How to begin regulating a digital reality world

How to begin regulating a digital reality world
Businesses and governments should guide augmented reality development

Copyright © 2018 Deloitte Development LLC. All rights reserved. 2
Digital reality can unlock many opportunities for businesses and
government
• Medical practitioners can
simulate surgeries for
training
• Maintenance workers can
view detailed specifications
of the part they need to
repair
• Industrial designers can
visualize the facilities
• Theme park designers can
create immersive
experiences
Businesses
• Immigration agents can see
information on shipments
and travelers
• Emergency responders can
view information on
unknown spaces
• Military and law
enforcement officers can
use simulated scenarios for
training
• Inspectors can be provided
real-time information about
facility they are inspecting
Government

But opportunities also bring forth a few challenges. Imagine…
You are on a city sightseeing tour with
your AR gear. You see a Thai restaurant.
But on the next wall near the entrance
you notice some graffiti complaining
about food poisoning
The graffiti exists only in digital world (only
seen through AR headset), the restaurant
can’t erase it and in fact can’t even see it.
“I ordered a chicken taco, a side of
guacamole and chips. Right after
eating, I felt nauseated and went to
sleep. Woke up with massive diarrhea
and vomiting. “
1 2
View in augmented reality
3

Challenges and risks posed by augmented reality
1
Challenges for
property and
speech rights
2
Questions
about privacy
and copyright
3
Threat to
reputation
4
Risks to revenue
streams

Challenges for speech and
property rights:
Legal battles between AR
developers and relevant
parties for
• Altering the depiction of
physical space in digital
world
• Damaging public property
• Trespassing and creating
nuisances on a private
property
Questions about privacy and
copyright
• More data will be collected
and recorded about
individuals and surroundings,
leading to possible privacy
issues
• AR potentially infringes on a
copyright owner’s exclusive
rights to reproduction and
alteration
AR challenges and risks: Speech and property rights; privacy and
copyright
Source: Don Behm, “Milwaukee County panel recommends $83,000 payment to mobile app game creator to settle lawsuit prompted by Pokémon Go,” Milwaukee Journal Sentinel, November 30, 2017; Brian Wassom, “Augmented reality law, privacy, and ethics,” Safari,;
Brian D. Wassom, “IP in an augmented reality,” American Bar Association, June 29, 2017; Kate Lyons et al., “Online abuse: How different countries deal with it,” Guardian, April 12, 2016

AR challenges and risks: Risk to reputation and revenue streams
Threat to reputation
• Businesses could be
“tagged” in a virtual
augmented space depicting
negative reviews
• The immediacy and physical
presence of those reviews
in AR could give them much
greater weight in the eyes
of a viewer
Risks to revenue streams
• Iconic landmarks or company
logos could be used as
augmented markers and
modified to meet the needs
of visitors.
• This could lead to third-party
actively taking away ROI from
the physical owner of location
Source: BrightLocal, “Local consumer review survey,” accessed on December 4, 2018; Poppy Lauretta McLeod, et al., “The eyes have it: Minority influence in face-to-face and computer-mediated group discussion,” Journal of Applied Psychology
Ryan Erskine, “You just got attacked by fake 1-star reviews. Now what?,” Forbes, May 15, 2018

For businesses, mitigating these risks typically means controlling
access to augmented spaces
Current approaches: GPS
or IP address
• When a device wishes to
use an app: it would not
only validate the device and
any user credentials, but
also check the reported
location of a device against
the rights of the AR
application provider
• If rights are not matches,
AR experience can be
denied
Evolving approaches: Digital
addresses for physical
spaces
• Every physical space could be
identified with a unique
number with access to
specific owner. This
potentially could prevent
third party or competitors
from launching any AR
experience
Source: Martin Derbyshire, “What is geolocation and how it works on gambling websites in NJ,” NJ Gambling Websites, April 9, 2018.

All of these approaches to controlling augmented spaces come with
pros and cons
• Geofencing can be circumvented
• Unique IP-type identifiers need to be 3 dimensional and time
bound
• Digital addresses also likely require an independent 3rd party to
manage and assign them
The end result is that businesses cannot do it alone. The solution
should come from businesses and government iterating together.
Technology alone cannot solve the problem

Regulators can
consider the four
principles to
mitigate some of
the challenges
posed by AR

• Review current applicable laws,
regulations, and rules.
• Potential policies that should be
reconsidered include property laws,
privacy regulations, and copyright
and intellectual property rights.
Principle #1: Review and understand existing regulations

Principle #2: Take an adaptive approach to regulation
• Adaptive regulation relies on iterative
process of designing regulation.
• It also has faster feedback loops that
allow regulators to evaluate policies
against set standards, feeding inputs
into revising regulations.

Principle #3: Encourage adoption of soft laws
• Soft laws can include guidance, a
push for industry self-regulation,
best-practices codes, codes of
conduct, and third-party certification
and accreditation.
• It allows regulators to quickly
respond to changes as these laws
don’t have to go through legislative
process.

Principle #4: Test regulatory approaches in sandboxes
• Sandboxes are controlled environments
allowing innovators to test products,
services, or new business models
without having to follow all the standard
regulations.
• It allows government and business to
partner in technology experimentation,
while simultaneously testing the effects
of proposed regulations.

Contacts
William D. Eggers
Executive Director, Deloitte Center
for Government Insights
Deloitte Services LP
+1 571 882 6585
weggers@deloitte.com
Allan Cook
Managing Director
Deloitte Consulting LLP
+1 213 688 5360
allcook@deloitte.com
Link to the full study: How to begin regulating a digital reality world

Copyright © 2018 Deloitte Development LLC. All rights reserved.15
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