Metaverse Market Dominance Raises Competition Worries, EU Antitrust Officials Say

Metaverse companies could limit users’ choice and raise prices if they grow to dominate their market, two officials from the European Union’s antitrust authority said in a blog published Monday.

The EU is preparing its own strategy for virtual online worlds in which people could interact, socialize or trade via avatars – and the metaverse could be the latest front in a long-running antitrust campaign against tech giants that threaten consumer welfare.

With Facebook renaming itself Meta as it seeks to reorient around the technology, policymakers are worried the company might seek to create a “walled garden” which users can’t easily leave.

A big company that forms a closed ecosystem “may constrain its consumers, business partners and competitors in numerous ways,” forcing them to buy own-brand products, charging exorbitant prices, or misusing people’s personal information, said Friedrich Wenzel Bulst and Sophie De Vinck of the European Commission's antitrust unit.

The EU has long complained about anti-competitive behavior by tech giants, imposing a fine worth over 4 billion euros ($4 billion) on Google for how it authorized phones running the Android operating system. It even passed new legislation, the Digital Markets Act, which could see the likes of Apple or Amazon fined 20% of turnover.

“There are good reasons for competition law enforcers on both sides of the Atlantic to be actively accompanying technological and market evolutions in this area” to keep the metaverse innovative and open, said Bulst and De Vinck, who both work on the media sector unit of the commission’s antitrust division. They called for more discussions with U.S. counterparts the Department of Justice and Federal Trade Commission on the issue.

Read more: EU Passes Law to ‘Rein In’ Big Tech’s Domination Over Smaller Players

But policymakers are wary about the entry of big tech into the area.

“Meta is in danger of becoming the AOL of Web3,” U.K. lawmaker Matt Hancock told CoinDesk in an interview earlier this month, referring to how users were boxed in to using single email and search provider in the early days of the internet. “I'd love Web3 to be able to go back to a much more vibrant and diverse range of players.”

But the way to avoid that – through different industry players working together on common standards and technology – poses competition risks of its own, warn Bulst and De Vinck.

The EU’s worry extends beyond competition, into areas like data privacy, intellectual property, and free speech, De Vinck and Bulst said. That may give a clue as to the areas the EU will be looking at in a non-legislative policy paper on virtual worlds such as the metaverse, which has now been promised for spring of next year.

Read more: Does the Metaverse Need a Free Trade Agreement?