CCMI/206

Initiative on virtual worlds, such as the metaverse

OPINION

Consultative Commission on Industrial Change

Initiative on virtual worlds, such as the metaverse

(Exploratory opinion at the request of the European Commission)

Rapporteur: Martin BÖHME

Co-rapporteur: Hervé JEANNIN

1.Conclusions and recommendations

1.1The EESC is convinced that the metaverse and the development of virtual worlds are likely to have a drastic impact on the way we live together. The metaverse is a highly interconnected digital universe (virtual space) that uses the internet, avatars and software agents and binds them together to create a new physical and virtual world. This has implications for the business environment, working conditions and the development of civil society. These changes will bring with them both opportunities and risks that society will need to address. There is still a need for progress with regard to acceptance of the use of these new technologies, increasing safety for all kinds of workers.

1.2From the EESC's perspective, it is important to ensure that the next generation of the internet is open and connected. The metaverse is built upon a foundation of interconnected virtual worlds, which are created using various technologies such as 3D modelling software, Web 3.0, augmented/virtual/extended reality, artificial intelligence/machine learning, and distributed computing. Organisations can envision how these technologies can improve their business models, but they must address critical questions, such as how to evaluate market trends, source capabilities, measure engagement, and adapt businesses to stay competitive. Opportunities and challenges are further detailed in points 3.2 and 3.3, and some specific industrial examples are set out in point 3.10. There is a need to continuously analyse whether the legislation currently in force is sufficient to regulate virtual worlds. The EESC reiterates the recent position of the European Parliament and stresses the importance of correctly determining the employment status of those involved in virtual worlds and ensuring that they are considered either employees or self-employed, depending on their actual working conditions.

1.3The development of the metaverse requires careful consideration by the legislator to ensure a safe environment. Ongoing collaboration among stakeholders is necessary to ensure that the metaverse benefits society. However, virtual worlds such as the metaverse also pose risks, especially for children and vulnerable groups. Platform operators need to put in place strict control mechanisms to filter and remove harmful content and safeguards to prevent harassment and abuse.

1.4The metaverse can also impact working conditions and health and safety. It is important to ensure that adequate measures are put in place in order to ensure sufficient information about these issues, including through social dialogue and collective bargaining, to ensure the safety of workers and provide access to training to improve competencies and skills. The EU has to guarantee that existing legislation that applies in the real world is also respected in the virtual world and that, where necessary, appropriate measures are taken to address specific needs for regulating the metaverse.

1.5The use of the metaverse in industry today, as far as the EESC is concerned, is focused on optimising operations, gathering data and improving performance. Digital twins have proven to be a valuable tool for companies to achieve these goals. The metaverse must provide solutions to unsolved problems or enable products to be manufactured at lower cost and in less time, improve quality, reduce risk and increase efficiency.

1.6The metaverse could potentially have a positive impact on the environment and climate change by enabling remote working on a new level, reducing the need for physical travel and reducing carbon emissions. In addition, the metaverse can be used to simulate and test sustainable practices, such as renewable energy systems and smart cities, before implementing them in the physical world. However, the energy consumption and carbon footprint of the technology that powers the metaverse must also be considered. The expansion of virtual worlds will further increase global energy demand. This will increase the need for green energy generation. 

1.7The EESC sees the need to address issues of taxation of activities in the metaverse already today. Fiscal issues in the metaverse are challenging, as traditional tax models may not be appropriate and new approaches may be needed to collect fair and effective taxes.

2.General comments

2.1The next generation of the internet will be open and interconnected, a digital enabler for commerce and society. The technologies associated with the metaverse – augmented reality (AR), virtual reality (VR), extended reality (XR) and digital twins – are capable of accelerating engagement, socialisation, collaboration and experiences, offering users new immersive ways to access products and services.

