5G SERIES: The metaverse: An Overview over China and EU virtual environment

This article is the 2nd article of the series of 5G developed by the Technology and Media Working Group of the European Guanxi Editorial Team. Every month we dive into a different aspect of 5G with regards to the EU-China dynamics. You can read the rest of the articles here.


Woman with headset © Tumisu / Public domain/ Pixabay


The metaverse does not refer to a specific piece of technology but rather a shift in our interaction with technology and the possibility of interacting with others (people, companies, institutions, etc.) in a virtual space in the same way we do in the physical world. Therefore, the development of 5G is necessarily related to the development of the metaverse and its consumer experience. The creation of the metaverse requires the connection of billions of physical devices joining a virtual world, and securing fast interconnectivity is the first step to imagining such a system. Currently, China is not only leading the expansion of 5G globally, but also seems to be enthusiastic about the development of the metaverse. However, being the country with the majority of 5G infrastructures worldwide might not be enough to lead the global metaverse, so both Chinese tech giants and the Beijing central government are taking further steps in this direction.


Through this article, we aim to provide an overview of the metaverse in its relationship with 5G technology, both in China and the EU. We first consider the two cases separately, then we draw some conclusions. We find that China might be ahead in the race for developing 5G and 6G connectivity, which will provide the backbone upon which metaverse projects will be running. On the other hand, we also understand that the two entities differ in two fundamental aspects: their interpretation and application of the metaverse. While China exercises a strong state influence and central control over the development of its digital plan, the EU acts more as a peripheral force, a "regulator behind the scenes" responsible for making sure that companies play by the market rules and laws.


Metaverse with Chinese Characteristics

Chinese netizens seem to be extremely enthusiastic about the metaverse (in Chinese 元宇宙 yuányǔzhòu) and national Big Tech have started to invest in a market that could be worth $8 trillion in the future, according to Morgan Stanley (2022).


The first company to launch its metaverse app was Baidu, in December 2021. The app, called Land of Hope (in Chinese: 息壤xīrǎng), marked the Chinese big tech entrance in the global competition for the metaverse. The app allows people to interact in a virtual world through the creation of avatars. In January, the app featured several virtual scenarios merging Chinese history and futuristic design including themes such as the sci-fi inspired Three-Body Museum and an ancient Shaolin Temple. The functionalities are still limited but the hope for the future is to involve the users in an immersive 3D experience (Jing Culture & Commerce, 2022).


Other examples come from Tencent, the Chinese world-leading internet and technology company, creator of WeChat, which revived its virtual avatar project which started 19 years ago. Jelly (in Chinese: 啫喱 zhě lí), an app that allows users to create online versions of themselves and interact with up to 50 friends, became the most downloaded app in China’s iOS app store, stealing the record from WeChat (Protocol, 2022). The number of users connected at the same time was so big that the app experienced delays and crashes until the creators decided to limit the creation of new accounts.


ByteDance, the parent company of the app TikTok, released two metaverse apps: Party Island (in Chinese: 排队岛 pái duì dǎo) for the Chinese market, and Pixsoul for the Southeast Asian market, both of which are based around the creation of virtual avatars to connect with friends. At the end of January, the company stated that the app is not related to metaverse as it is undergoing revisions and is only accessible through a specific invitation code (Global Times, 2022).


Since the start of the metaverse fever, several local governments, such as those from Shanghai, Wuhan, and Hefei, have started to include the topic in their government work reports for 2022. Shanghai and Beijing have already started their projects to create virtual city halls to serve both residents and tourists. In October, the China Institute of Contemporary International Relations (CICIR), a think-tank linked to the Ministry of State Security, issued a paper on the metaverse warning of the need for lawmakers to deal with virtual crimes (Financial Times, 2022). Similarly, in November, the government of Zhejiang province organised a “metaverse industry development symposium” (The Economist, 2022). The topic has also been discussed during the Two Sessions (in Chinese: 两会liǎnghuì). Specifically, during a press conference, Zheng Xinjian 郑新俭, Director of the Fourth Department of the Supreme People’s Procuratorate, stressed the importance to protect users’ privacy from increasing online frauds related to the metaverse (Sina Weibo, 2022).


Surprisingly, the Chinese government seems to be conciliant with the metaverse development, perhaps because the concept of the metaverse is still undefined and any kind of actor can enter it (Financial Times, 2022).


The EU's Take on the Metaverse

Meta –formerly Facebook– CEO Mark Zuckerberg publicly announced his vision for the metaverse last October, placing Europe at the heart of his expansion plans ever since. Indeed, the region represents a core player for Meta's development projects, which led the company to announce the creation of 10,000 high-skilled jobs in the area over the next five years (Clegg and Olivan, 2022).


