Immersion and regulation: extended reality technologies, their impact on innovation and policy recommendations

Extended Reality (XR) technologies, encompassing Augmented Reality (AR) and Virtual Reality (VR), are primed to revolutionise digital interactions across various sectors, from retail and education to entertainment and healthcare. As these immersive technologies rapidly evolve, they present unprecedented opportunities and novel challenges for citizens, businesses and policy-makers. This policy brief examines the current landscape of XR technologies, their potential impacts on citizens and society and the regulatory implications surrounding their development and implementation.

XR offers significant benefits, including enhanced access to services, improved learning experiences and new forms of creative expression. However, it also raises concerns about privacy, data protection and potential adverse psychological effects, such as addiction and difficulties distinguishing between virtual and authentic experiences. The Digital Services Act (DSA) and Digital Markets Act (DMA) provide a regulatory framework that supports and potentially hinders XR innovation.

The DSA and DMA are expected to have a mixed but positive long-term impact on XR innovation. While compliance efforts may slow down innovation for smaller XR developers due to the complexity of content moderation and data protection, fair competition, enhanced transparency, and interoperability are likely to foster innovation, increase user trust and attract more users over time, though challenges around real-time moderation and achieving true interoperability remain.