Industrial Metaverse

German industry’s contribution to the European Commission’s call for feedback „An EU initiative on virtual worlds: a head start towards the next technological transition“

Harnessing the potentials of the Industrial Metaverse

The megatrend Industrial Metaverse has recently gained significant attention due to its potential to fundamentally transform the functioning of industries. The Industrial Metaverse merges the real and thedigitalworldbydepictingandsimulatingcomplexsystems,suchasmachines,factories,andcities. Thereby,itenablesuserstointeractinanaccuratevirtualrepresentationoftherealitytosolvecomplex real-world problems. The Industrial Metaverse is still in the midst of development and will be constructed using a variety of established and emerging technologies, such as digitaltwins, artificial intelligence, machine learning, extended reality, cybersecurity and blockchain as well as cloud and edge computing. The convergence of these technologies will result in a potent interface that surpasses the collectivecapabilities ofeach technology on its own, bridging the gap betweenthephysicalanddigital world.

TheIndustrialMetaverseholdsgreatpotential,bothforindustryandsociety.Bypreciselymatchingthe technologytousecasesandrespectiveproblems,sustainabilityintheindustrycanbeimproved.Digital twins – which form the centreof theIndustrial Metaverse– allow for virtual testing in the design, build, and operating phases without wasting resources. Moreover, production can be optimized and constantly adapted using feedback loops in order to save energy and to reduce emissions. Apart from enhancing sustainability of industrial processes, the Industrial Metaverse can also contribute to business competitiveness by saving costs as well as increasing efficiency and productivity. However, it is not only the industry that benefits. Through the constant exchange of data and information, it will be possible to solve highly complex problems digitally, which will also create societal advantages. As a result, the Industrial Metaverse can make a major contribution on the road to the InnoNation – i.e., Germany as a pioneer location for innovation and industry – by creating an innovative environment where unprecedented opportunities for research, data sharing, and interactive collaboration emerge.

On the following pages, BDI – The Federation of German Industries outlines seven recommendation that would help companies across the internal market to harness the potentials of the Metaverse. We wouldappreciateiftheEuropeanCommissionweretotakeoursuggestionsintoaccountwhendrafting its Metaverse initiative.

Recommendations

While German industries acknowledge the Commission’s initiative in general, we would appreciate if the European Commission would take into account the following recommendations:

1. No regulation of the Industrial Metaverse required

The application of Industrial Metaverse use cases is still in its infancy and under early development. Whiledigitaltwinsandmostotherbuildingblocksofthemetaversealreadyexist,andhence,fallwithin thescopeofexistingorcurrentlydiscussedEuropeanand/ornationaldigitalregulation,severalmajor challenges, such as providing adequate connectivity (5G and 6G) as well as computational infrastructures, need to be addressed. A great deal of research and development is currently conducted by Europeancompanies inorder tofuseexisting technologies,suchas digitaltwins and blockchains,into afully-fledgedIndustrial Metaverse,whichis whyregulationshouldbedispensedatthisstageinorder to avoid nipping innovation in the bud. The example of Italy and their ban on chat GPT shows that novel technologies are already covered by existing laws and no new regulation is needed. Moreover, we agree that “the EU already has a strong regulatory framework to address potential impacts”, especiallyconsideringthefar-reachingEuropeanregulatoryframeworkonpersonalaswellasnon-personal data, i.e. the GDPR and the EU Data Act. Additionally, there is a wide range of existing regulatory guidelines,suchastheUnfairCommercialPracticesDirective,theConsumerRightsDirective,andthe DigitalContentDirective,whichalsocoverthepotentiallegalspaceoftheIndustrialMetaverse.Before new regulations are introduced, the already existing regulatory acts should first take effect. Hence, there is no need for action. However, the Industrial Metaverse might be an opportunity to put the existing legislation to the test, in order to identify potential regulatory barriers or inconsistencies.

2. Distinction between B2B and B2C use cases

While we support the Commission’s intention to develop a common approach for virtual worlds with theaimoffosteringinvestmentandtalentsintheIndustrialMetaverse,animportantdistinctionbetween B2C and B2B application fields should be made in any possible regulation. The Metaverse has three different sectors – besides the commercial and the consumer metaverse, the industrial metaverse differs in terms of users and purpose. While the commercial and consumer metaverse mainly include B2C-use cases,the industrial metaverseis mainly B2B. This should be taken into account in any possible regulation, as businesses have an entirely different user structure than private individuals, especiallywhenitcomestotheir abilitytonegotiateindividualcontractsfortheusageofsuchtechnologies.

