written by

Avoncourt Team

Technology Blog - Jul 22, 2017

Facebook is using AR as an opportunity to strengthen its biggest weakness

In a public testimony Mr. Zuckerberg gave during a lawsuit between game maker ZeniMax and Oculus, the virtual reality startup Facebook purchased for $2 billion in 2014, the Facebook chairman and co-fouder was asked to elaborate on the implications of missing out on the smartphone revolution:  “Because of that, Facebook hasn’t really been involved in designing the operating systems and phones,” he explained. “Companies like Google and Apple have done that instead. And that in some cases meant we haven’t been able to design the experiences that we hoped to deliver for our community.”

What he means is: the world of mobile phones that Facebook has built its $415 billion ad business on, is owned and controlled by Apple and Google, not Facebook; they are the landlords, and Facebook is just a tenant. In an interview later this year Mr. Zuckerberg also said “We want to get to this world in the future where you eventually have glasses or contact lenses where you can mix digital or physical objects in the digital world,”…“Think about how many of the things around us don’t actually need to be physical, instead of a $500 TV sitting in front of us, what’s to keep us from one day having it be a $1 app?”

It’s in this context that Facebook is now betting its future on augmented reality, the nascent technology that promises to substitute smartphones with something like a pair of glasses or even contact lenses.Zuckerberg said, “The end goal of AR is to have a pair of stylish glasses that can display everything from directions and entertainment to information about the objects you’re looking at, like the cost of a bottle of wine, directly in front of your eyes”. And he wants all of it to be powered by Facebook.

Owning the smartphone killer

“We see the beginning of a new platform”

The large motivation behind Facebook’s investments in virtual and augmented reality is simple: to not miss out on the next big wave of technology that comes after smartphones. That’s why Facebook paid billions for Oculus, is working on its own AR hardware and brain-controlled sensors, and is opening up its AR camera effects to developers now.If Facebook can build the AR equivalent of Apple’s iOS operating system for iPhones, it has a shot at controlling the platform on which every other company will have to build AR hardware. Imagine a future post-phone world in which, instead of Apple or Google, Facebook set the ground rules about what apps can and can’t do on its platform. Like Apple’s App Store, Facebook could take a cut of all transactions that occur within its AR platform. And Facebook would know more about its billions of users than any company in history.

Facebook would certainly like to own both the dominant hardware and the software in a truly AR world, but if it can’t crack the hardware, it wants to at least be one of the few winning software providers. Facebook chief technology officer Mike Schroepfer in an interview about the company’s AR ambitions recently stated: ”If we can build an interesting business building hardware, that’s great, but if that doesn’t work and it just creates an ecosystem and we have an awesome network to run on top of it, that’s great too.” But as Apple, Microsoft, Magic Leap (backed by Google’s Alphabet and Alibaba), and others like Elon Musk’s Neuralink, are racing to make consumer AR a reality, the competition is already fierce. For this reason Facebook is firing on all of its AR cylinders now, even when it says that consumer adoption of AR is potentially decades away. 

The big threat to Facebook’s business is that if it doesn’t manage to build the dominant AR platform of the future, it runs the risk of repeating its history with mobile phones all over again.