Extended reality and unfair commercial practices: combining legal, economic, and philosophical perspectives

Cecilia Isola (Università di Genova)

Abstract

Virtual and Augmented Reality are one of the technologies with the highest projected potential for growth. According to the latest reports, the global Augmented Reality (AR) and Virtual Reality (VR) market reached 28 billion U.S. dollars in 2021, rising to over 250 billion U.S. dollars by 2028. What makes these two new technologies unique is their immersive nature; that is, their ability to extend the surrounding reality or to create an environment totally different from the physical one, using digital tools to offer users specific perceptual experiences which can induce the feeling of being in another place or in a completely different space.
Although for many years the use of immersive technologies has been associated with the world of video games, the impact of Augmented and Virtual Reality – that are part of a broader category of Extended Reality technologies (XR) – is being felt across many industrial sectors, notably healthcare, hospitality, education and retail. These potentials of XR technologies attracted the curiosity of firms, which are increasingly implementing immersive commercial practices aiming to involve users in a more persuasive way with respect to the traditional forms of advertising and marketing, such as the growing trend is the experiential marketing, which – unlike traditional marketing – consists in offering the public a direct experience of the product or service, being promoted or launched through multi-sensory experiences. Another commercial practice that promises to become popular is XR advertising, e.g. a form of advertising that exploits the potential of virtual and augmented reality to make it more immersive and interactive than its traditional forms.
In market contexts, XR advertising may add value to market efficiency by enabling consumers to receive, perceive and process information about products, services and rights in a deeper, more detailed and realistic way. This certainly can enhance customer experience and harbour the potential to better match consumer preferences with products. However, they may facilitate the exploitation of consumer weaknesses while searching, evaluating and buying products or, at least, interfere with consumer perception when purchasing. The reason lies on the fact that such immersive technologies work inducing artificial emotions and leverage sensitive data that could be measured and can lead to commercial of a potentially more dangerous manipulative nature than the traditional forms currently used.
Although XR technologies are leading users to new forms of experience of reality and to the innovation of the technological landscape, there is a range of consumer harms in XR technolo¬gies, as, for example, physical harms, such as nausea or motion sick¬ness caused by headsets or epileptic seizures due to XR contents. In this potential consumer’s harms scenario, this paper aims to contribute to the better understanding of business-to-consumer commercial practices, involving the use of virtual and augmented reality technologies, which raise fairness concerns from the perspective of EU consumer protection policies. First, the Author will offer a conceptual analysis of virtual and augmented reality from the perspective of legal philosophy, introducing the concept of Metaverse. Second, by drawing on the key insights from current economic theory, the paper will explore the different functions through which advertising conveys information to consumers and persuade them to buy products and services. Then the paper will explore the peculiarities of XR-based advertising (due to time limitation, VR and AR advertising will be considered as a unique form of XR advertising), exploring the technical aspects, the representational elements and potential impacts of this new commercial practice on consumers. Third, the paper discusses the current EU legal framework applied to commercial practices and the possible evolution of the current law, due to new challenges in the face of these disruptive technologies, with a focus on Directive 2005/29/CE, the key EU law instrument for safeguarding informed and rational market decisions. Finally, expounding on the conceptual and meta-jurisprudential analysis, the paper will consider an interpretive issue: whether manipulative commercial practices through XR technologies fall under UCPD.

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