At the height of anti-trust allegations that Big Tech is currently facing have come new accusations, this time from the virtual reality (VR) field.
According to a report by Bloomberg, VR startups are accusing Facebook of dubious behavior, where the company is leveraging its massive size and capital to push out smaller rivals from the market.
Facebook cemented its place in the market when it bought VR headset innovator Oculus in 2014, seen as a rather big bet by CEO Mark Zuckerberg at the time, considering the deal cost $2 billion. As a result of that deal, Facebook is now the world’s biggest virtual-reality hardware maker, with a 39% share of the market, according to data from IDC.
As per Bloomberg’s report, “developers say Facebook is using its market power to thwart companies that offer competing games and services. It’s copying the most promising ideas, using below-cost pricing for its devices and making it harder for some apps to work properly on the platform, according to developers and a hardware maker.”
For anyone who’s been following Facebook for these past few years, this should come as no surprise. The company is notorious for copying its rivals’ features to death in an effort to drown out their USP.
“In the summer of 2016, [Zuckerberg] told company employees at an all-hands meeting that they shouldn’t let their pride get in the way of doing what is best for users—even if that meant copying rival companies,” Wired reported. “Zuckerberg’s message became an informal slogan at Facebook: ‘Don’t be too proud to copy.'”
Most of the complaints seem to be coming from software developers that are creating programs and services for use on VR headsets like those by Oculus.
“Our industry is getting eaten alive by Facebook,” said Cix Liv, who co-founded startup Yur Inc., a company that creates algorithms that can be integrated into Oculus games to track fitness metrics. “Any application that has a chance of being mildly competitive with them, they have to kill it somehow.”
Yur released its fitness tracking app for Oculus in September 2019. The company couldn’t meet Facebook’s requirements to qualify for an Oculus store listing, even after the company tried its best to comply with the criteria demanded. So, it had to resort to being listed on another marketplace that was available to Oculus users.
Bloomberg explained: “Facebook in the spring released a software update for Oculus that prevented Yur’s technology from working within games, according to Liv. Liv said Yur was the only company that experienced such an issue. Subsequent updates required users to delete the Yur app in order to get the Oculus headset working again.”
By September, Facebook had released its own fitness tracker called Oculus Move that Liv says essentially copied his app’s look and functionality. This wasn’t a one time phenomenon either, as we’ll soon see.
That’s just the tip of the iceberg, as the Bloomberg report goes on to list even more concerning accounts. One of these comes from VR consultant Nima Zeighami, who said Facebook “locked down the ecosystem so much that if someone makes an app that competes with them too much, they can just blacklist them.”
Another comes from Guy Codin, creator of the popular app Virtual Desktop Inc. which lets users beam their PC desktop to their VR headset. In June 2019, Godin introduced a version that could stream games and other content to an Oculus headset, which Facebook demanded he remove from the main app a few weeks later, citing an alleged poor user experience and health and safety issues. Otherwise, Virtual Desktop would be pulled down from the Oculus store.
Godin said these claims are “totally bogus” but that he had no choice but to comply because he depends on Oculus for 90% of his revenue.
Soon, however, he’d find himself on the receiving end of the usual Facebook retaliation technique: the social media giant announced later that year that it was releasing a competing product called Oculus Link, which allowed users to stream content but required a cabled connection to the user’s computer.
Godin told Bloomberg he’s happy to compete against Facebook’s product, but that it isn’t a level playing field because the company controls what features he can offer.
“They just want to own it all,” he said. “If there’s only one company, it’s going to be very hard to survive as a developer.”
These are just a few of the complaints VR developers have voiced, as Liv explains that more than 40 of them organized in September and considered writing an open letter to Facebook calling for more transparency to its Oculus store policies and other changes to benefit developers.
However, the issues with Facebook don’t just extend to the software side of things. The company is apparently even strong-arming rival hardware manufacturers by selling at a loss, buffered by its size and swathes of capital.
Stan Larroque, the founder and CEO of Lynx, a Paris startup that promotes its virtual-reality headset to businesses, told the US business news site that Facebook is selling the Oculus headset at a loss, which he notes is making it impossible for smaller device makers to compete.
You can find the extensive report here. It tells quite the troubling story of what’s going on in the US VR market.