Ready to enter the metaverse? Privacy risks companies need to know.

29/05/2023 | Reading time: 2 minutes

The metaverse is an interactive digital environment encompassing all virtual worlds, augmented reality and the internet. A space where users can interact with a computer-generated environment and other users in real time. In simple terms, a 3D version of the internet.

1. Facebook’s nod to the metaverse

Following Facebook’s rebranding to Meta, privacy concerns have been raised given Facebook’s history of data collection and user tracking.

Interestingly, ‘Meta’ has connections to the metaverse outside of its literal meaning of ‘beyond’. In Neal Stephenson’s sci-fi novel ‘Snow Crash’, the company controlling the metaverse is called ‘Meta’. While Facebook’s name choice is likely more of a nod to its desire to expand beyond social media, the resemblance is an interesting coincidence.

As companies enter the metaverse and strive to create innovative platforms, it is crucial to address the legal risks surrounding privacy.  In this blog post, we explore some of the legal risks of privacy for companies in the metaverse

2. Legal risks of privacy and data protection

In Australia, the Privacy Act 1988 (Cth) and Australian Privacy Principles (APPs) govern the privacy regime in the metaverse. Companies developing metaverse platforms must comply with the APPs.

The APPs outline how organisations must handle personal information, including when it is collected, used, disclosed and stored. Failure to comply, including failure to obtain valid consent, provide adequate notice, implement adequate security measures, notify users of data breaches, and comply with cross-border data transfer requirements, could result in legal liability.

3. Data collection

Metaverse platforms generate an unprecedented volume of user data, presenting both opportunities and challenges for companies. While data can enhance a company’s products and user experiences, it also raises concerns about data misuse. Companies should:

(a) prioritise transparency and ensure users are aware of how their data is collected, used and protected;

(b) implement clear privacy policies and security measures; and

(c) obtain valid consent from users before collecting and utilising their data.

4. Identity theft

As users create avatars and interact with others, they may share personal information such as their name, biometrics, age and location. This information could be exploited by hackers for identity theft and fraudulent activities. Companies must:

(a) implement robust security measures to protect user identities and prevent unauthorised access to personal data;

(b) educate users about potential risks and encourage them to refrain from sharing sensitive information; and

(c) be vigilant in detecting and preventing phishing scams, social engineering attacks and other threats that could compromise user data.

5. How to stay safe in the metaverse’s dark side

While the metaverse may be a promising new frontier for communication, creativity and commerce, it also comes with unexpected privacy risks.

It is imperative for companies developing metaverse platforms to take these privacy risks seriously and implement comprehensive metaverse terms and conditions, privacy policies and security measures to protect user privacy. Failure to do so could result in legal liability and damage to a company’s reputation.

For expert legal guidance on safeguarding your company’s privacy in the virtual realm, contact our experienced team today. Your privacy and peace of mind matters to us.