive wearable devices.⁸¹ With BCI, a user's interaction with a computing device does not depend on the user's peripheral nerves and muscles.⁸² Rather, a BCI device captures a user's neural signals and translates the user's mental intent directly into action. For example, the user might control and move a drone just by thinking of directional commands.⁸³

BCI technology may provide a better cognitive user interface in the metaverse than existing AR/MR/VR devices do,⁸⁴ by enabling users to control digital avatars, objects, and interactions with brain signals.⁸⁵ A core element of BCI is an algorithm that converts electrophysiological input from the user into commands that control devices.⁸⁶ Recently, such algorithms have used machine learning and other artificial intelligence (AI) techniques to improve its processing efficiency, potentially leading to conversions fast enough for real-time interaction.⁸⁷

Fifth-Generation (5G) and Next-Generation Wireless Networks

As discussed previously in "Persistent Network Access," the metaverse would require a high-bandwidth, low-latency, and reliable internet infrastructure to deliver an immersive, persistent, and interoperable virtual experience. The real-time and portable access to the virtual world via mobile devices would also require advanced wireless communications technologies. Fourth-generation (4G) wireless telecommunications technologies do not support the bandwidth, latency, and reliability required by the metaverse.⁸⁸ 5G⁸⁹ and next-generation (e.g., 6G) wireless telecommunications technologies may be able to support data-intensive metaverse applications.

5G

5G represents the next iteration of wireless communications technologies that were designed to improve 4G mobile networks.⁹⁰ Some experts assert that the high-speed data transmission in 5G networks will enable data-intensive XR applications.⁹¹ In particular, a high-bandwidth 5G network could shift some intensive XR processing and functionality (e.g., graphical rendering) from users' local devices to high-performance servers at the edge of the 5G network⁹²—a strategy called edge computing.⁹³ The 5G network could then deliver data from the edge server back to the user's mobile XR device with low latency.⁹⁴ 5G networks may also facilitate latency-sensitive applications such as on-device head tracking, controller tracking, hand tracking, and motion tracking and thus improve the user experience with lightweight and cost-efficient XR devices.⁹⁵

According to the International Telecommunication Union (ITU), one version of 5G technology can yield peak data rates up to 140 gigabits per second (Gbps) in the download link and 65 Gbps in the upload link.⁹⁶ According to 3GPP, a global consortium of national and regional telecommunications standards organizations,⁹⁷ a 5G system qualifying its wireless service requirements to support AR/VR applications could achieve an end-to-end latency in the range of 5-10 milliseconds while maintaining high-definition graphical resolution and user-experienced data rate of 10 Gpbs for both download and upload links,⁹⁸ and network reliability of data delivery of at least 99.9%.⁹⁹

6G

6G represents the next generation of wireless communications technologies projected to follow and improve 5G data networks. 6G is in the early stage of research and development. Institutions in the United States, China, India, Japan, South Korea, and countries in the European Union have launched 6G research initiatives. Various telecommunications providers, equipment makers, and industry consortia are developing 6G technologies. 6G is expected to achieve a download speed of one terabit per second (1 Tbps; 1 Tb is equal to 1,000 Gb), 10-100 times faster than 5G;¹⁰⁰ latency in the range of 10-100 microseconds (1 microsecond is equal to 1/1000 millisecond), 50-1,000 times less than 5G;¹⁰¹ and network reliability of 99.999%, versus 5G's 99.9%.¹⁰²

Blockchain

Blockchain¹⁰³ is a technology that permanently records information (e.g., commercial transactions) in an interconnected database called a ledger.¹⁰⁴ Blockchain ledgers rely on a distributed-network proof system to prevent falsification or double spending.¹⁰⁵ All participating nodes (i.e., computing devices) in a blockchain network share, maintain, and verify transactional data published to the network, making records tamper-resistant.¹⁰⁶ In order to add a block of new data to the blockchain, participating nodes must reach a consensus to validate the legitimacy of the block following the rules of the blockchain.¹⁰⁷ This consensus-driven recording system is cryptographically secured and difficult to defraud.¹⁰⁸

