How Real is the Threat of Monopolies in Virtual Universes?

 

1. Introduction: The Real Danger of Virtual Universes

The “metaverse”refers to three-dimensional digital universes where users can interact with their digital identities, acquire virtual property, shop, work, and socialize. Since Facebook's rebranding as “Meta” in 2021, the metaverse concept has evolved from a mere tech fantasy into a “marketplace” directly impacting sectors such as investment, advertising, education, and real estate.

This transformation profoundly shakes the "market concept" that classical competition law attempts to regulate; elements such as data-driven dominance, platform dependency, and the limited supply of virtual products create new types of monopolistic risks within the metaverse.

2. Evaluation of Metaverse within the Framework of Competition Law

2.1. Identifying the Relevant Market

The first step in competition law is identifying the “relevant product and geographic market.” But when it comes to the metaverse:

• Geographical boundaries are effectively disappearing.
• Product marketplaces, however, differ from traditional digital services: the “uniqueness” of products such as virtual real estate, avatar clothing, NFT assets, and VR event tickets does not fit the classic definition of a marketplace.

In this case, the metaverse exhibits the characteristics of a multi-layered "composite market." It can simultaneously host games, commerce, advertising, and content.

2.2. Dominant Position and Network Effect

Companies like Meta (Facebook), Microsoft, Epic Games, and Roblox are building their own metaverse platforms, "locking" users into their internal ecosystems. This leads to a structure known as the "network effect," where as the number of users increases, it becomes more difficult for competing platforms to enter.

📌 The Competition Board's 2021 Digital Markets Report also highlighted how network effects and multilateral platform structures strengthen dominant positions.

3. Where does the risk of a virtual monopoly arise?

3.1. Virtual Real Estate and Land Monopoly

On metaverse platforms, "land sales" are offered in limited quantities using NFT structures. Especially in systems like Decentraland and Sandbox, the supply of virtual space is artificially limited to artificially inflate prices. This limitation:

• It creates excess demand.
• It provides speculative gains for early investors.
• It causes new entrepreneurs to be left out of the market.

This results in monopolistic control.

3.2. Payment Systems and Token Addiction

Each metaverse platform uses its own internal currency (e.g., $MANA, $SAND). The inability to transact using tokens other than these creates a risk of forced tying and de facto monopolies

3.3. Advertising Space and Visibility

In the metaverse, visibility areas such as digital billboards and virtual storefronts are very limited and mostly belong to the platform-owning companies. Theprinciple of "equal access," a fundamental element of competition law, is violated here, and small businesses are pushed out of the system without gaining visibility.

3.4. Inclusive Access Issue

Some metaverse platforms are only accessible with specific hardware (e.g., VR headsets). This technical barrier to access leads to the exclusion of potential consumers and limits the entry of new players into the market

4. Debates in the EU and the US

4.1. European Union Perspective

The EU Commission has stated that the metaverse risks creating "digital gatekeepers" and has placed Meta and similar structures under scrutiny within the scope of the Digital Markets Act (DMA)

Key obligations imposed under the DMA:

• Prohibition of self-preferencing
• Equal access to data
• User data should not be used in other markets

There are no specific regulations yet for the metaverse; however, Competition Commissioner Margrethe Vestagerhas stated that the metaverse is high on the future regulatory agenda.

4.2. Meta's Investigation in the United States

The U.S. Federal Trade Commission (FTC) has filed a lawsuit against Meta's acquisition of the virtual fitness platform Within. The FTC argues that such mergers can eliminate potential competition .

This is a significant development, demonstrating that virtual marketplaces can be regulated using classic merger control methods.

5. The Legal Situation in Türkiye

There is currently no competition law regulation specific to the metaverse in Türkiye. However, the Competition Board has:

• 2021 Digital Markets Report
• 2022 Data-Driven Markets Communication
• Trendyol (2021/41-558) and Google decisions

Examples like these demonstrate that metaverse platforms could also be subject to similar oversight.

In the Turkish legal system, the abuse of dominant position, as defined in Article 6 of Law No. 4054, is also applicable in virtual spaces.

6. Legal Questions and Uncertainties

• How will "market definition" be done in the metaverse?
• Are NFTs and tokens considered classic products?
• In commercial interactions between avatars, who will be considered an undertaking?
• How will hardware and software dependencies be controlled?

These questions raise serious problems in applying classical competition theory to virtual worlds.

7. Solution and Policy Recommendations

• Algorithmic Transparency:Ranking and visibility mechanisms must be made auditable.
• Data Access Obligation:Data access should be facilitated for competitive entrepreneurs.
• Hardware Neutrality:VR/AR access requirements must be compatible with alternative systems.
• Definition of Virtual Property:The legal nature of products owned through NFTs or tokens needs to be clarified.
• Fair Access:Advertising space and user base should be accessible to smaller players as well.

8. Conclusion

The metaverse is not only a technological innovation but also a new challenge for the law. In this digital universe, companies are no longer just content providers; they simultaneously assume the roles of infrastructure owner, advertising provider, money-making authority, and regulator

The lack of oversight of such a structure "virtual feudalism ." Therefore, classic competition law principles should be adapted to technology, and complex regulations should be introduced to accommodate the multifaceted roles of platforms.

Although no specific regulations have yet been enacted in Türkiye, it is of great importance that the Competition Authority closely monitors these developments and establishes precedents early on, within the framework of existing legislation.