Katarina Klaric, Principal, Stephens Lawyers & Consultants
Metaverse, 3D virtual digital platforms, if accessible by users located in Australia, will be subject to Australian laws, even if the owners or operators of the platforms are not registered businesses or companies in Australia and do not have a physical presence in Australia[i].
Australia’s Legal Framework
Australia does not have specific laws that regulate the use of AI on the metaverse. Australia is a signatory to the OECD AI Principles, which are designed to encourage organisations to follow ethical practices and good governance when developing and using AI. Australia has also adopted international standards for management and governance of AI systems[ii]. To complement the existing regulatory framework, government and other organisations have adopted a voluntary AI ethics framework – Australia’s Artificial Intelligence (AI) Ethics Principles – which is designed to ensure AI systems benefit humans and the environment, uphold privacy rights and are fair, non-discriminatory, safe, secure, reliable, transparent and accountable[iii].
Australia’s existing legal framework is used to regulate AI technologies across all industries. These laws include:
- Australian Competition and Consumer laws – administered by the Australian Competition and Consumer Commission (ACCC), regulate competition, anti-competitive conduct and unfair trade practices.
- Corporations laws – administered by the Australian Securities and Investment Commission (ASIC), regulate companies and the financial services market sector.
- Data protection and privacy laws – administered by the Office of the Australian Information Commissioner (OAIC) and State Privacy Commissioners.
- Online safety laws[iv] – Australia established the first world eSafety Commissioner who has extensive powers to have illegal and harmful on-line material removed. The laws include mechanisms to address online safety issues from cyberbullying to image abuse (including fake images, deep fake pornography and child exploitation material) and other kinds of material, which affect online safety, some of which may be generated by the use of AI.
- Media and Communications laws –administered by the Australian Media and Communications Authority (AMCA).
- Criminal laws.
- Discrimination laws.
Liability arising out of the use of AI or automated decision-making technology
There have been no reported decisions involving claims for damages or imposition of penalties arising from the use of AI on metaverse digital platforms. However, there have been cases where a regulator, the ACCC, has successfully taken action against digital platforms in respect of unfair trade practices under Australian Consumer Law (ACL) involving the use of algorithms.
Uber order to pay a $21 Million penalty [v]
The Federal Court of Australia ordered Uber B.V to pay penalties totalling $21 million for breaches of s29(1)(i) of the ACL involving false or misleading representations made in trade or commerce in respect of the display on an Uber app of:
- an estimated price range for a ride at the time of the booking, when the actual price was not likely to be within the range;
- cancellation fees to be paid when no fees were chargeable if the trip was cancelled during the free cancellation period stated in the terms and conditions.
The court also granted an injunction to restrain the infringing conduct and ordered Uber to contribute towards the ACCC’s costs.
The price range calculations of fares displayed on the Uber platform were dependent on the accuracy of pricing algorithms used by Uber. Consumers relied on Uber providing truthful information about pricing and the application of cancellation fees for a trip. The court, in considering the appropriate penalty, took into account the fact the employees of the Uber group were aware of the limitations as to the accuracy of the algorithms used[vi] and that Uber would profit from this[vii].
Robodebt scheme – $1.8billion class action settlement
There have been a number of class actions for compensation arising from the unlawful Robodebt scheme, which involved an automated decision-making system developed by the Department of Human Services (DHS). The system-involved data matching of income earned by the welfare recipients as reported by the employer to the Australian Taxation Office (ATO) with what the welfare recipient had declared to DHS. If there was a discrepancy, a notice was issued requesting the recipient to explain the discrepancy. If the recipient did not respond, provide details or agree with the income data from the ATO, the system used a process of “income averaging” to calculate overpayments rather than looking at the actual income earnt and welfare payment received over the relevant fortnight as required by relevant law and issued debt notices. The Robodebt system was implemented without appropriate design, human welfare and fairness considerations or testing (including user testing) resulting in errors and debt notices illegally and unfairly issued. The Federal Court of Australia found the Robodebt scheme was unlawful and approved a settlement sum of $1.8billon for welfare recipients who were subjected to illegal debt collection notices and enforcement action[viii].
Proposed Reforms to Laws affecting AI technologies
The regulation of digital platforms has been on the Australian Government’s agenda since 2017, when the Government directed the ACCC to conduct inquiries into competition and consumer impact of digital platforms. These inquiries have resulted in eight reports and recommendations for regulatory reforms to deal with anti-competitive practices and unfair trade practices of digital platforms. These are discussed, in our article titled ‘Competition Law and the Metaverse – Australia’ which you can read [here].
