Recommendations for building understanding and expertise
Part of NSW Government's preparation for deeper engagement with the metaverse will involve building understanding and expertise. Beginning to invest in staff and institutional knowledge skills and capabilities now will help ensure that the government is ready if and when metaverse technologies become more widely adopted (including within government). The following sections provide a series of recommendations for starting this process.
Examining open legal questions
Adoption of metaverse technologies both by the NSW Government and the wider public will raise new legal questions. Considering these questions now will help the government understand and prepare to take on its roles as a metaverse user, platform provider and regulator.
The authors of this report are not legal experts. This section raises questions of a general nature based on possible metaverse deployment scenarios. We implore the NSW Government to seek legal advice before undertaking any new activities whose legal status is not well-established.
Understanding the legal status of metaverse applications
What existing activities and products are legally relevant to the metaverse?
Metaverse applications combine elements of various existing technologies. Therefore, in seeking to understand their legal implications, it may be helpful to first establish where existing law can be applied directly. Relevant technologies may include:
- computer games, especially massively-multiplayer online games (MMOs)
- phone or desktop apps
- websites including e-commerce sites
- social networks.
In many of these cases a metaverse application will differ from these existing technologies only by virtue of being accessible through VR or AR, which may be irrelevant to many legal questions. This may apply particularly in areas such as:
- data privacy
- intellectual property.
Status of property in metaverse applications
Are there any circumstances where objects or locations in metaverse applications could take on property-like elements?
Consider a virtual object or piece of land in a metaverse application whose ownership in that application is contested. Though Australian law does not recognise the data or information that represents the object in the computer as property,  it is an open legal question whether such virtual objects or land in metaverse worlds may have enough property-like elements that property law becomes relevant. 
Copyright law may also intersect with metaverse applications: reproduction of existing architectural works in virtual worlds or modification of existing works with augmented reality may, for instance, require obtaining a licence from the copyright holder of the work in question.
It may be important for the NSW Government to plan for the legal ambiguities around property when developing metaverse applications. Similarly, the government is responsible for the collection of property taxes in some circumstances: the status for metaverse land or objects may also be relevant for this role.
Localisation of metaverse elements
When are augmented reality objects 'in' a real-life location?
Augmented reality allows for the projection of virtual objects into real environments. This raises the question of when those objects should be legally considered as 'in' that environment. One example is the placement of virtual poker machines placed in bars through augmented reality. Different legal issues may arise depending on the bar's involvement or knowledge of this placement, which will also have implications for gaming regulations and gaming tax, both administered by the NSW Government.
Other examples where the question of locality may be legally important are the addition of illegal material such as child abuse imagery into a location through augmented reality, or the creation of augmented reality hazards that cause people to trip and fall.
The ambiguity of localisation also arises when considering the rights of individuals over their own real property: it may be important to understand whether a homeowner, for example, has any rights to control the kind of virtual objects placed on their land by third party metaverse application providers (including, potentially, the NSW Government). This issue has already arisen with the augmented-reality app 'Pokemon Go', which encouraged throngs of players to particular real-life locations as part of the game. 
Are the data collected by metaverse applications appropriately regulated, especially for children?
As described in Overview of the metaverse, metaverse applications may be in a position to collect high-fidelity data about users including heart rate, eye, head and body movement, gaze direction, and facial expressions. Data such as these are not necessarily identified as sensitive in Australian privacy law, but still present significant privacy risks: they are typically able to uniquely identify an individual, and also can be used to infer a variety of emotional responses and states.
Metaverse technology is already being rolled out to schools in NSW. A NSW Department of Education staff member involved in the stem.T4L VR program explained the safety and privacy precautions taken by its coordinators. Examples include confirming the location of collected student data (i.e. student data must be stored in Australia, preferably NSW) with the application owners, and the use of 'non-immersive' VR hardware (such as Google Cardboard ) that permits only '3 degrees of freedom'. However, they noted that the emergence of internet-based metaverse applications has increased the risks, especially as there is no regulation protecting children's privacy rights or controlling the data collected about them in the metaverse.
When would the NSW Government have obligations to ensure metaverse services are accessible to all members of the NSW public?
Accessing metaverse applications typically requires a VR or AR headset and a high-speed, low-latency internet connection. Apart from the cost associated with obtaining these items, some people may be unable to wear a headset without feeling nauseous and so will be excluded from any services that require them. We recommend that the NSW Government therefore investigate any legal requirements for accessibility when developing or regulating metaverse applications.
Are there circumstances in the metaverse where people have a right to their own likeness, as instantiated in the form of an avatar?
