According to the UnivDatos Market Insights, the growing use of social media platforms, rapid developments in AI, CGI, and machine learning, the rising shift to digital marketing, and metaverse integration drive the Virtual influencers market. As per their “Virtual influencers Market” report, the global market was valued at USD 16 Billion in 2023, growing at a CAGR of about 23% during the forecast period from 2024 - 2032 to reach USD billion by 2032. Virtual influencers are rapidly becoming popular and, for some time now, millions of fans have followed them and collaborated with world brands. Sam, Sarah, and Lili, thus built with the help of sophisticated CGI and AI technologies, are something new for today’s brands to play with. But what is more concerning as their impact increases, is the demand for the proper legislation in this sphere that considers the problem of transparency, consumers’ rights, and ethical issues. This article provides an analysis of the current laws and regulations of virtual influencers as well as the challenges that are likely to be faced and the prospects of this emerging market.

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1. Understanding Virtual Influencers

They are also referred to as computer-generated and controlled personas that are used to interact with social media users by Companies or individuals. Unlike human influencers, virtual influencers or digital influencers are purely computer-generated, thus any aspect of them can be regulated. Using a bot, one can communicate with his followers, advertise products and services, and even participate in brand-related events similar to a human influencer.

The most famous case is Lil Miquela – a virtual model bought by the startup Brud; she has millions of followers on Instagram and has worked with CK Calvin Klein and Prada. Likewise, Imma, the Japanese virtual influencer, has collaborated with giant firms like IKEA and Nike among others. Thus, as these virtual personalities grow in popularity, there is a growing awareness of the lack of adequate legal regulation that would apply to them.

2. Current Regulatory Landscape

The use of virtual influencers has created debates among regulators, marketers, and legal advisors, about call for specific laws and rules. New to the scene, there is little explicit regulation of virtual influencers, however, there is legal precedent for regulation of advertising and endorsements and data privacy.

a. Advertising Scientific and Official Statement Rules

The main issue with virtual influencers is the problem of their authenticity and more specifically the problem with advertising and sponsored content. For instance, in many countries, the law demands that the influencers come out and inform the audience that their content is sponsored or paid for by the brand. For instance, in the United States, it is the Federal Trade Commission (FTC) that requires influencers to disclose any sponsorship to their audience. This is usually achieved with terms such as #ad or #sponsored coming right next to the post.

Like real-life influencers, virtual influencers have to comply with these requirements on disclosure. Brands and creators need to make sure that their virtual influencers come with clear disclaimers to prevent the deception of the consumers. That way, organizations risk legal actions against them, fines, and adverse impacts on their brands’ reputations.

b. Intellectual Property Rights

Intellectual property rights are the other important consideration in moderating virtual influencers. The creation of virtual influencers is based on violation of intellectual property rights, namely cloning photos, videos, and music. Brands and creators need to have licenses to use this material, otherwise will be violating other’s IP rights.

Also, as the case of virtual influencers grows, questions concerning the ownership of their IP rights appear. A brand owns various digital creations that require protection from third-party use or replication that may water down the brand’s value leading to negative market positioning.

c. Data Protection and Privacy

Virtual influencers, like any other digital entity, utilize and gather data from their communication with their followers. This makes users’ data privacy and protection a major concern given policies like the General Data Protection Regulation (GDPR) in the European Union. The new regulation called GDPR which stands for General Data Protection Regulation introduced new rules regarding consent where users’ permission must be granted when data from such users is collected or processed.

Brands and creators that employ virtual influencers are bound by various legal obligations, particularly the data protection laws which require them to obtain consent from users and institute measures to protect user information. This is because any non-adherence to these regulations attracts heavy penalties together with legal repercussions.

3. Ethical and Social Considerations

In addition to the legal issues, virtual influencers raise ethical and social concerns that should not be overlooked. Such issues as authenticity, transparency, or the effect, may befall real influencers and the labor market.

a. Authenticity and Transparency

Realness is one of the main selling points for influencers since their followers consider them to be likable. Virtual influencers are inanimate and hence do not possess the humane attributes that many of the audience look for. Social media retailers must fully disclose the nature of the accounts they are promoting through their virtual influencers so that they do not mislead followers by portraying them as real people where there is none.

Transparency with audiences is very important, therefore it is necessary to aware consumers that virtual influencers are not real people and this is a reputation that can harm the brand and may lead to legal consequences.

b. Influence on the Human Stakeholders

People have also argued that virtual influencers are penetrating the market to replace human influencers. Considering the rising popularity of the use of digital characters in marketing campaigns it is evident that real influencers may end up losing out on potential business and revenue.

That does not mean that virtual influencers are much better than real ones; some distinctive features are undeniable: virtual influencers are far more consistent and easier to control than live people, but there is something more important, that is missing in virtual influencers – people’s relationships. As for further cooperation with influencers, brands should think about how they will use virtual and human influencers most effectively so that they do not take people’s jobs away or undervalue them so much.

4. Future Legal Developments

Furthermore, since the market associated with virtual influencers is still new, it could be seen that more detailed legal acts that can guarantee sufficient regulation of main concerns connected with virtual individuals will be created in the future. Thus, the proper rules may be implemented by the regulators for the virtual influencers distinguishing between aspects like – disclosure, ethics, or even data protection.

a. Standard Procedures and Practices of the Workplace

Regulations of technology will depend on the methods of a legal nature, standards, and recommendations of the industry that will be adapted shortly. Marketers, industry bodies, and legal professionals should come up with relevant policies about the utilization of virtual influencers in the right manner. This is a clear indication that these standards can contain possible checklists for brands and creators to consider, thus helping them to overcome legal hurdles present in the current legal systems worldwide.

b. Globally Coordination and Standardization

Because social media and digital marketing are worldwide, it becomes necessary to coordinate the actions of different regulators. Synchronizing rules and requirements for virtual influencers and their advertisement would establish equal grounds for brands as well as implement the standards of transparent and authentic advertisement that does not mislead the consumer.

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Conclusion

Virtual models are becoming the new trend in the digital marketing space as they enhance the means through which brands interact with the target market. However, their emergence is associated with several legal and ethical issues that should be solved to avoid deception and unauthorized actions toward the clients. With time, it will be important to look at laws, industry guidelines, and even standards to guide those dealing with the issues of virtual influencers legally. Thus, accreditation to such regulations can help hitherto ascertain the best practices that can be applied to the side of virtual influencers without the negative effects they were previously associated with so that digital marketing becomes ethical in the future.

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