As the world of extended reality (XR), so creating new virtual worlds and augmenting the physical world with digital objects, continues to expand rapidly, the European Union (EU) faces both great opportunities and significant challenges in formulating regulations that will shape the future of these technologies. Dominik Mahr, Professor of Digital Innovation & Marketing at Maastricht University, who co-authored the policy brief “Immersion and regulation: extended reality technologies, their impact on innovation and policy recommendations,” discussed with Studio Europa Maastricht how EU policies influence the emerging XR industry and the strategies Europe must adopt to remain competitive amidst global trade tensions.
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Strategic positioning in XR development
Mahr underscores the importance of Europe positioning itself as a leader in the responsible development of XR which includes VR (Virtual Reality) and AR (Augmented Reality) technologies:
“We need to make sure that we are not hindering our innovation but also provide an alternative. The point of the Digital Services Act (DSA) and the Digital Market Act (DMA) is that we need to be strong. But what does it mean to be strong? The EU can be strong by saying ‘Nay,’ i.e. imposing regulations, but I believe it’s better to turn into critical Yay-sayers.”
“The EU can be strong by saying ‘Nay,’ i.e. imposing regulations, but I believe it’s better to turn into critical Yay-sayers.”
The expert advocates for a shift in mindset, emphasising that the EU must create viable alternatives to the tech giants that dominate the global market. According to Mahr, Europe cannot afford to simply criticise the dominance of companies like Google, Meta, and Microsoft. Instead, he stresses the need for European companies to work together and build competitive ecosystems:
“Alternative is the main strength if we talk about competitive environments. Innovation thrives when there’s competition. I run faster because I see the other one running faster. We need to build up the right tech players, not just a single large company, but a fleet of companies working together.”
He adds that the European approach to XR should not aim to replicate the model of large US tech companies but rather foster an ecosystem where smaller companies can thrive. “We might not need to create superstars of big tech, but rather a fleet of companies that work together,” Mahr suggests. “For XR, we can build a strong ecosystem. It may be less consumer-driven but more industry-driven, with big companies looking for these ecosystems, not wanting to depend on one another. That’s the key to building a competitive European tech space . The European framework needs to be transparent and open for the current tech giants to contribute, too.”
The role of regulation in Europe’s innovation landscape
Mahr raises concerns about the impact of regulations like the DSA and DMA, especially when it comes to supporting smaller companies in the XR space:
“The DSA and DMA are good for laying down specific rules, but the issue is: will they help smaller companies? The EU needs to shift the narrative from regulation to the alternative tech landscape we want to create. What is that alternative? Are we going to create a space dominated by big tech, or are we fostering a more diverse tech environment?”
“The EU needs to shift the narrative from regulation to the alternative tech landscape we want to create.“
Mahr argues that while the regulations are crucial for competition, they tend to favour large corporations:
“These regulations are heavy on the rules, making it difficult for smaller companies to operate. As a start-up I want a clear one-stop authority that takes me by the hand and walks me through the regulations so I can focus on what I do best. Unlike Google, which can hire an army of lawyers, small European start-ups don’t have the resources to navigate this legal complexity. We need to provide legal services that help small companies manoeuvre through these regulations.”
Privacy concerns in XR and consumer awareness
Privacy is a significant concern in the XR space, particularly as these technologies create highly immersive environments that can heighten privacy risks. Mahr highlights the differences between traditional online platforms and digital reality environments: “With XR, you can do more than just leave a nasty comment on social media; you can actually step on somebody’s toes in a virtual environment. It’s not just about saying something offensive, but physically acting it out on one’s avatar, which makes privacy concerns even more pressing.”
“With XR, you can do more than just leave a nasty comment on social media; you can actually step on somebody’s toes in a virtual environment.“
Mahr emphasises that one of the biggest challenges is ensuring consumers understand their rights:
“My biggest concern is that consumers don’t fully understand what their rights are. Take Google Street View, for example – to what extent can I blur out my house if I don’t want it to be seen? Consumers need to know what they can and can’t control in these immersive environments. If we don’t make this clear, the risks will only grow as these technologies evolve.”
Geopolitical dynamics and the EU’s competitiveness struggle
The trade tensions between the EU and the US, especially in the wake of the Trump administration’s recently introduced tariffs, also play a role in shaping Europe’s position in the XR market. Mahr points out the dominance of US tech giants like Meta and Microsoft in the XR space, noting that Meta excels in providing VR-based training and entertainment, while Microsoft focuses more on industrial applications.
However, the expert is hopeful about Europe’s prospects:
“We need to ensure that we have the right regulation to give full access to open ecosystems—non-closed app stores and software ecosystems—while also fostering the creation of our own devices. We need to make sure that European companies can create scalable hardware, and we can develop the technology to match what’s already out there. It’s not rocket science. We can do that.”
Prof Dr Dominik Mahr is a Professor in Digital Innovation & Marketing specialising in the impact of digital data and technologies on individuals, organisations and society at large. He combines state-of-the-art research with practical experience and is also co-founder of the Maastricht Center for Robots (MCR) and the Digital Experience Lab (DEXLab) that drives research on emerging technologies such as XR.