Current Australian law does not generally recognise 'personality rights' for the public: a person's likeness may be used, for example, in a painting, without obtaining their permission (though some limitations do exist on the use of likenesses in commercial contexts). As metaverse avatars become higher-fidelity and their use increases, this legal status may become less clear.
Preparing for crime in the metaverse
Crime is inevitable in metaverse applications. When that crime involves a NSW resident, the NSW Government may be the relevant jurisdiction in which that crime is investigated and prosecuted. As described above, the existing approaches to policing and prosecuting crimes conducted through the internet (for example, abuse and fraud) may serve as a starting point.
Given the use of cryptocurrency and NFTs in metaverse applications, it would be reasonable to expect that the rampant fraud in that world  will present significant risks for the people of NSW.
One question of law that may become relevant in the metaverse is whether certain kinds of traditionally physical crimes such as assault, can be perpetrated in virtual reality. This question may become especially relevant as the fidelity and level of immersion provided by VR and AR headsets increases.
Even if conduct falls short of the legal threshold of a crime, it may be important for NSW law enforcement to be involved in prevention activities in the metaverse. The NSW Police Force's cyberbullying activities, for example, could be expanded to encompass risks in metaverse applications.
Training key staff
Formal training in 'the metaverse' is currently nascent, but training resources in the underlying technologies are well-established. Should the government wish to develop or deploy metaverse applications, platforms or services, then training both leaders and technical staff will be important. Some of the key areas for these roles are described below.
- the kind of application areas for which metaverse technologies may be suitable
- the risks of metaverse applications for NSW residents and the government
- the responsibilities of leaders to establish effective governance of metaverse applications developed by the NSW Government to ensure they are fit for purpose and do not cause unintentional harm.
- the new content and behaviour moderation challenges associated with virtual reality environments, such as identifying and preventing physical intimidation
- the construction of 3D interactive virtual worlds, which involves expertise in 3D modelling and the development or use of game engines
- network architectures that can provide latency and bandwidth requirements suitable for metaverse applications
- API design considerations for streaming data formats appropriate for metaverse applications
- user experience, especially harmonising the variety of devices users may use to access the metaverse, such as phones, desktop computers and XR headsets.
Initiating a metaverse application pilot
Developing a metaverse application as part of a pilot project may be an effective approach to upskilling NSW Government staff. Such a pilot could provide practical experience that complements formal training. Importantly, careful control of the pilot design can allow the government to identify currently unknown risks whilst preventing serious consequences for the government and the public.
The following questions and considerations may help inform selection of a metaverse application pilot project.
Questions and considerations when choosing pilot use case
- Does it provide the opportunity for NSW staff to build capability with metaverse technologies?
- If yes, will experience from the pilot be useful across the government, beyond just the team that developed the application?
- Does the application provide a service to which all NSW public are entitled?
- If yes, then does an equally capable mechanism to access that service already exist (such as a web application)?
- If not, is there a risk that people without the required hardware to access the application (such as headsets or good internet) would be unfairly disadvantaged?
- If yes, then does an equally capable mechanism to access that service already exist (such as a web application)?
- Does the application provide an alternative to in-person interaction with NSW Government staff?
- If yes, is there a risk that the pilot would be perceived as a cost-cutting or automation exercise?
- Does the application take advantage of existing NSW Government, data, infrastructure and services (for example, the Spatial Digital Twin and NSW Digital Identity services)?
- If yes, is there a potential to use the pilot to improve those services' utility for future 3rd party metaverse applications?
- Does it depend on the three metaverse properties to achieve its purpose?
- If not, is there a risk that the pilot will be perceived as a waste of money, given non-metaverse alternatives like a web application may achieve the purpose just as well?
- Does the use-case require the NSW Government to moderate the behaviour or language of users?
- If yes, consider that automated solutions for moderation are not yet well-developed for metaverse applications, opening NSW residents up to significant risk of harm.
- Does the use-case require collection or use of detailed behavioural or physiological data?
- If yes, consider the heightened privacy risks from collecting this data.
- Does the use-case involve algorithms or automation designed to influence the behaviour of users?
- If yes, consider the risk of unintended consequences of these features, as demonstrated in social media applications.
- Does the use-case involve cryptocurrency or NFTs?
- If yes, consider the additional risk this exposes users to given the widespread cases of fraud, scams and cyberattacks surrounding these technologies.
- Are there any other risks of unintentional harm to the NSW public?
- Given that metaverse applications are new to the NSW Government, it may be prudent to be especially conservative and avoid pilots that pose any foreseeable risk to people of NSW.