Some metaverse enthusiasts argue that the success of the metaverse depends on developing a virtual economy with profitable businesses, capital mobility, and strong consumer spending,¹⁰⁹ enabling companies and individuals to build, trade, and invest in virtual products, goods, and services.¹¹⁰ These activities would require a viable financial infrastructure to support commercial transactions parallel to, or extending, those occurring in the physical world. Some metaverse proponents are optimistic that blockchain-based digital currencies (i.e., cryptocurrency) and financial services could provide the underlying transaction system for the virtual world.

Blockchain-based cryptocurrencies could serve as a payment method in metaverse transactions.¹¹¹ Proponents argue that blockchain use in the metaverse could facilitate fast, secure, trusted, and transparent online transactions without a centralized oversight body.¹¹² Moreover, those who advocate for a decentralized metaverse (i.e., one not owned and controlled by a handful of companies) argue that blockchain could also serve as the technological backbone to build decentralized and distributed applications, services, platforms, and communities in the metaverse.¹¹³

Other experts believe that the metaverse could exist without blockchain technology.¹¹⁴ Users can complete transactions of digital assets using traditional electronic payment systems.¹¹⁵ Leading platform players could agree on open and common standards to enable interoperability of digital assets in the metaverse without blockchain.¹¹⁶ Prices of blockchain-based cryptocurrencies fluctuate and may create value volatility and market uncertainty.¹¹⁷ Blockchain may also pose regulatory challenges due to potential anonymized criminal transactions and financial fraud.¹¹⁸

Non-Fungible Tokens (NFTs)

A non-fungible token is a unique digital identifier recorded in a blockchain with its associated metadata.¹¹⁹ When attached to a particular asset (e.g., a piece of digital artwork or a musical recording), the NFT can be used to verify the authenticity and provenance of the underlying asset, certify its ownership, or represent a right to use, copy, or display the asset.¹²⁰ NFTs and the assets they represent can be traded online and could potentially support commercial transactions of virtual goods and identity management (of digital avatars, for example) in the metaverse.¹²¹

Select Companies Developing Metaverse Technologies and Services

A number of large technology companies (known collectively as "big tech") have invested heavily in the metaverse, developing and acquiring technologies¹²² and seeking to obtain a first-mover advantage.¹²³ This section highlights select companies in the United States, which currently engage in the development and investment related to the metaverse.

Second Life, released in 2003, is arguably the first example of a large-scale 3D virtual world to be implemented and commercialized.¹²⁴ It created an online multiplayer, role-playing, multimedia, 3D platform for users, through their avatars, to explore virtual spaces, play games, make and meet friends, join social events, create and trade virtual goods and services, take online classes, participate in meetings, and have "a second life" in the virtual world.¹²⁵

An event that increased public awareness of the metaverse concept was Facebook Inc.'s corporate name change in late 2021 to Meta Platforms, Inc. (Meta) and the company's shift in emphasis to building the metaverse.¹²⁶ In addition to its family of social media apps, Meta now focuses on AR/VR-related consumer hardware, software, and content to develop immersive social technologies and computing platforms.¹²⁷ The company had invested in the development of AR/VR technologies before its name change; for example, acquiring Oculus VR, Inc. for $2 billion in 2014.¹²⁸ Meta is developing VR services, such as Horizon Worlds, a platform on which users can create their own virtual home and office spaces and interact with other users.¹²⁹

Microsoft Corporation has described immersive and interactive virtual game spaces as building blocks for the metaverse and a key component in the development of its metaverse platforms.¹³⁰ The company asserts the metaverse could also be a place where people work and meet.¹³¹ It is developing Mesh, a collaboration and communication platform, on which users could use 3D avatars to participate in virtual meetings while wearing MR goggles.¹³²

