According to Fortune Business Insights, the Virtual Reality industry’s market size stood at USD 3.1 billion in the year 2019 while it is projected to reach USD 57.5 billion by the year 2027. Favorable adoption trends in the education, automotive, military, healthcare, and gaming industries coupled with advancements in the telecom sector, in the form of 5G standards, are fuelling the VR industry’s phenomenal growth. Here, we discuss the global regulatory landscape surrounding this industry subdivided into some of the most pressing issues facing it.
Privacy and Data Protection
Governments across the globe are expected to deal with privacy concerns associated with the VR industry. Reason being the fact that companies engaged in this business are tempted to collect greater amounts of data related to user preferences, their surroundings, and how their VR devices are communicating with other devices.
VR Presenting Huge Opportunities For Gaming Companies
Marketing revenues are the main driving force for such activities. Generally speaking, VR presents excellent opportunities for gaming companies to track eye movements also touted as the “advertising’s holy-grail” and to extract sensitive profitable user data. Similarly, medical application developers can gather highly critical data related to a person’s health.
Legislative Regulations Around The World
Legislative regulations in the form of the EU’s GDPR (General Data Protection Regulation), California’s Consumer Privacy Act, and the Japanese Act on the Protection of Personal Information (APPI) are in place due to which B2B enterprises can’t escape liability. Companies are legally bound to determine what personally identifiable information they gather and make sure that it is utilized and shared legally.
The United States has yet to enact broad privacy legislation at the federal level. HIPAA (Health Insurance Portability and Accountability) Act protects the health data of US citizens. Eye data can certainly be treated as health data. Overall, the US FTC (Federal Trade Commission) emerges as the primary regulator in this scenario.
Intellectual Property Rights Regarding Virtual Reality
Currently, case laws and international regulations with regards to intellectual property rights for the VR industry remain limited. In most cases, involved parties are bound to rely on existing laws and regulations. TRIPS Agreement (1995) under the WTO and European Parliament’s Directive 2009/24/EC on the legal protection of computer programs are some of the relevant building blocks for IP rights.
Service Agreements Between Virtual Reality Developers And Users
When it comes to avoiding future litigation, clear-worded service agreements between VR developers and users are the best path forward. The importance of such well-crafted service agreements increases as users in the virtual world attain greater freedoms to create virtual goods. Some of these goods become highly valuable over time due to their utility in the virtual/real worlds.
For example, Jon Jacobs, a virtual-entrepreneur, sold a virtual club in an online gaming platform by the name of Entropia Universe for USD 635,000. Overall, regulators around the world will have to strive hard to deal with IP rights issues that come into play in this fast-changing industry.
Payments within Virtual Environments
There is a growing trend of buying/selling items & services within virtual worlds like video games and other social platforms. Several video games have introduced their brands of ‘in-house currencies’. For example, Gil is used in the video game Final Fantasy and Linden dollars in Second Life.
These currencies are traded with each other or for real money. The second scenario has the potential to trigger regulatory and legal consequences especially because virtual currencies possess a real value and can act as assets for taxation purposes.
Apart from that, virtual worlds can allow traditional Payment Services Providers (PSPs) like credit/debit cards or even Paypal for their users. Such PSPs are strictly regulated by financial regulators like the Financial Conduct Authority in the UK. However, cryptocurrencies like Bitcoin and Ethereum are also finding their way into the Virtual Reality world. They remain largely unregulated and are vulnerable to large price fluctuations.
Health & Safety Concerns With Virtual Reality
Health & Safety concerns remain a top priority for international regulatory bodies. Any possible harm suffered by a user of VR equipment can lead to legal liabilities for the manufacturers, developers, and service providers. Different countries have different legal frameworks when it comes to safety obligations.
For example, in the UK, the safety of consumer products is governed by the UK General Product Safety Regulations 2015, EU General Product Safety Directive (GPSD), and Electrical Equipment (Safety) Regulations 2016. These regulations enforce strict liabilities on producers and importers of the products causing physical or mental harm to any user because of any defect.
Reaching Balance Between Innovation And Protection
Overall, regulators across the globe will have to reach a fine balance between innovation and consumer protection. Analysis of current regulations will be crucial for regulators to come up with new ones because current rules will provide adequate protection against several negative externalities. However, policies related to privacy regulations, property laws, and intellectual property rights will need a thorough reconsideration in coordination with the VR industry stakeholders.
Adopting Innovative Approaches When Regulating Cutting-Edge Technologies
Adopting innovative approaches will be the need of the hour when it comes to regulating cutting-edge technologies. Businesses and regulators can utilize various feedback-generating tools which include establishing regulatory sandboxes, policy labs, and crowdsourcing of the policymaking process.
Moreover, softer modes of regulations like codes of conduct, guidelines, and standards are often more effective than hard laws like statutes and treaties. Lastly, self-regulation must be encouraged through private standard-setting bodies and third-party accreditation and certifications. GVRA (Global Virtual Reality Association), created in the year 2016, is one such entity for the promotion and adoption of VR which comprises all the major manufacturers
 industry’s market size is booming. However, the global regulations are not as advanced and there are several concerns.){kind=link}