In a new strategy published on July 11, the European Commission has identified Web 4.0 and virtual worlds—often also referred to as the metaverse—as having the potential to transform the ways in which EU citizens live, work and interact.  The EU’s strategy consists of ten action points addressing four themes drawn from the Digital Decade policy programme and the Commission’s Connectivity package: (1) People and Skills; (2) Business; (3) Government (i.e., public services and projects); and (4) Governance.

The European Commission’s strategy indicates that it is unlikely to propose new regulation in the short to medium-term: indeed, European Competition Commissioner Margarethe Vestager has recently warned against jumping to regulation of virtual worlds as the “first sort of safety pad.” Instead, the Commission views its framework of current and upcoming digital technology-related legislation (including the GDPR, the Digital Services Act, the Digital Markets Act and the proposed Markets in Crypto-Assets Regulation) to be applicable to Web 4.0 and virtual worlds in a “robust” and “future-oriented” manner. 

What Are Virtual Worlds and Web 4.0?

The Commission defines virtual worlds as being “persistent, immersive environments, based on technologies including 3D and extended reality (XR), which make it possible to blend physical and digital worlds in realtime, for a variety of purposes.”  It considers Web 4.0 to be the “fourth generation of the World Wide Web,” which will feature “advanced artificial and ambient intelligence, the internet of things, trusted blockchain transactions, virtual worlds and XR capabilities.”  These will enable digital and real objects to integrate and communicate with each other to “seamlessly blen[d] the physical and digital worlds.”  According to Internal Market Commissioner Thierry Breton, the EU will “connect virtual world developers with industry users, invest in the uptake and scale-up of new technologies, and give people the tools and the skills to safely and confidently use virtual worlds.”  The EU is keen to ensure that it establishes itself as a leader in Web 4.0 and virtual worlds, and that the emerging metaverse reflects EU values, principles, and fundamental rights. The strategy is the latest in a series of metaverse-related EU initiatives and announcements.

Below, we outline several key features to the EU’s new strategy:

(1) People and Skills

The European Commission is looking to increase the numbers of Web 4.0 and virtual worlds specialists in the EU, as well as knowledge and awareness of these technologies amongst the general public. It envisions building a European talent pool of developers and content creators through increased funding as well as the Digital Europe and Creative Europe programmes.  Adding to the talent pool by attracting skilled professionals from outside the EU is also a priority.

Regarding the general public, the Commission aims to create a virtual worlds “Toolbox.”  Drawing on existing programmes such as the European Digital Media Observatory and the Code of Practice on Disinformation, the Toolbox will increase public understanding of virtual worlds—including how to manage virtual identities, creations, assets, and data, and how to guard against disinformation.  The Commission will ensure Virtual Worlds are child-friendly by design through its upcoming age appropriate design code, whilst enabling young people to learn about them through the “Better Internet for Kids” Portal.

(2) Business

According to the Commission, Europe has “strong industrial potential” in Web 4.0 and virtual worlds.  However, the fragmentation of technical expertise, slow uptake of new technologies and limited access to finance hampers this potential.

The Commission seeks to address these challenges by enhancing collaboration between entities at all levels of the virtual worlds production chain.  For example, the proposed “New European Partnership” between key virtual worlds stakeholders is to create a pathway to investments in cutting edge technologies, European data spaces, and the Next Generation Internet initiative.  The creation of regulatory sandboxes to test virtual world technology and services is intended to foster an accommodating business environment by giving developers an opportunity to assess their compliance with regulations in a risk-free setting.  

The Commission is keen to ensure the virtual worlds business environment remains competitive: wary of the prospect of “large market players” dominating the space, the EU seeks to ensure the interoperability of platforms and networks by developing interoperability standards with Member States and stakeholders.

(3) Government (Public Services and Projects)

The Commission envisages local and national governments paving the way to Web 4.0 by using digitalisation to “improv[e] the design and delivery of public services” and to “addres[s] major societal challenges such as health and climate change.”  It pledges to support projects with those goals, such as the European CitiVerse project which helps local authorities to streamline the planning and management of cities. The Innovation Friendly Regulations Advisory Group is to help identify future virtual worlds public service initiatives.

(4) Governance

The Commission argues that “close cooperation” between it and Member States is the only way to manage the scale of societal change that Web 4.0 and virtual worlds will bring about.  To this end, it seeks to convene an expert group composed of Member State representatives to share best practices among Member States and in international forums.  It also aims to “support the creation of a technical multi-stakeholder governance process to address essential aspects of virtual worlds and Web 4.0 that are beyond the remit of existing internet governance institutions.”  Lastly, established groups such as the European Centre for Algorithmic Transparency and the EU Blockchain Observatory and Forum will help monitor new developments in virtual worlds and Web 4.0: they will identify new growth and innovation opportunities, encourage best practices and identify new challenges.

Next Steps

The Commission encourages the European Parliament and the Council to endorse the strategy and to work with it on implementing the outlined action points.  It envisions progress on most of the strategy’s action points over the next twelve months. 

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Covington’s multidisciplinary team will continue to track these developments and can help advise clients on legal implications and potential engagement opportunities.

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Edwin Djabatey of Covington & Burling LLP contributed to the preparation of this article.