On another question, its also unfortunate that in some countries in the EU that gambling is allowed, but because our servers are all in the US these residents cannot gamble. This is something we can fix and we’re working on it. In the meantime, unfortunately no gambling. – Zee Linden 1st August 2008.
The above quote from the then CFO of Linden Lab, Zee Linden (AKA John Zdanowski) was actually in relation to a discussion about Linden Lab annoying the life out of us Europeans by introducing VAT to our bills. Eventually a lot of us realised Linden Lab were the wrong target and I still find the law silly as it applies to Second Life. There are good reasons for collecting VAT for electronic services, but Second Life isn’t a good example. The problem is that the EU regulation simply isn’t flexible enough. However I’m not here to talk about VAT today, I’m here to talk about governance and in particular governance in a virtual world.
The VAT discussion was an example of laws applying to one set of Second Life users based on where they live. However this was only an issue for European residents, it didn’t apply to Americans. The gambling ban on the other hand applied to all Second Life residents, even those who lived in countries where online gambling wasn’t illegal. I should point out here that even in those countries, gambling in Second Life would have been questionable as it was unregulated. However even a licensed gambling outlet would not have been allowed in Second Life because Linden Lab are based in San Francisco.
Now if we go back a bit further in time to the Second Life Community Convention of August 2007 we can find an old Reuters interview with Philip Rosedale. This interview is interesting because it gives an insight into where Second Life was back then and what they were hoping for. However the section I want to highlight is this exchange :
Reuters: Is there a problem where German laws are more restrictive than American laws on ageplay? And likewise, American laws may be more restrictive than European laws on gambling. Are we moving to the lowest common denominator?
Philip Rosedale: No.
The lowest common denominator is just not what you want to do. It’s not going to happen on the Internet, and it’s not going to happen here. We’re doing what we can as a platform to try to make that the case.
If you want to apply a local jurisdictional law to people, we’re going to make it so you apply that to people who are individual avatars trying to go to one place. That’s what we’re doing with age verification. We’re making that a feature that’s tied to land and people, not a feature that’s tied to the whole system. When we’re confronted with a legal or regulatory matter where we need for legal reasons to enable a certain type of restriction on behavior, we do that as locally as possible and not have a lowest common denominator.
Reuters: So there may be code in the future where your avatar is tied to your real-life nationality and then based on that nationality certain restrictions may or may not come into play?
Philip Rosedale: Right.
If the local restrictions that countries for example are making on avatars, if those restrictions are well-published and transparent and in the public light, I think we’re going to get to a good overall set of choices. Countries will make the right choices about how they want to restrict people’s use in Second Life if they can see what other countries are doing rather than us being the sole decider of what’s right locally.
So we can see here that Linden Lab wanted to be able to restrict behaviour locally. However this is very challenging when Linden Lab are the only governor, more on that later but what fascinates me about this is that the new skill gaming policy is actually going to try and enforce this notion of restricting people’s access to areas and activities based on their local jurisdiction. This has been quite a long time coming.
VAT was an outside of the virtual world issue. Age verification, was a grid wide operation that did restrict people based on whether or not they had verified, but the inworld system wasn’t bothered about where you lived.
When it comes to skill gaming Linden Lab have entered interesting territory. as the blog post explained :
Access to Skill Gaming Regions will be restricted to Second Life users who are of sufficient age and are located in a jurisdiction that Linden Lab permits for this kind of online gaming activity. If you are in a permitted jurisdiction and you meet the relevant age requirements, you will be able to access these regions just like any in Second Life. If you are not eligible, you will receive an error message. However, you are responsible for knowing which jurisdictions are prohibited and the requisite ages of participation and not attempting to access a Skill Gaming Region if you do not qualify. Attempts to circumvent our controls will constitute a violation of our Skill Gaming Policy and Terms of Service.
Linden Lab could in theory do more of this sort of thing, say for example if there’s a law that has implications for British folk but not Americans, Linden Lab could ban the British and quite possibly throw their tea into the harbour at the same time. A problem with Australians accessing certain content? Prohibit Australians from that content. Indeed Linden Lab can do a lot of this if they really want to, although I’d imagine they don’t really want to.
However Linden Lab are always going to be restricted by US laws. I’m not knocking US laws, but that’s the way matters stand. Long term, this model probably won’t fly. Now I’m someone who believes a 3D Metaverse will one day be upon us, I don’t share the view that it will be in the next five years but I do believe it will arrive in the future. Linden Lab’s policy here is encouraging in terms of not being held back by laws in a few states. Longer term we’ll probably have to see distributed technology governed by others for a 3D Metaverse to really be embraced.
In that regard High Fidelity are in many ways on the right lines. High Fidelity will allow people to build their own worlds. Now depending upon how deeply involved High Fidelity are with certain aspects of the service will determine how much freedom individuals get to govern their own High Fidelity based worlds. For example if High Fidelity are the controller of all payment services, then US laws will certainly apply in many areas.
OpenSimulators OSGrid metaverse is another example of the possibilities of distributed governance. People can create their own rules and regulations to a degree, but when it comes to central services that apply to all users you really need to tread carefully.
Linden Lab’s new virtual world looks like it will face the same governance issues as Second Life, from the little we know about it. When it arrives it will be in the right place, but longer term when there are agreed standards and the 3D web arrives, worlds like this will be part of a larger technology, one where Europeans will be able to gamble if it’s legal, but where, like with the Internet today, you step into someone else’s jurisdiction their laws apply too.
I’m encouraged to see Linden Lab applying a policy that doesn’t apply to the lowest common denominator, it’s absolutely the right thing to do but longer term these issues will become more challenging and more onerous, Linden Lab won’t want to wade through the issues, distributing the governance along with the technology looks like it will be the only real option in town.