On the other hand, the EU is already considering the potential actions needed for regulatory control over the metaverse, as stated by the Executive Vice President of the European Commission and Digital Chief, Margrethe Vestager (Yun Chee, 2022). The mission is for the future operations of the metaverse to face more scrutiny under European law. According to Vestager, plans to create an all-encompassing virtual reality environment could pose new challenges for antitrust regulators: the feeling is that the metaverse will create new markets and a range of different businesses, which could potentially also result in the rise of a marketplace where some entities may have a dominant position (or monopoly). Regulatory mechanisms will enable the Member States to cope with these news challenges (Stolton, 2022).


Aside from this, Facebook has already been the target of European regulators, alongside other tech giants, for possible breaches of the General Data Protection Regulation (GDPR), a key instrument to ensure data safety and privacy in the EU and the European Economic Area (EEA). In addition to this, the EU has proposed the constitution of a Digital Markets Act (DMA), aimed at curtailing online companies behaving as "gatekeepers", while also launching a Digital Markets Unit to focus solely on the monitoring of internet platforms (Van Dorpe, 2021). The Commission (2020) has established three monitoring criteria for the latter, namely: a firm must have a "substantial influence" on the European market, the service supplied must be an "important gateway" between enterprises and end consumers, and it must hold "an established and lasting position" or be on its way to having one.


The forthcoming law and the Digital Services Act (DSA) represent two crucial components of EU legislation targeting digital platforms, and as such, they are not immune to criticism. In particular, concerns regarding the DMA have been expressed by certain business sector players as well as independent analysts. In addition to criticism for its ostensibly subjective standards, others have expressed concern that the regulatory law may have negative economic consequences that diminish the benefits it brings to competition (Wall and Lostri, 2022).


Alongside American firms (Leswing, 2021), European experts and industry associations have also voiced their reservations. The reason is straightforward, given the investment multiple stakeholders have already committed to. David Haynes, one of Soundcloud's co-founders, has teamed up with Petri Rajahalme, an XR industry veteran, to form a €25 million fund focused on metaverse investments. FOV Ventures, which has raised €16.5 million towards its €25 million goals, plans to invest in 25 to 30 metaverse firms in their initial stage.


Although "the metaverse" has come to be associated with Meta's grand plans to create shared virtual spaces, other variants of the theme are also worth a mention, such as Decentraland (MANA), which started with an ICO of $24 million, becoming available to the public in 2020, and Sandbox (SAND), which started off in 2011 as a blockchain-based virtual world and migrated to the 3D gaming platform six years later.


Still in its infancy, the metaverse in Europe seems to be advancing at a fast pace, serving as a trampoline for startups in related industries, and has yet to be subject to government regulations. Much remains to be explored in the future.


Conclusion

The development of metaverse is strongly related to the development of internet coverage. China ranks first in the world. The country’s state-owned and state-backed telecom giants have outpaced their Western rivals in developing and building 5G telecom infrastructure. According to the People’s Daily (2022), 60% of all the world's 5G infrastructure is placed in China. They are well-positioned to do the same with 6G and successor technologies, which will be essential to providing the enormous mobile bandwidth and high speeds needed for the constant, data-drenched connections the metaverse will require.


Besides the infrastructure needed for the development of the metaverse, the government is worried about the regulation of virtual reality. In China, the pressing concern is the creation of a safe online environment. To do so, in 2021 the Chinese government launched the Qingliang (清朗) Operation, literally translated as “cleansed and uncontaminated”, which targeted influencers, video games, and online fan groups to stop the spread of fake news, frauds, and material that can damage netizens belonging to the most vulnerable categories (i.e. minors and elderly) (Sina Weibo, 2022).


Europe, on its part, appears to have similar objectives, considering 5G and 6G technologies to be enablers of innovation, able to support digital transformation. The European Commission identified such opportunities relatively early, establishing a public-private partnership on 5G (5G-PPP) in 2013 to accelerate research and innovation in 5G technology, and committing more than €700 million in public funding through the Horizon 2020 programme to support related activities (European Commission, 2021). Similarly, the first set of 6G projects worth €60 million was launched under the 5G-PPP, and most of them include AR, VR, and AI (5GPPP, 2022).


As it emerged from these observations based on both China and the EU, the expansion of the metaverse is just a natural step following the development of 5G and 6G-related technologies. In other words, the metaverse can advance very quickly: better be ready.



Giulia Interesse is currently pursuing a PhD at Peking University, focusing on public management and innovation policy research. Her goal is to identify effective and impactful solutions to social issues surrounding international technology transfer and innovation efforts for development. Aside from her interest in Chinese politics and policy-making, she is keen on learning about different cultures and exploring opportunities for global cooperation. You can find her on LinkedIn and Instagram.


Noemi Capelli is currently pursuing a master’s degree in Forecasting Innovation and Change at the University of Bologna. She holds a master’s degree in China’s Politics and Economics at Shanghai Jiao Tong and a bachelor’s degree in Asian and African Languages and Cultures at the University of Torino. She is the co-founder of Chinaly, a daily press review of Chinese newspapers. You can find her on Instagram and on LinkedIn.



The opinions expressed here are those of the writers and do not represent the views of European Guanxi.


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