Metaverse — the latest chapter of the Splinternet?

The nature of the metaverse can be better understood by exploring the context of its nascent development. The saturation of the internet and mobile internet — in 2022 there are 6.64 billion smartphone users or 84 per cent of the world’s population — means that consumers and technology platforms need innovation to foster fresh growth opportunities. The COVID-19 pandemic has also changed the way people work, live, entertain and move around, generating long-term demand for activities conducted in virtual environments. These factors have provided an opportunity for the uptake of the metaverse.

Opinions vary on what the metaverse is and how it should and could evolve. Some digital technology specialists envision the metaverse as a massive and interoperable network of real-time, three-dimensional virtual worlds experienced synchronously by everyone on earth. This is a lofty vision with a low probability of near-term realisation. In reality, the metaverse will largely ride on the existing rails of the internet with additional layers on existing structures.

Decentralised platforms based on blockchain, or the so-called new creator economy which Web 3.0 claims to herald, will play a minor role in the metaverse. This is because their resources and capital investments are disproportionally smaller than the big tech companies that are building metaverse products based on existing technology while experimenting with blockchain on the side. The mass adoption of blockchain-based metaverses is not guaranteed and more time is needed to assess its chances of success to become the mainstream technology.

The metaverse will face similar challenges to those already faced by the Asia Pacific internet sector. One major challenge is data localisation regulations that require companies to store or process data domestically. China, India, Australia, Indonesia and Vietnam have either implemented or plan to implement data localisation requirements and restrictions on cross-border data transfer, a trend likely to expand as nations become more concerned with security and data sovereignty. For companies operating across Asia, this complicated regulatory landscape will add significant compliance costs, hinder the free-flow of data, slow cross-region operations and hamper innovation.

The collection of sensitive personal data poses another challenge to the metaverse. Virtual reality headsets equipped with sensors that track eye, hand and body movements will eventually monitor individual facial expressions and vital signs. It is increasingly likely that governments will localise data processing and storage and impose vigorous regulatory frameworks to address data security and privacy. This may compound the likelihood of a splintered collection of local networks rather than a globally connected metaverse.

These challenges are part of broader regional fragmentation along regulatory, geopolitical, ethical and cultural lines in the Asia Pacific. Technology regulations in China have severed Chinese cyberspace from the rest of the world. India has banned more than 270 Chinese apps believed to pose a threat to national security since 2020. The interconnected tech ecosystem between the two countries no longer exists. Other countries are becoming battlegrounds for Chinese and US tech giants fighting over market share and influence. Such fights make them more likely to adopt measures to ban metaverse content, as they currently do with online gaming content.

First, countries should cooperate on developing metaverse business applications. By removing the legal and regulatory barriers to making consumer applications, businesses can foster regional collaboration. A three-dimensional metaverse could increase the ease with which professionals in different countries can work together on architectural design or product development projects. The quality of education and training currently delivered using traditional video conference could also be greatly improved in a more interactive metaverse.

Governments could also use the metaverse to address common challenges such as climate change and the development of alternative energy. For example, the use of digital twins — the virtual representation of an object or process — can more accurately predict the impacts of climate change. This presents an immense advantage to island nations dealing with its devastating effects.

Finally, governments and private companies should strengthen regional cooperation in a targeted fashion. As geopolitics becomes entangled with technology, it is increasingly difficult to pursue pan-regional coordination in sectors as broad as the metaverse. It is more realistic for organisations and private enterprise alliances to pursue specific objectives, such as hardware makers setting standards for virtual- and augmented-reality headsets. Efforts to increase interoperability among different metaverses are less likely to yield concrete outcomes.

The metaverse is the future of the internet, but without regional and global cooperation it will probably arrive broken and embedded with great inequality. It faces similar challenges to those plaguing today’s internet ecosystem and may further entrench fragmentation. Although the splinternet is likely to deepen over the next few decades, there are options to alleviate the potential impacts of a broken metaverse and to maximise its positive applications. Exploring those avenues should be the goal of all stakeholders in the Asia Pacific.