Alphabet Inc. has invested in AR technologies (e.g., Google Glass) and plans to integrate them into Google's internet-based navigation, online collaboration, and video content services.¹³³ Google refers to its vision of the metaverse—which combines its expertise in search engine algorithms, AI, and AR—as "ambient computing." Google describes the user experience in ambient computing as "being within the computer rather than accessing the computer ... being always online rather than always having access to an online world."¹³⁴

Other companies are developing metaverse-related hardware, software, services, and platforms as well. For example

• Apple Inc. is reportedly investing in the development of both hardware and software for AR applications.¹³⁵
• Roblox Corporation is reportedly expanding its virtual world platform by allowing users not only to play millions of games created by independent developers but also to shop for virtual items using its own virtual currency, Robux. The platform also allows users to perform collaborative work and business communications.¹³⁶ To some game players, Roblox may be the nearest and most expansive vision of the metaverse.¹³⁷
• Epic Games, Inc. (the developer of the online game Fortnite) has received investment from companies such as Sony to develop metaverse-type services and applications.¹³⁸

The investment in, and development of, metaverse technologies and applications by technology firms may raise policy questions around content moderation, privacy, and competition.¹³⁹

Policy Issues for Congressional Consideration

Some experts have expressed concerns that the immersive, persistent, and real-time environment and large-scale virtual platforms of the metaverse could reproduce and magnify the issues already surrounding current online platforms, services, and applications, such as content moderation, privacy, competition, and the digital divide.¹⁴⁰ Members of Congress have shown interest in each of these issues in the context of current online platforms and may consider addressing them in the specific context of the metaverse.

Content Moderation¹⁴¹

Some Members of Congress have introduced bills that seek to address issues surrounding content moderation on social media platforms.¹⁴² Some experts assert that content moderation may be much more complicated in the metaverse than social media.¹⁴³ Social media companies have pitched the metaverse as a virtual space for immersive social communications, interactions, and engagement.¹⁴⁴ Some analysts argue that bullying and harassment could be exacerbated by the immersive nature of VR.¹⁴⁵ As metaverse users would have virtual bodies and voices, content moderation would likely need to address text, speech, and behavior.¹⁴⁶

Some analysts also believe that conducting effective moderation on all types of communication and interaction—chat, voice, gestures, and user-generated content—among a massive number of users in real time would require significant effort and may not be feasible.¹⁴⁷ The chief technology officer of Meta has reportedly acknowledged that moderating how users speak and behave in Meta's virtual worlds "at any meaningful scale is practically impossible."¹⁴⁸ In 2021, Second Life founder Philip Rosedale stated, "[w]e don't have identity systems yet that would enable strong governance."¹⁴⁹ Some experts doubt that social media and content providers would be able to moderate a metaverse environment that is enormously more complex and dynamic given the challenges they are facing in moderating their existing services and platforms.¹⁵⁰ Some have expressed concerns that metaverse platforms might end up being uncontrollable or operators might implement strict screening, monitoring, and surveillance processes that restrict a great deal of behavior.¹⁵¹

Data Privacy¹⁵²

Data privacy is an issue of concern for many Members of Congress.¹⁵³ Some experts assert that personal information is the "seminal asset" in the digital economy and the opportunity to collect and monetize personal data acquired from metaverse users would be immense.¹⁵⁴ Additionally, some commentators have expressed concern that the metaverse might give operators and service providers an expanded set of data sources to track and mine, including body movements, facial expressions, and biometric data.¹⁵⁵ A VR device could generate data that reveals a user's emotions, abilities, and desires.¹⁵⁶ According to a report issued by the Institute of Electrical and Electronics Engineers (IEEE), XR headsets and their peripherals could enable the capture of a wide range of user data, as shown in Table 1.