Pilot ideas suggested by NSW Government staff
During interviews informing this report, NSW Government staff proposed a number of specific use-cases that they thought would be worthwhile, including:
- VR tour of Sydney Opera House, in which users (jointly) explore and learn about the venue in virtual reality, possibly even seeing performances on a virtual stage.
- virtual Service NSW shopfront, in which users can interact with Service NSW staff through VR to pay bills, renew their driver's licence etc.
- virtual tech precinct, in which organisations can obtain virtual offices for collaboration and co-location.
These ideas are examined in the sections listed.
Choice of first pilot application
Based on an evaluation of the questions and considerations above, the following applications may be suitable for an initial pilot project:
- Virtual tour of the Sydney Opera House: This project would produce a 3D interactive replica of the Sydney Opera House in a virtual world to act as a tourist attraction. Utilising the NSW Digital Twin as infrastructure for this pilot would have the benefit of serving as a testing ground for metaverse support there. The application does not provide a critical service (which would imply requirements for high levels of accessibility and reliability), and does not depend on social interaction (which would require careful moderation to be in place).
- VR emergency services (police, firefighter and medical) training: Replicating emergency service scenarios in VR could provide a safe and effective approach to training, especially for situations that are difficult to re-create practically. VR training programs of these types have already been deployed by international governments, so the NSW Government could investigate procuring existing tools. The application is also not public facing, nor is it involved in critical decision-making, reducing the risk of large-scale negative impacts.
- Rail corridor maintenance activities: Transport NSW has suggested that a live AR headset overlay for rail corridor maintenance could improve upon the functionality of its existing mobile application pilot. The application is not public facing, which could reduce the risk of large-scale negative impacts. It also replicates and improves on an existing solution that could serve as a backup during development and testing.
- Emergency and disaster response planning visualisation: With the recent floods devastation and upcoming bushfire season, improving emergency response is an urgent and relevant effort. A live geospatial visualisation for tracking incidents and responses in VR or AR could assist teams directing emergency and disaster response efforts. Developing such an application could also be an opportunity to improve existing data sources. The application is not public facing, reducing the risk of large-scale harm from errors in design. It is, however, performing a critical function and would need to be extensively tested before being relied upon.
Founding a community of practice
If the NSW Government wishes to upskill its staff and build metaverse capability, it may benefit from engaging with a metaverse community of practice. Globally, there are no active metaverse communities of practice, so NSW will need to create its own. This community could be internal, but could also be open to other public sector or private employees, to the NSW Government's discretion.
Discussions with NSW Government staff have revealed a number of prototype metaverse projects and research in the area, dispersed across different departments. By establishing a metaverse community of practice, branches of the NSW Government can share knowledge and insights from their research. This could lead to a more cohesive overall NSW Government metaverse strategy, and encourage collaboration between departments on new metaverse incentives.
A department should be chosen to lead the metaverse community of practice, an example being the Department of Customer Service, or any department who has conducted extensive research into XR technologies, such as Transport for NSW, Department of Health, or Department of Education. The group in charge could organise an email chain for communications, as well as an online community forum for members to post interesting articles or upcoming events.
Community meetups should be organised on a recurring basis — i.e. quarterly — so that representatives from each department and other interested parties from the NSW Government can share ideas, showcase their work, and raise discussion items.
Creating a metaverse 'experience lab'
Metaverse technologies, particularly VR and AR, are new enough that many people have not experienced them at all. Creating an 'experience lab' for NSW Government staff gives an opportunity for the staff to have such a first hand experience in a controlled environment, and may help develop staff's intuition and judgement about their various roles with the government's work in the metaverse.
Cultivating collaborations and knowledge sharing
If the NSW Government plans to develop metaverse applications, there is value in networking with other entities who have either applied, or are conducting their own research into the metaverse. These networking events can be any of the following, or a combination of
- NSW Government cross-agency metaverse strategy events that invite members of different areas of the NSW Government to showcase their current efforts in the metaverse
- cross-government events with representatives of federal, state, and territory governments across Australia to share their metaverse research and help to establish a national strategy for the metaverse
- partnership and collaboration events involving both public and private sector, where the private sector participants are encouraged to showcase their metaverse capability at the event. Increasing networking opportunities with the private sector will also help to establish a chain of recognised metaverse suppliers to support future metaverse-related procurements.
 Norton Rose Fulbright. The Metaverse: The evolution of a universal digital platform. Norton Rose Fulbright (2021).
 Moses, L. B. The applicability of property law in new contexts: from cells to cyberspace. Sydney Law Review 30, 639–662 (2008).