With help from Rebecca Kern

It’s not too late to tune in for POLITICO’s AI and Tech Summit, currently livestreaming here and featuring a slate of tech leaders, policymakers and national-security officials hashing out the right policies to balance risk and innovation.

Metaverse booster numero uno Mark Zuckerberg unveiled the Quest 3 this afternoon, Meta’s next-generation virtual reality headset that will ship on October 10 as announced at the company’s Connect conference.

Covering a product launch isn’t normally our forte here at DFD, but this one is a little different. The world of the metaverse is still so nascent that every attempted step toward its realization has implications for privacy, governance, and the overall character of the social and policy debates that will accompany it. Given that VR devices have a long way to go before they’re accepted into our homes and lives in the way the smartphone was, the characteristics of each individual device tend to matter.

The Quest 3 is no exception. Meta invited me to demo the device earlier this month at their New York City office, and it has one key feature that sets it apart from any VR device I’ve previously tried: A recognizable version of the real world. The passthrough vision on the Quest 3 — its ability to show you the real world around you, despite your eyes ostensibly being covered by an opaque white panel — is miles beyond previous devices, delivering for the first time a clear facsimile of what’s around you while you also interact with virtual elements.

Or, as they call it in the industry, “mixed reality.” This is a really big shift: high-quality mixed reality hasn’t really been accessible to American consumers yet at a mass-market price point. Meta’s Quest Pro headset was geared toward enterprise and business use, and ByteDance’s Pico 4, which boasts similar capabilities, isn’t for sale in the United States. A leak earlier this year revealed that Meta has already sold nearly 20 million Quest headsets, so unless interest completely falls off a cliff, it’s reasonable to assume a large chunk of early adopters in America will soon be experiencing a version of the metaverse that’s closer than it’s ever been to the promised seamless integration of our virtual and physical lives.

That means the policy discussion around these devices is bound to heat up — especially with an administration that’s been decidedly aggressive when it comes to Big Tech, and has attempted (albeit unsuccessfully) to thwart what it sees as an attempt by Meta to monopolize the space. When I chatted earlier this month with Meta VP and deputy chief privacy officer for policy Rob Sherman, he said he was hoping to solve problems around privacy and safety in the “middle layer” between the actual technology and an explicit policy discussion.

“When it comes to mixed reality devices that are able to collect information about the environment around you, how do we… make sure that that’s something that’s understandable and controllable by people?” Sherman asked.

There’s a lot of thinking to be done, because there is a lot of data being collected by these devices, including about bystanders who might or might not want to be part of your virtual world. If Meta’s Quest 3 takes off with its eye-popping combination of those real and virtual realities, that’s going to go from a policy hypothetical to a pressing issue very quickly.

FTC Chair Lina Khan spoke at POLITICO’s AI & Tech Summit this afternoon, warning AI companies that her commission will be just as hawkish on competition for them as it has been for the current generation of tech giants.

As POLITICO’s Rebecca Kern and Josh Sisco reported, Khan said to Josh during a panel that the FTC wants “to make sure the market understands there is no AI exemption to the laws on the books.” She also welcomed any potentially forthcoming help from Congress in clarifying the extent to which the FTC can regulate AI, and said she hoped for more resources for the commission’s new Office of Technology and its privacy work. — Derek Robertson

Meta is launching AI watermarking stickers : The company said it plans to roll out its AI stickers, first announced this summer, in the coming weeks. Users can create AI-generated images using the company’s large language model (Llama 2) and its image generation model (Emu) to share stickers on WhatsApp, Messenger, Instagram and Facebook stories in the next month, according a blog post today, and all the images created this way will have a watermark on them in the corner that says “Imagined with AI.”

Other AI players have also started launching consumer-facing AI products. Google announced in mid-September it is deploying its Bard AI chatbot system to Google Docs, YouTube and Gmail. And earlier this week, OpenAI announced it’s enabling its ChatGPT system to respond with a synthetic voice. — Rebecca Kern

• The boom in demand for microchips is driving a revolution in optical fiber.
• More adventures in ChatGPT simply making things up.
• Snap is shutting down a very-recently-launched AR unit.
• It is apparently no longer possible to report misleading electoral information on X.
• What does the new AI-assisted Coca-Cola flavor taste like?

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Mohar Chatterjee ([email protected]); Steve Heuser ([email protected]); Nate Robson ([email protected]) and Daniella Cheslow ([email protected]).

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