The IEEE report maintains that the pervasive capture of sensitive physical and behavioral data is both unique to XR relative to other consumer technologies and fundamentally necessary to its core functionality.¹⁵⁷ This set of sensed user data could be used with machine learning algorithms and AI techniques for estimation, inference, and prediction of users' identity, behavior, activity, and emotional state.¹⁵⁸ Additionally, some experts point out that interoperability, a core aspect of the metaverse, is fundamentally about data sharing and has inherent privacy risks.¹⁵⁹

Some observers speculate that metaverse technology companies may seek to use personal data acquired in the metaverse to create user profiling and sell targeted advertising, in a similar fashion to current social media, search, and online marketplace platforms.¹⁶⁰ For example, the company that operates Second Life currently collects, uses, processes, stores, and disclosed its user data in a manner and scope similar to other online platform operators' data practices.¹⁶¹ Given the range of personal information that may be collected by metaverse technologies, some have noted the pressing need for data privacy protection while metaverse technologies are being developed.¹⁶²

In February 2022, three Members of Congress wrote a letter to Lina Khan, Chair of the Federal Trade Commission (FTC), regarding "the potential threats to children who use VR products and platforms."¹⁶³ In the letter, they urged the FTC to use its authority under the Children's Online Privacy Protection Act of 1998 (COPPA; Title XIII of P.L. 105-277) and the Federal Trade Commission Act of 1914, as amended, to protect children in the metaverse.¹⁶⁴ Among the concerns identified by the Members are "VR companies' plans to present commercial advertisements in the metaverse," which "could lead to harmful marketing practices that may be inherently manipulative of children."¹⁶⁵ The Members stated that under the laws the FTC "has a statutory obligation to ensure that powerful technology platforms treat young people fairly, comply with the platforms' own public statements [e.g., privacy policies], and protect children's privacy."¹⁶⁶

Market Power and Competition¹⁶⁷

Congress is considering bills that would create new antitrust standards specifically applicable to big tech companies.¹⁶⁸ According to some experts, market power in the metaverse may come primarily from network effects and scale.¹⁶⁹ Network effects refers to situations in which the value of a product, service, or platform depends on the number of buyers, sellers, or users who leverage it. Typically, the greater the number of buyers, sellers, or users, the greater the network effect, and the greater the value created by the offering. The willingness to pay for, offer, or use the product, service, or platform increases as the number of buyers, sellers, or users grows.¹⁷⁰ It is possible that a few companies could take advantage of network effects and seek to consolidate control over key metaverse platforms. Accordingly, some critics assert that the metaverse will provide new opportunities to those big tech companies to further increase their market power and extend their dominance beyond their 2D internet platforms.¹⁷¹ Some experts also express concern that a large portion of users' digital lives, if the metaverse were to achieve sufficient scale, might be controlled by a handful of companies,¹⁷² leading to further erosion of user privacy and autonomy.¹⁷³

If this were to be the case, metaverse platforms might be able to prevent competing technologies, standards, and applications from being available on their platforms, similar to a controversial practice that some big tech companies currently implement at their online application stores.¹⁷⁴ The FTC is reportedly investigating whether VR headset maker Oculus VR, which is owned by Meta, is engaged in anticompetitive practices in its treatment of third-party applications and through the prioritization of its own software.¹⁷⁵

Digital Divide¹⁷⁶

Some Members of Congress have expressed concern about those who lack access to or cannot afford high-speed internet, given the importance of the internet to education, work, and social interaction. The gap between those do and do not have internet access is known as the digital divide. By the FCC's current broadband standard of 25/3 Mpbs, as of the end of 2019, 4.4% of the U.S. population, or 14.4 million people, did not have broadband access.¹⁷⁷