2.2Organisations have an opportunity to envision how the next generation of the internet will improve their products and services. This includes considering the impact of the metaverse on commerce, how AR can enhance training, how to effectively use 3D modelling and digital twins, and how entertainment can apply VR. However, the emergence of new virtual worlds such as the metaverse also raises several critical questions for organisations that require urgent attention. Firstly, they must envision appropriate opportunities and evaluate the market, customer needs and trends to remain competitive. Secondly, they need effective processes to source capabilities, including partnerships and outsourcing. Thirdly, measuring the impact of engagement and experience is crucial in order to continually improve performance and customer satisfaction. Lastly, organisations must adapt their business models to new technologies, markets, and customer expectations in order to stay competitive.

2.3It is necessary to consider how virtual and physical worlds will be balanced to ensure the responsible construction of the metaverse. It is essential to ensure that the metaverse is a safe environment for consumers and aligns closely with the "open" vision of the next iteration of the internet. Consumers must be prepared for its use and receive training; for children and teens this should take place preferably already in school. Additionally, it is crucial to consider whether technology can advance quickly enough to build the metaverse of our imagination. These issues require ongoing dialogue and collaboration among stakeholders, including industry, policymakers, social partners and civil society networks, to ensure that the development of the metaverse benefits society as a whole.

2.4The EESC points to possible risks, especially for children and vulnerable groups such as people with disabilities and minorities. Because the metaverse takes place in the virtual world, offenders can more easily maintain anonymity and spread malicious and harmful messages to other users with impunity. This can lead to cyberbullying. The metaverse may contain potentially harmful or inappropriate content that is unsuitable for children. It is important that platform operators put in place strict control mechanisms to filter and remove such content. It could also be problematic that intensive use of the metaverse could mean an inactive lifestyle. It is the political task and responsibility of the EU to define and monitor the legal safety conditions for virtual worlds.

2.5The EESC stresses that virtual worlds can have an impact on working conditions and health and safety. There is a need to continuously analyse whether the legislation currently in force is sufficient to regulate virtual worlds. The EESC reiterates the recent position of the European Parliament and stresses the importance of correctly determining the employment status of those involved in virtual worlds and ensuring that they are considered either employees or self-employed, depending on their actual working conditions 1 . It is important to ensure that adequate measures are put in place to guarantee the safety of workers and that the same standards are applied as in the real world. Social dialogue and collective bargaining are therefore essential to ensure these measures. It is also important that workers are properly trained and informed to ensure that they can work safely and effectively in virtual worlds. Lifelong learning is more than necessary. Competency screening throughout a person's career is essential to meet training needs (upskilling and reskilling). Here too, social dialogue has the task of offering a collective approach to allow each individual worker access to such competency screening and to the training needed to improve competencies and skills and to contribute to building European autonomy in the field of virtual worlds.

2.6The EESC considers that virtual worlds like the metaverse will have an impact on the environment and resource consumption. On the one hand, they can consume a significant amount of energy, especially when hosted on high-performance servers. This can lead to an increased demand for electricity and thus an increased carbon footprint. On the other hand, however, virtual worlds may offer the potential to be used as a substitute for real experiences and interactions. This can have a positive impact on resource consumption, especially if people travel less and use fewer physical products. The EESC sees the need for regulatory requirements to ensure that virtual world operators take measures to reduce energy and resource consumption. This includes using renewable energy such as solar or wind power, optimising servers and hardware to reduce energy consumption, and promoting recycling and reuse of hardware and equipment.

2.7The EESC believes that European values and a human-centred philosophy must inspire the rules and governance of virtual worlds. For this reason, Europe should take a dominant position in the development of the metaverse. It is the task of the EU regulator to act, as far as possible, to find a good balance at international level with regard to the interoperability of standards, which must be set in a cooperative way with all relevant stakeholders, including the social partners. Particular attention should be paid to the social dimension and especially to young people with regard to the side effect of the metaverse. We also need to avoid geographical imbalances and inequalities due to differences in digital infrastructure across Europe. 

2.8Taxation of businesses in the metaverse is a complex challenge, as the traditional concepts of geographical boundaries and physical locations are no longer sufficient. The determination of taxable income, assessment of digital assets and delineation of business lines requires a realignment of the basis of taxation. The creation of appropriate regulatory mechanisms to ensure fair tax practices is also essential.

