Meta: The Apple rivalry enters a brand new part as tech giants try for headsets

Meta Platforms Inc. CEO Mark Zuckerberg demonstrates the Meta Quest Pro during the Meta Connect virtual event in New York, the United States, on Tuesday, October 11, 2022.

Michael Nagel | Bloomberg | Getty Images

Meta Founder Mark Zuckerberg and Apple CEO Tim Cook has dealt intensively with the topics of Internet data protection and digital advertising in recent years. But they never really competed against each other.

That will change soon.

With Apple officially announcing its long-awaited mixed reality headset — the Vision Pro — on Monday, the iPhone maker and Facebook parent are now firmly in the same market.

Zuckerberg and Cook both envision the next great era of personal computing as one in which people put on a headset to enter a virtual world and interact with digital objects in 3D. Cook describes it as spatial computing and Zuckerberg calls it the metaverse. Other technologists refer to it as mixed reality or augmented reality because digital images can be overlaid on the physical world.

Facebook entered the market nine years ago when it acquired VR headset startup Oculus for $2 billion. In late 2021, the company changed its name to Meta and Zuckerberg committed to spending billions of dollars a quarter developing the underlying VR and AR technologies needed to make his future vision a reality.

Today, Meta owns the lion’s share of an emerging market, far outpacing competitors like Sony, HTC, and Magic Leap in headset sales. Research firm CCS Insight recently reported that global shipments of VR and AR headsets fell by over 12% yoy to 9.6 million in 2022 as consumers scaled back consumer spending.

Several tech analysts told CNBC in December that Apple’s entry into the VR and AR market could give the industry the boost it needs to further engage consumers with the benefits of the technology.

Leo Gebbie, an analyst at CCS Insight, said, “If any company has the ability to transform the VR market overnight, it’s Apple.”

But Apple hasn’t said exactly when Vision Pro will be available – just that it will be sometime early next year. More importantly, it’s hardly designed as a mass-market product, at least initially. The starting price is $3,499.

That gives Zuckerberg some breathing room. Meta’s Quest family of VR headsets includes the $300 Quest 2 and $500 Quest 3, which will be available this fall. The company’s Reality Labs division, which handles hardware and software development, lost $13.72 billion last year and $3.99 billion in the first quarter.

Wall Street has put a lot of pressure on Meta in 2022, sending the stock down nearly two-thirds, in part due to concerns about Metaverse’s excessive costs. But shares have rallied this year after Zuckerberg ramped up spending in other areas of the company, including customer service and trust and safety.

Controversy over business model

For Zuckerberg, transforming mixed reality into a business reality has become central to the future of the company.

In contrast to Apple or Google mother alphabetMeta does not control an operating system like iOS or Android. These platforms have allowed Apple and Google to dominate the smartphone market, helping them generate billions of dollars from their respective app stores, and allowing them to dictate the rules that third-party developers — including Facebook – must follow.

Apple’s privacy change to iOS in 2021 hurt Facebook so badly that the company shortly thereafter predicted it would result in a $10 billion drop in sales in 2022. The update limited the ability for Facebook and other social media companies to track and deliver targeted advertising to users across the web. Meta’s massive and fast-growing online advertising business suddenly found its business shrinking.

Zuckerberg has been vocal about what he believes to be unfair Apple iOS and App Store policies. His company said that by removing the targeting capabilities, Apple was doing great harm to the many small businesses that were using Facebook’s advertising model to reach new customers in an efficient way.

At a conference last November, Zuckerberg said, “Apple has emerged as sort of the only company trying to unilaterally control what apps get on a device.” He added, “I don’t think that’s a sustainable or a good place is.”

For his part, Cook has been unsympathetic and has long criticized Facebook for allowing its business to monetize users’ personal information, rather than selling a product that people want to buy. In 2021, Cook linked Facebook’s business model to real-world consequences such as violence or the fall in public trust in Covid.

Apple CEO Tim Cook stands next to the new Apple Vision Pro headset on display during the Apple Worldwide Developers Conference June 5, 2023 in Cupertino, California.

Justin Sullivan | Getty Images

“If a company is built on misleading users, on data exploitation, and on decisions that aren’t decisions at all, then it doesn’t deserve our praise. It deserves reform,” Cook said at a privacy conference in Brussels. He didn’t mention Facebook by name at the time.

By evolving the Metaverse on its own terms, Meta has the best chance of bypassing Apple’s dominance and writing its own rules. However, imagining the metaverse going mainstream is a huge gamble.

Apple now knows everything about making consumer goods for the masses, be it computers, digital music players, smartphones, tablets or watches. And Apple has its own new operating system for Vision Pro, which it calls visionOS. That means Meta and Apple will compete for developers looking to bring their games and apps to the widest possible audience.

Disney shared some potentially worrying news on the subject with Meta on Monday.

After previously touting the promise of the Metaverse, Disney recently wound up its Metaverse division led by Bob Iger, who returned to the company last year.

On Monday, Iger took the stage at Apple’s WWDC event and said his company’s streaming service was available for the new headset. While some Disney content is available on Quest devices, Iger hinted that Apple will offer a whole host of new experiences.

“We’re constantly looking for new ways to entertain, inform and inspire our fans by combining extraordinary creativity with breakthrough technology to create truly remarkable experiences,” said Iger during the keynote address. “And we believe that Apple Vision Pro is a revolutionary platform that can make our vision a reality.”

Meta did not immediately respond to a request for comment.

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