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European Commission Highlights Dangers of Metaverse Gatekeepers

Photo by Christian Lue / Unsplash

A new blog published by two members of the European Commission’s antitrust unit has shed light on the union’s concerns about competition in the metaverse.

The blog, entitled 'Understanding the metaverse – a competition perspective’, was co-written by Friedrich Wenzel Bulst, head of the Commission’s antitrust unit, and Sophie De Vinck, a case handler specializing in media sectors.

Going After the Gatekeepers

Focusing heavily on the dangers of so-called gatekeepers in the metaverse, the article emphasizes the immense power that could be wielded by tech giants over citizens’ rights online and offline.

According to Wenzel Bulst and De Vinck, powerful closed ecosystems could prevent consumers from “travelling freely between different metaverse worlds. They would for example not be able to bring along virtual goods or services from one metaverse platform to another.”

The authors go on to state that this eventuality could “lead to the emergence of gatekeepers that control access to a metaverse and its users, similar to the developments observed in a number of core platform services identified in the European Union’s recently agreed Digital Markets Act.”

Although Meta (formerly Facebook) is not mentioned by name in the article, its shadow looms over the entire piece. Despite Meta Reality Labs losing $2.8 billion in Q2, it continues betting big on the metaverse. At this year's annual shareholder meeting, CEO Mark Zuckerberg confessed that the company was going to be “investing and losing a significant amount of money” over the coming three to five years, as it aims to build a comprehensive centralized VR platform.

Wenzel Bulst and De Vinck make plain their concerns that metaverse gatekeepers could limit competition in a variety of ways, making it more difficult for alternative service providers to reach their customers. The authors use the example of a metaverse gatekeeper forcing users to adopt certain services or products by bundling them with ‘must-have’ hardware or software, and imposing “exorbitant prices for accessing the metaverse or some of their metaverse-based offerings.”

While noting that such challenges are already evident in other digital markets, Wenzel Bulst and De Vinck suggest this outcome is not a foregone conclusion. On a positive note, the authors write that “one could imagine the metaverse as an open competitive environment, organised on the basis of multiple interoperable worlds, between which users can easily move virtual goods and services in a secure way.

“This would for example mean that avatars could travel seamlessly from one to the other branded environment… meeting up with others to attend a concert in a different metaverse platform, without hitting any virtual walls.”

Music, no doubt, to users’ ears. But will it come to pass? It seems more realistic that competition will intensify between platforms providing decentralized metaverses and interoperability and closed shops who do their utmost to lock customers into one ecosystem.

Enforcing the Law

Based on the blog, competition enforcement authorities are alive to the dangers of metaverse monopolization – although it’s hard not to be cynical given their failure to reproach existing tech giants for essentially presiding over monopolies in different sectors, whether it's e-commerce (Amazon) or app stores (Apple).

That said, the EU recently flexed its regulatory muscles by slapping Google with a $4 billion fine for breaching antitrust rules – the largest fine ever imposed by a competition authority on the continent. According to this latest blog, the Commission will tackle possible metaverse-related competition challenges via a suite of “well-tested tools within traditional competition law enforcement.”

For Meta and the rest, those words sound like a warning. But will they heed it?