3.Specific comments

3.1The metaverse's building blocks

3.1.1From a technical standpoint, the metaverse is built upon a foundation of interconnected virtual worlds, where each world may represent a distinct environment or experience. To enable interaction and communication between users within the metaverse, various protocols and standards are used, such as the Open Metaverse Interoperability Protocol (OMI), which allows for seamless interaction between different virtual worlds. Other technical components include networking protocols, user identity systems and artificial intelligence algorithms. The metaverse's technology stack has four core building blocks: (1) content and experiences, (2) platforms (such as game engines), (3) infrastructure and hardware (including devices and networks), and (4) enablers (such as payment mechanisms and security). Ten layers span these components, providing the critical building blocks on which all metaverse experiences are based.

3.1.2Finally, the metaverse also involves economic and commercial components, such as virtual currencies, marketplaces, and systems for buying and selling virtual goods and services. These components are designed to facilitate commerce and value exchange within the metaverse, and they may rely on blockchain and other decentralised technologies to ensure transparency and security.

3.2Opportunities

3.2.1From the EESC's perspective it is worth noting that the future of the metaverse is comprised of multiple dimensions, including consumer, enterprise and industrial metaverses. (i) The consumer metaverse serves as the recreational space where individuals can engage in virtual-reality gaming and social interactions. (ii) The enterprise metaverse provides a platform for co-designing with customers. (iii) The industrial metaverse acts as the portal for manufacturing products.

3.2.2The industrial metaverse holds significant potential for European companies looking to optimise their operations, gather data and improve performance. The use of digital twins in the industrial sector has proven to be a valuable tool for companies to optimise their operations, gather data and improve performance, for example by designing without physical prototypes.

3.2.3For individuals, the seamless nature of transitions between physical experiences and interactions and their virtual and multimodal enhancement opens an endless scope of possibilities. The metaverse is a great lever for recruitment, onboarding, training without risk, and the provision of collaborative and immersive remote work environments that attract the future talent that the industry needs to develop.

3.3Challenges

3.3.1The EESC's assessment of the current situation is that acceptance of the use of these new technologies must still progress. The necessary increase in the level of maturity required by the combination of numerous technologies, the evolution of infrastructures, computing capacity and communication networks are also prerequisites for a deployment at scale of this new internet for consumers and citizens.

3.3.2The metaverse poses urgent challenges that cut across firms, their employees, independent developers and content creators, governments and consumers. Most of the workforce will need to be reskilled to take advantage of rather than compete with it, and cities and countries have to establish themselves as hubs for its development and will need to join the global competition to attract talent and investment and also bind workers permanently. Social dialogue and collective bargaining have the task of providing all necessary opportunities for workers involved in changing work environments.

3.3.3The EESC underlines that at the societal level, a variety of stakeholders will need to define a road map toward an ethical, safe, and inclusive metaverse experience. Guidelines may also be necessary around issues including security, ethics and regulatory compliance, physical health and safety, sustainability, and equity and fairness. The requirements for data protection and the implementation of the European General Data Protection Regulation in the metaverse also pose a special challenge. The extent to which existing requirements are still sufficient must be examined.

3.3.4Considerations about the allocation of virtual space in the metaverse are of great importance as they determine who has access to certain areas and content and who does not. The large platform operators such as Facebook, Google and Microsoft will play an important role in shaping the metaverse as they already have a strong presence in the virtual world and have the necessary resources to provide the infrastructure. It is important that these companies follow transparent and fair rules for access to the virtual space in order to create an open and diverse virtual world. In addition, smaller market players must also be provided opportunities to participate in value creation through virtual space.

3.3.5Users are reporting increasing levels of offensive and undesirable behaviours including harassment of users, sexualisation of avatar interactions, data exploitation and unregulated gambling, instances of bullying, presentation of graphical sexual content, racism, threats of violence, and grooming of minors (CCDH, 2022). Moreover, addiction to simulated reality and privacy and mental health issues also appear as key concerns among users worldwide (Statista 2020).