In June 2023, the Australian Government released a Discussion Paper – Safe and Responsible AI in Australia and commenced a public consultation process, to consider the adequacy of the existing legal and governance framework to address the potential risks associated with AI technologies and the safeguards required having regard to global regulatory developments. Further to this consultation process the Australian Government published its Interim Response to the consultation on 17 January, 2024 and in September 2024 released its proposed mandatory guardrails to shape the use of AI in high-risk settings, and released the first version of the Voluntary AI Safety Standard[ix] (VAISS) which focuses more closely on “organisations that deploy AI systems”, with a “next version” of the VAISS proposed which “will expand on technical practices and guidance for AI developers”[x] and will also “provide guidance on labelling and watermarking of AI content and incorporate feedback from industry on V1 to improve practices and guidance for deployers.”[xi] The consultation process on the Voluntary AI Safety Standard V2 is continuing.[xii] It is likely that Australia will follow global trends and implement laws similar to the EU Artificial Intelligence Act to deal with high risk AI technologies.
In September 2023, the Australian Government accepted recommendations for reforms to Australian privacy laws and on 29 November, 2024 implemented the recommendations when it passed the first tranche of privacy law amendments[xiii] to the Privacy Act 1988 (Cth) (‘Australian Privacy Law Amendments’) [xiv]. The Australian Privacy Law Amendments make the Government accountable in relation to the use of AI/automated decision-making technologies including by requiring transparency and ensuring integrity of the decisions made, with individuals to have a right to request meaningful information about how automated decisions are made that impact them[xv]. Consultation on the second tranche of Australian privacy law reforms is progressing and is expected during 2025.
Disclaimer: This article is not intended to replace obtaining legal advice
© Stephens Lawyers & Consultants, May 2024 – 2025; Authored by Katarina Klaric, Stephens Lawyers & Consultants
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Katarina Klaric
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[i] Facebook Inc. v Australian Information Commissioner [2022] FCAFC 9 (7 February 2022); Clearview AI Inc. and Australian Information Commissioner [2023] AATA1069 [8 May 2023];
[ii] ISO/IEC 5339:2024: Information technology – Artificial intelligence – Guidance for AI applications
ISO/IEC 5392:2024: Information technology – Artificial intelligence – Reference architecture of knowledge engineering.
ISO/IEC 5338:2023: Information technology – Artificial intelligence – AI system life cycle processes
AS ISO/IEC 42001:2023- Information Technology- Artificial Intelligence -Management systems, December 2023.
AS ISO/IEC 23894:2023: Information technology – Artificial intelligence – Guidance on risk management.
ISO/IEC 8183:2023: Information technology – Artificial intelligence – Data life cycle framework.
AS ISO/IEC 23053:2023: Framework for Artificial Intelligence (AI) Systems Using Machine Learning (ML)
ISO/IEC 24668:2022: Information technology – Artificial intelligence – Process management framework for big data analytics.
ISO/IEC 22989:2022: Information technology – Artificial intelligence – Artificial intelligence concepts and terminology.
AS ISO/IEC 38507:2022: Information technology – Governance of IT – Governance implications of the use of artificial intelligence by organizations.
[iii] Australian Government, Department of Industry, Science and Resources, “Australia’s Artificial Intelligence Ethics Framework- Australia’s AI Ethics Principles. https://www.industry.gov.au/public.
[iv] Online Safety Act 2021
[v] Australian Competition and Consumer Commission v. Uber B.V. [2022] FCA 1466 (7 December 2022).
[vi] Ibid, [100]-[103]
[vii] Ibid, [104]-[109]
[viii] Prygodicz v. Commonwealth of Australia (No.20) [2021] FCA 634 (21 June 2021) at [5]; see court orders attached Decision.
[ix] Australian Government Department of Industry, Science and Resources, ‘Voluntary AI Safety Standard – Guiding safe and responsible use of artificial intelligence in Australia’, 5 September, 2024 [ Voluntary AI Safety Standard | Department of Industry Science and Resources ]
[x] Ibid. at ‘Why we wrote the standard’ [ Why we wrote the standard | Voluntary AI Safety Standard | Department of Industry Science and Resources ]
[xi] Australian Government Department of Industry, Science and Resources, ‘Voluntary AI Safety Standard v2 consultation: expression of interest’, at ‘Overview’ [ Voluntary AI Safety Standard v2 consultations: expression of interest – Department of Industry, Science and Resources ]
[xii] Ibid.
[xiii] the Privacy and Other Legislation Amendment Act 2024 (Cth)
[xiv] Office of the Australian Information Commissioner ( OAIC ), “Passing of bill a significant step in Australia’s privacy law”, 29 November, 2024