3. Contribution to international standardization activities, instead of European unilateral approaches

German industry welcomes the European Commission’s intention to take a proactive approach to shape the development of the ecosystem of virtual worlds based on the EU’s values as well as the guiding principles of openness and interoperability.To achieve thisaim, however, unilateral European approaches are not appropriate. As the Industrial Metaverse has to take existing industrial assets into account(“brownfield”)ithastobebasedontherespectiveinternationalstandardsandnormsfromISO and IEC that are currently preparing a Joint Systems Evaluation Group on the subject of Metaverse applications.Henceforth, we urge the European Commission tocontribute –together – with European industry to these international standardization efforts at ISO and IEC. In order to achieve an adequate overview on relevant activities, ‘The Metaverse Standards Forum’ as well as other related standardizationinitiativeslikethe‘ITUFocusGroup’withintheUNandotherinternationalorganizations(OECD) should be supported.

4. Next generation connectivity is key

In the Industrial Metaverse, companies of all sizes will be able to deploy digital twins with real-time performance data. To enable this, networks of the future will need to be capable of handling gigabit datatransfersinrealtime.Thiswillbemadepossiblebyfiber-opticand5Gnetworks.However,Europe is lagging behind its international peers regarding 5G deployment, while the European Commission has identified a vastinvestment gap. In the contextof the Commission’srecent Connectivity Package, Europe must therefore take decisions to shape the future networks it needs. Rapid and dedicated deployment of next-generation connectivity networks will be critical, as the future of the industrial metaverse will depend heavily on them. To cover businesses and populations with such high-performancenetworksinatimelymannerexistingbarrierstoexpansionmustbeconsistentlydismantledand all potential for acceleration must be boldly exploited. To this end, German industry is calling on policymakersatthenationalandEuropeanlevelstotacklelengthyapprovalproceduresinparticular.Complex approval and planning procedures for standard projects suchas fiber-optic expansionor new cell sites must be reduced to a necessary minimum and, if possible, eliminated. In addition, concerted efforts are needed to build up construction capacity and address the shortage of skilled workers. We needforward-lookingdecisionstoenablefuturenetworkstodelivercapacitiesthatcanhandleincreasing data volumes for use cases that require quasi-synchronous, low latency and high bandwidth connectivity.

5. Accelerate the uptake of Digital Technologies in Europe

European companies should step up their efforts in fully harnessing the potentials of digital technologies, such as the Industrial Metaverse, and transform them in new business models. To this end, the uptake of enabling technologies, such as Digital Twins, Edge-Cloud, 5G, 6G Blockchain (NFTs), AI, AR/VR,mustbesupported–especiallywithaviewtowardsSMEs–bybothpublicandprivateentities. In addition, we would welcome, if public and private organizations would collaborate in order to raise the awareness for the potential benefits of the Industrial Metaverse within Europe’s industry.

6. Global collaboration among industry players will be key

Interoperability is essential to foster cross-company exchanges, requiring extensive collaboration among all involved industrial players, including non-European companies.

7. Additional points of attention

The European Commission, when dealing with the Industrial Metaverse, should also consider the following aspects:

 Provide support for an enabling Intellectual Property and cybersecurity framework: An appropriate framework for IP protection and cybersecurity will be crucial for the success of the industrial metaverse.

 StrengthenthelinkswithEUresearchandacademia:collaborationbetweentheindustrialsector and research institutions needs to be reinforced.

 Address the shortage of skilled experts: there is a growing shortage of skilled professionals in the sector: high need for EU-wide support for the training of the next generation of designers and VR experts.

 Ease the access to finance regime in Europe to support public investment into new technologies. Horizon Europe and its plannedsuccessor shouldbe used as potential financingvehicle to support the development of the industrial metaverse.

 Future of work: Create adequate framework conditions in order to raise the job quality, to enhance inclusion while also fostering qualification offerings that enable employees to use and benefitfromindustrialmetaverse applications.Mitigate potential risks,e.g.concerning privacy and digital identity issues or new physical strains.

Imprint

Federation of German Industries / Bundesverband der Deutschen Industrie e.V. (BDI) Breite Straße 29, 10178 Berlin

www.bdi.eu

T: +49 30 2028-0

EU Transparency Register: 1771817758-48

German Lobby Register: R000534

Editor

Steven Heckler

Deputy Head of Department Digitalisation and Innovation

T: +49 30 2028-1523

s.heckler@bdi.eu

Emilia Schuster

Intern Department Digitalisation and Innovation

e.schuster@bdi.eu

BDI Dokumentennummer: D 1762