The metaverse is an elusive concept, but can be broadly described as a rapidly growing extension of the tendrils of the internet, redefining what constitutes social media. As an ever-growing and immersive network of technologies, the metaverse attempts to close the gap between society and the media that serves as its vehicle. As it exists now, the metaverse is a multi-platform virtual ecosystem with an integrated economy that evolves and grows in real time. A more developed vision of the metaverse has been conceptualized as “a fully immersive, virtual world run in parallel to the physical world with mass-scale adoption.” The economic implications are enormous: one recent report forecasts that the metaverse market will surpass a value of $993 billion USD by 2030.
Challenges Facing Regulators
One key legal challenge presented by the metaverse is the simultaneous regulation and governance of centralized and decentralized platforms, and the accompanying exchange of digital assets and currencies. In this setting, brands and consumers can interact in innovative ways, propelled by the emergence of dynamic marketing tactics, captivating consumer experiences, and the sheer range of goods and services which transcend the division between the metaverse and the physical world. As previously discussed, it is anticipated that intellectual property rights will play an important role in digital asset protection and management. This forecast likewise extends to the role of businesses in the digital marketplace. More than ever before, marketing strategies encompass the experience embodied by a brand, which places a premium on consumer engagement and feedback. Businesses must prepare to adapt their measure of success, as new metrics of engagement, such as number of visitors, views, shares, “likes”, etc., will supplant traditional benchmarks within the economy of the metaverse.
Milking the Metaverse Market
At the time of writing, many companies have already leveraged the advantages of the metaverse to expand the reach of their branding and create new product portfolios. Several mainstream and designer brands have crafted virtual experiences, which include exclusive digital assets for sale, from non-fungible tokens (NFTs) to virtual luxury apparel. Influencers and celebrities have lent their names to exclusive digital assets that can only be accessed via the metaverse. The emergence of this virtual landscape has transformed the market of digital assets and has created a new avenue for brands to expand their reach. This new market begs the question: where should businesses turn to assess the relative risks and regulatory limits they face with metaverse marketing?
Unfortunately, there is no clear answer – yet.
Although the Canadian federal Competition Act is the principal legislation that governs marketing practices in Canada, the question remains as to how it extends to the apparently boundless marketing tactics made possible by the metaverse. Although several provisions (e.g., sections 52 and 74.01 relating to misleading advertising) apply irrespective of the medium of advertising, the Competition Act does not explicitly contemplate anything approaching the scope of the metaverse. Provincial consumer protection legislation appears equally ill-equipped to deal with these challenges.
Businesses contemplating a metaverse marketing debut would be wise to heed existing rules and regulations that govern real-world marketing practices. Although the response from policymakers to date has been inadequate to keep up with the exponential growth of the metaverse, recent stirs in the democratic machine forecast an attempt to regulate the digital marketplace.
A Partial Response
The limitations to the Canadian regulatory framework have not gone unnoticed. Leading up to the suite of amendments to the Competition Act that came into force June 23, 2022, several calls to action shed a light on growing policy concerns for regulating the new digital marketplace.
For example, in response to an invitation by Senator Howard Wetston to consult on Canada’s competition law framework in October 2021, Edward Iacobucci emphasized that digital markets “often aggravate the Act’s pre-existing shortcomings” This sentiment was echoed in a public letter by Privacy Commissioner Daniel Therrien in December 2021. He wrote:
“The digital transformation of our economy has brought with it a number of opportunities and challenges for all regulators. Among other things, this transformation has led to an increased cross-regulatory intersection between privacy, competition and consumer protection.”
In response, the Canadian Competition Bureau published a lengthy submission in February 2022. One notable point that repeatedly came up in the recommendations was the need for a new yardstick against which to assess competitive behaviour in a digital economy. Certain aspects of the June 23, 2022 amendments may affect how competition is assessed in the metaverse, but this law is far from a comprehensive framework to address the elastic metaverse environment. Additional amendments are anticipated, but it remains to be seen whether they will effectively address the unique concerns of the metaverse.
The Path Forward
Marketing in the metaverse is not an undertaking to be taken lightly. A foray into the metaverse may be an attractive venture for businesses looking to modernize, reach new markets, or expand their product portfolios. Indeed, this virtual landscape presents an unprecedented opportunity to engage with consumers in innovative ways. Although presently under-regulated, these opportunities are not uncoupled from the risks that accompany traditional advertising media. Current marketing restrictions and the principles that underpin them should continue to guide businesses that wish to market in the metaverse with a view to long-term viability.
