Regulating the Metaverse with Denise Zheng

On a recent episode of the .metaverse podcast, we were joined by Denise Zheng. 

A seasoned industry veteran and proven forward-thinker, Denise is the Managing Director of the Metaverse Continuum Business Group and Global Lead for Responsible Metaverse at Accenture. 

With a career of nearly two decades spanning the intersection of technology, public policy, and business, Denise has spent the bulk of her time in DC working in both the public and private sectors. From drafting cybersecurity legislation and operating think tanks on Capitol Hill to consulting on key cybersecurity projects for DARPA and the Business Roundtable, few people are better positioned than Denise to shape the future of the metaverse. 

To listen to the full conversation, find the .metaverse podcast on any podcast streaming network, including Apple Podcasts or Spotify.

In our time with Denise, she dropped too many gems to list, so we had to pick a few of our favorites. 

Get out your notepad…

1. Consistent Privacy Standards 

In 2018, the EU rolled out GDPR, the toughest privacy and security law in the world. While there are both pros and cons to the EU’s approach, the United States has opted for a fragmented patchwork of data privacy regulations across states and different jurisdictions. 

Unsurprisingly, this has led to confusion and inconsistency among consumers, corporations, and policymakers alike. 

This all may change with the metaverse, says Zheng. 

The metaverse is a combination of many new technologies, including XR, virtual reality, augmented reality, artificial intelligence, and web3 innovations. These new environments will involve new types of data collection and privacy challenges. 

“It’s time for us to really think hard about what is a framework that puts in place protections for consumers and consistency for companies so that we can innovate while making sure that the privacy and security of our online presence are adequately protected. Without these rigid standards, the metaverse can turn from a force for good into a catalyst for public safety issues."

2. Privacy By Design 

When it comes to Web 2.0 security, there is a fundamental misalignment of incentives between operators and bad actors. The average business invests only 6 to 14% of its IT budget in cybersecurity, while the time and money needed for an attacker to launch a hack or cyber attack are negligible. Much of this can be attributed to the fact that these security protocols were not built into our platforms from the beginning but rather retrofitted later on. 

“We need to fundamentally change this equation and think about how to make it much more expensive for bad actors to do bad things, while also driving the cost down of what it takes to protect yourself, “ says Zheng.

This means prioritizing security in all new software developments and working with law enforcement to ensure they have the adequate tools to go after malicious cyber actors. In Zheng’s words, privacy by design. 

“As we’re architecting the metaverse, we have an opportunity to work across the ecosystem to build that security in from the start and fundamentally shift those economic incentives from the very beginning.”

3. Innovation by Regulation

As seen countless times throughout history, disruptive technologies generally remain largely unregulated until substantial harm and issues around inequities arise. Given the surge of cryptocurrency into the cultural zeitgeist, regulators are starting to crack down. 

Within the last year, we’ve seen an influx of hacks and exploits where people are losing their wealth and many innocent folks are getting hurt. It’s time for the government to think about its role in ensuring consumer protection, all without stifling innovation. According to Zheng, the government needs a standard put in place so that startups and metaverse native companies can adhere to a common set of guidelines that actually drives innovation rather than prevents it. 

“Our legislative branch is designed to be very deliberative and take a long time to debate, draft, vote, and amend the law before it ultimately gets passed. There’s some benefit to this very thorough process as it enables stakeholders from all different parts of society to get involved, engage, and provide their feedback.” 

The first step? Put those who truly understand the technology in positions of power. 

“We’re starting to see some organizations and nonprofit groups creating opportunities to bring technologists into government to shape public policy,” she says. These people have experience building technology companies and really understand how it works and impacts users. I think that’s more needed than ever.” 

4. The Impact of AI on the Metaverse 

AI is going to be critical to the metaverse. Deeply powerful AI models will largely be responsible for generating highly realistic, or unrealistic, environments. As we spend more time in these immersive environments, we’ll be interacting with AI-driven avatars. 

“Can you imagine a future where maybe instead of streaming video on a flatscreen, it’s AI actors instead of characters, and you can participate in the movie or show as if you were interacting with them in real-time?” says Zheng. “Or an AI that helps to augment your avatar and toggle back and forth between the real you and the AI-enhanced version of you? At the same time, this does raise some ethical questions. And there’s certainly good and bad to that. In the future, there will likely be a debate around the need for AI bot disclosure requirements, so you know if you’re dealing with a real human or AI.”

5. Repeating the Same Mistakes 

But even with all the optimism, Zheng does recognize the importance of building the metaverse the right way. Although technology can be seen as an equalizer, it also has the potential to further exacerbate inequality. 

Late in the episode, Zheng references a video that had been forwarded to her by a colleague. 

The message was that people are spending millions of dollars buying virtual land, virtual purses, and virtual shoes, and yet a homeless person can't even afford to buy a sandwich in the real world. 

So before we invest all this money in building the virtual world, why don't we make a better world today in real life? 

“It really hit me when I saw that and made me start to think…What do we need to do to ensure that the metaverse is truly inclusive and that we’re building it in an equitable way? "

"It starts with the people designing it. The teams putting together the initial blueprints need to be diverse and inclusive. Second, we need to be focused on experiences that create more opportunities. Education is a big one.  How can you invest in uses of the metaverse that are good for society, that improve education, that improve access? That’s what I’m really excited about.”

To learn more about the metaverse, tune into the .metaverse podcast.

You can listen to the .metaverse podcast on all podcast platforms, including Spotify, Apple Podcasts, and Anchor.