The first-ever Congressional hearing on virtual worlds took place today in Washington. Linden Lab CEO Philip Rosedale testified, along with representatives of IBM, TechSoup, and the New Media Consortium.

The hearing was conducted by the Subcommittee on Telecommunications and the Internet (a subcommittee of the House Committee on Energy and Commerce). It was cast as an educational hearing, essentially a first look at these spaces for subcommittee members. With a few notable exceptions, the subcommittee members displayed a better understanding of virtual worlds than one might have expected, and both their comments and the testimony offer a look at the future of virtual law and the interaction between real world governments–or at least the U.S. government–and virtual worlds.

Opening Comments

Edward Markey (D-Massachusetts), who chairs the subcommittee, seems to have a surprisingly solid understanding of virtual worlds. He described virtual worlds as a “glimpse into future [and] a window into current reality for millions of people.” He noted that “at their best, virtual worlds are vehicles for understanding across boarders and in communities.” The concerns he listed were also on point: consumer protection, intellectual property protection, online banking, gambling, and child protection.

The ranking member of the committee, Cliff Stearns (R-Florida) also seemed to come in with a good understanding of virtual worlds and a clear focus on the future. He recognized something that a fair number of commentators seem to miss: this isn’t really about Second Life in the long run. Stearns noted that “better graphics will lead to avatars that look, walk, and act just like real people [...] in the very near future.” He did point out that virtual worlds can “enable egregious social behavior and social ills,” but emphasized, at two different points in his remarks, that virtual worlds “can best flourish without overregulation.”

Another bright spot was Gene Green (R-Texas) who noted that virtual worlds provide a “realistic way to get experience running an entrepreneurial venture.” Green also used the opportunity to push for more support for broadband deployment and competition.

The opening remarks went downhill from there. Several representative did not seem to understand the difference between games and social virtual worlds (one joked, “you’ll only get two experience points for attending this hearing”). Another said it made him uncomfortable that the word “avatar” means “god” in Hindu philosophy (“we’re not gods…”). Jane Harman (D-California) compared using a laptop while sitting on the beach to “working in a virtual world,” and focused her remarks on a somewhat suspect press report of terrorists “using virtual worlds to transfer money and find new recruits.”

Testimony to the Subcommittee

Philip Rosedale (soon-to-be-ex-CEO of Linden Lab, the company that runs Second Life) offered a few opening remarks about the benefits of Second Life and ran a video highlighting some of the interesting, socially acceptable things people do there. There was not a “Strokerz Toyz” poseball in sight.

The subcommittee members seemed willing to let Rosedale discuss the benefits of these spaces to an extent, and displayed some real enthusiasm for them. Several members even pointed out that they had avatars.

However, the subcommittee focused a fair portion of Rosedale’s testimony on one potential problem: child sexual predation in virtual worlds. In one exchange, Chairman Markey pressed Rosedale on the lack of safeguards in the Second Life software to flag suspicious behavior, asking, “How do you keep the adults out of the teen area and teens out of the adult area?” Rosedale said that following a standard “best practice,” the teen community was encouraged to report suspicious behavior. Markey interrupted him: “But once there, they could camouflage themselves.” Markey pushed for specifics, asking if Linden Lab gets social security numbers or a driver’s license (it doesn’t) and if not, then how does it know a users’ age, beyond self-reporting? Markey did not seem convinced that the self-reporting and community-based measures Rosedale said were in place were sufficient, noting, “A lot of people would not tell the truth. If they’re going into there with some overt intent, they’d not be truthful.”

One piece of information that will be of interest to both attorneys looking at Second Life as a repository for potential discovery and Second Life users concerned about privacy is that, according to Rosedale, Linden Lab currently keeps communication logs for “several weeks.”

Representative Bart Stupak (R-Michigan) returned to the line of questioning later, asking Rosedale if they had “set up any kind of sting operation” in Second Life. “We have not,” Rosedale said, “but I suspect law enforcement agencies may have done so. We have not, as a company, felt a need to do that.”

Stupak then asked about limits on excessive use. Rosedale pointed out that “excessive” needs to be sensitive to what the application is, since virtual worlds offer so many choices. “If you’re killing monsters,” he said, “then too much can make you unable to perform well in human society.” On the other hand, Rosedale noted, running a small business in Second Life can be “a lemonade stand experience, and may be superior to other kinds of learning.”

Representative Jane Harman (D-California) repeated her concerns about terrorism based on the largely discredited idea that terrorists are using virtual worlds for training, recruitment, and fund transfers. [Update: New World Notes points out that a team of anti-terrorism investigators does try to track jihadists in Second Life, so it's not an absurd point or as discredited as I thought, though I do think that Representative Harman overstates the danger.] She started by reading part of a Sunday Times “virtual jihad” article from last August into the record and asked Rosedale to respond. Rosedale pointed out that Second Life manually reviews all transactions of more than US $10, and noted that “as a company we have never seen any evidence that there is any such activity going on in Second Life.” He also pointed out that “because we have a stronger recorded identity there, it is likely that virtual world activities are somewhat more policeable and the law is more enforceable there than it is on websites.”

In addition to Rosedale’s testimony, TechSoup’s Susan Tenby, Senior Manager of Community Development, discussed non-profit opportunities in virtual worlds, IBM’s Dr. Colin Parris discussed the future of these spaces as the natural evolution of the 2D internet into three dimensions, and Dr. Larry Johnson, Chief Executive Officer of the New Media Consortium, focused on the educational opportunities these spaces offer.

Dr. Parris’s testimony regarding the opportunity for businesses to make money in these spaces was particularly interesting. Ranking member Cliff Stearns asked how virtual worlds could be used by businesses beyond “just marketing.” Parris focused on inexpensive distance communications, product simulations and design, and particularly on the benefits of using virtual worlds for training. He noted that it “is more cost effective” in the long run to conduct interactive training in virtual worlds. He said that while it is “early in cycle, there are a number of ways that these do help businesses make money.”

April 1: Updated to add reference to commentary from New World Notes on potential terrorism in virtual worlds.