When Mark Zuckerberg announced in 2021 that Facebook would become Meta, ushering in the Metaverse, it sparked global curiosity and a flood of investments. The likes of Disney, Gucci, JP Morgan and the Bank of America were all chasing the promise of a new world of profit, entertainment and commerce. Yet, the hype that materialised in a US$120 billion commercial investment into the Metaverse within one year was soon replaced by concerns over news of virtual harassment, data and financial fraud, illegal trade and identity theft. Indeed, Interpol, the European Union and several national governments launched investigations asking: What exactly is the Metaverse? And more importantly: who governs it? Despite the headlines about virtual concerts, digital real estate and immersive play, the true challenge of the Metaverse lies not only in its new technology, but in responsible regulation. What rules govern a borderless digital world where users appear as avatars, transactions happen in crypto-tokens, and even crimes – like virtual harassment or identity theft – have no geographical or jurisdictional home? Four years on from its launch, regulators across the globe are still grappling with a disruptive digital innovation. Interpol issued white papers, the EU investigated, and the World Economic Forum weighed in on the potential and downfall of the Metaverse. Yet so far, there is no unified legal framework. While the Metaverse was imagined as a seamless global ‘world’, it is now colliding with the desperate and fragmented attempts of national governments to apply analogue laws to a virtual world. So, what does Meta do when governments can’t keep up? It governs itself. ANCIENT RULES FOR VIRTUAL WORLDS? It may seem surprising, but the Metaverse has something in common with the marketplaces of Ancient Greece and the medieval law merchant: the use of private rules to govern transactions across borders. Long before modern nation-states, traders devised their own “General Terms and Conditions” to conduct business at scale, safely and swiftly – even in the absence of courts and kings. Legal scholar Eugen Ehrlich, writing in 1913, famously argued that we must seek “the living law” not in dusty statutes, but in the documents in use: the contracts, codes, and customs that govern real-life business transactions. In other words: law is not just made by parliaments; it emerges wherever people do business, and it is this defacto law that really must be studied to understand how disruptive digital innovations can conquer the globe while regulators lag behind. This is what is referred to as “private rules” – made by businesses, for business. The Metaverse, with its global presence and cross-jurisdictional nature, revives this ancient practice. Today, it is Meta’s legal documents – its Terms of Service, Codes of Conduct, and its Oversight Board – that act as the de-facto constitution of its virtual realm. PRIVATE RULES In my research, I explore how companies like Meta use such “private rules” to manage disruptive digital innovation. More specifically, these rules act as institutional devices: tools like general 48 |
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