Congress has authorized and appropriated federal funds for broadband to help bridge the digital divide, for example, in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136); the Consolidated Appropriations Act, 2021 (CAA, 2021; P.L. 116-260); the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2); and the Infrastructure Investment and Jobs Act (IIJA; P.L. 117-58). Most of these funds, including the largest federal broadband grant program—the Broadband Equity, Access, and Deployment (BEAD) program administered by the National Telecommunications and Information Administration, prioritize support for broadband deployment in unserved locations that lack access to reliable broadband service with at least 25/3 Mbps.¹⁷⁸

To access the metaverse and many of its potential services, however, users would likely require broadband download and upload speeds in excess of 1 Gbps.¹⁷⁹ By the end of 2020, about 3% of mobile connections in the United States were on 5G, which could provide the speed and wireless connectivity needed for the metaverse. By 2025, it is estimated that 5G connections will increase to 68%, but that would still leave 32% of mobile connections without 5G access, potentially exacerbating the digital divide.¹⁸⁰

Opportunities and Challenges

A survey in January 2022 found that 37% of respondents agreed with the statement that "the metaverse would be more fun than real life," and 38% agreed with the statement that "the metaverse would make their life better."¹⁸¹ Another survey in 2021 found that 38% of Gen Z (those born between 1997 and 2012) and 48% of millennials (those born between 1981 and 1996) agreed with the statement that "the metaverse is the next big thing and will become part of our lives in the next decade."¹⁸² According to the research firm Gartner, by 2026, one-fourth of people would replicate their real-world activities by spending "at least one hour a day in the metaverse for work, shopping, education, social and/or entertainment."¹⁸³ In December 2021, Bloomberg estimated that the metaverse would become a $783 billion-plus digital market by 2024 based on 2020 data and an assumption of a double-digit annual growth rate.¹⁸⁴ Citing the convergence of online games, social media, and user-generated content, the analysts expected that the metaverse would present an opportunity particularly for online game and social media firms to generate revenue streams from online live entertainment events, sales of software and services, sales of AR/MR/VR headsets and other XR hardware, and digital advertising, among other activities.¹⁸⁵

However, some experts do not believe that the technological infrastructure required to support the metaverse currently exists.¹⁸⁶ They note that the absence of open technical standards and toolkits for either developers or users to create metaverse applications and content would inhibit the realization of the metaverse and its ability to reach the scale of the internet.¹⁸⁷ Such scaling is likely to require substantial investments in research and development.¹⁸⁸

Policymaking around the metaverse may be challenging while its development trajectory is uncertain.¹⁸⁹ It is not clear whether there will eventually be an interoperable global metaverse or multiple proprietary metaverse platforms. While some suggest a wait-and-see approach, others argue that policy leaders should explore proactive regulation.¹⁹⁰ The Appendix lists legislation introduced in the 117^th Congress, which contains provisions related to metaverse technologies (i.e., AR/MR/VR). Some of these provisions would provide federal resources for research and development in metaverse-related technologies, identified as one of key technology focus areas that may help "enhance the competitive advantage and leadership of the United States in the global economy."¹⁹¹ Other provisions focused on regulating practices of online platforms, including those that offer AR and VR services.¹⁹² While no legislation has addressed policy issues specifically in the context of the metaverse yet, the development and growing adoption of extended reality, next-generation wireless communication, and blockchain technologies may present policymakers an opportunity to work with stakeholders—including scientists, engineers, technology experts, academic scholars, business leaders, and civil society—to help shape the evolution of the metaverse.

In April 2022, the Biden Administration launched a global partnership and initiative articulated in the Declaration for the Future of the Internet.¹⁹³ The declaration reaffirms and recommits its 61 nation-state partners to "an open, free, global, interoperable, reliable, and secure internet."¹⁹⁴ The declaration stresses the internet as a single, decentralized network of networks, which should be non-fragmented; facilitate global communications and commerce; foster competition, privacy, and respect for human rights; and support innovation, trust, and freedom.¹⁹⁵ A similar vision and policy framework might be developed to guide the development of the metaverse.

Appendix. Summary of Legislative Efforts on Metaverse-related Technologies in the 117^th Congress