3.4Talents: building metaverses for businesses requires a special kind of competencies. We may also require new roles such as component developers, infrastructure providers, service developers, and virtual hosts. Europe must strive to become once again a community of welcome for researchers and engineers and to train their successors. Up-skilling and re-skilling of the existing workforce, in collaboration with universities and other educational institutions, must become a priority.

3.5Tools: in the development of the metaverse, there is a critical need for tools that can create content for multidimensional worlds and embed programming inside objects. These tools will be essential in the creation and distribution of content and services in the metaverse. Additionally, these tools will need to be accessible to a broad range of creators and users, from hobbyists to professional designers.

3.6Ecosystems and models: new markets and platforms may be required to source live objects such as NFT or entire metaverses. These items may be offered as products or services, but the pricing, ownership, and business models are yet to be determined. To ensure consistency, standards will need to be established to guide the process.

3.7The EESC stresses that it is crucial to consider new sharing and licensing mechanisms that will enable the creation and distribution of content and services while also ensuring the protection of intellectual and industrial property and the privacy and security of users. The design of the metaverse must respect trademarks, copyrights and other licences and forms of intellectual and industrial property.

3.8From a technological and societal point of view, one of the main challenges in deploying the metaverse at scale is standardisation. Many protocols, standards and rules must be established in relation to cybersecurity, storage and protection of personal data, protection of individuals, and the fight against cyber-stalking, cybercrime and disinformation. The European Union must have a strong role to play in order to not let these be set by other geographical areas. The European Union must therefore take part in the international consortia in charge of their development.

3.9The gaming industry has been at the forefront of organising online communities. It is also where many people, especially children and young people, come into contact with virtual worlds for the first time. The EESC therefore advocates that this industry in particular should be held accountable and involved in the development of consumer protection standards.

3.10Current use cases for virtual worlds in industry

3.10.1The EESC points to the calculations made by the car manufacturer Renault, which announced in November 2022 that its Industrial Metaverse would enable savings of EUR 780 million at various stages of the production cycle. By 2025, an additional EUR 320 million in savings could be achieved, as well as EUR 260 million in inventory savings, a 60% reduction in vehicle delivery times and a 50% reduction in the carbon footprint of its production plants.

3.10.2In healthcare, Pfizer is using virtual reality training solutions to improve compliance with clinical trial protocols. Trainees are trained through a realistic, immersive experience in a virtual laboratory where they can interact and experiment safely, in close to real-life conditions. Pfizer is already using similar technologies to train its field operators at production sites. Compliance with the industry's strict protocols and regulations, both in research and production, is significantly improved by employees who have completed these immersive training sessions. In addition to this example, the metaverse can bring about far-reaching changes in access to health care and in the quality of care by helping to overcome deficits in care, especially in rural and remote areas.

3.10.3With regard to the aeronautics and space sector, Airbus and Boeing are already using the digital twin concept, the foundation of the industrial metaverse, as a future platform to create a 3D replica of their new aircraft and production systems to support engineering and simulation activities.

3.10.4In the financial sector, several banks and insurance companies are enhancing their customer experience and interaction with immersive and metaverse solutions. AXA, for example, purchased a virtual plot of land on a Web 3.0 platform to interact with new customer groups and to build a virtual agency in the long term. Allianz uses augmented reality to increase customer awareness.

3.10.5The EESC notes that the Consumer, Products, Retail and Distribution (CPRD) industry is probably where we have seen the most recent metaverse and Web 3.0 initiatives. Use cases range from 3D virtual stores and immersive social shopping to avatars, branding and marketing, new community engagement and new loyalty programmes based on NFTs and Web 3.0 technologies.

Brussels, 19 April 2023.

Pietro Francesco De Lotto

President of the Consultative Commission on Industrial Change

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(1)      https://www.europarl.europa.eu/news/en/press-room/20221212IPR64513/digital-workers-better-working-conditions-and-protection-of-rights