Epic Games' Gaming Metaverse

By BK​

What do you need to know this week?

Epic Games, the developer of “Fortnite”, has secured $2 billion in funding from Sony and Kirkbi, the investment company behind the Lego group, in a bid to build an avatar-based metaverse. The deal values Epic Games at $31.5 billion.

This move comes after Microsoft agreed to acquire Activision Blizzard, who owns the intellectual property of famous video game series including World of Warcraft, Overwatch, Call of Duty and Candy Crush Saga, for $75 billion. This sent shockwaves in the gaming industry as Microsoft, the owner of Xbox, was seen as challenging Sony, the owner of PlayStation, for dominance of the console gaming industry.

Why is this important for your interviews?

The metaverse have recently been all the rage in the technology space. It's a relatively undefined term that broadly refers to the idea of a “shared virtual platform that people can access through different devices and where they can move through digital environments”.

Fortnite is broadly considered part of the metaverse and the $2 billion investment in Epic will give Sony a chance to delve deeper in this business and step up its competition with Microsoft. In addition, this investment will give Epic Games an opportunity to recoup their resources and refocus their business strategy after having lost a major antitrust trial last year over whether Apple’s payment rules for apps were anticompetitive.

Epic’s recent funding success mirrors Roblox’s chart-topping IPO, as well as its announcement that it was working on a metaverse where players can gather to play games and work in a virtual economy field by Roblux, its own in-app currency. Moreover, in March, Meta (formerly known as Facebook) CEO Mark Zuckerberg announced that the company is testing new tools that would allow creators to sell virtual assets and "experiences'' within the worlds they build in Horizon Worlds (formerly Facebook Horizon). Meta has also adopted a policy of creator monetisation in Horizon Worlds - launching a $10 million Horizon Creators Fund to pay creators and kickstart a creator community. Indeed, Citibank estimates that the metaverse economy could be worth between $8-13 trillion by 2030.

How is this topic relevant to law firms?

As virtual reality and augmented reality technologies develop, novel and complex legal issues involving data and consumer privacy, intellectual property, real estate, tax, financial regulatory compliance and antitrust will continue to arise.

In the space of digital security and privacy, metaverse technology will be deeply integrated into multiple aspects of users’ lives covering virtual real estate and virtual currency, which can be used to purchase digital assets and services for sale. It is unclear whether these assets can even be taxed and, if so, the jurisdiction that would apply. In addition, as major tech companies seek to build the infrastructure for the metaverse, they will encounter antitrust issues - as co-operation agreements, purchases of vital infrastructure software and operational reach will become commonplace issues.

Finally, in the realm of intellectual property and digital assets, consumer brands have also partnered with digital platforms to sell digital assets – for example, Nike has partnered with Epic Games to create a digital collection of Michael Jordan-branded digital "wearables" meant to be worn by users in Fortnite. As such, law firms will have to help tech clients in navigating the regulatory aspects of creating the metaverse, as well as advising on the legal implications on standard commercial contracts, such as licensing intellectual property, in the metaverse.

For each of the legal issues mentioned above, law firms will have to help technology clients navigate issues of jurisdiction and conflicts of laws as the metaverse will promote a greater degree of virtual interconnectivity and user immersion. This may not only challenge the boundaries of the law, but also blur the boundaries between the application of national and international law.