Meta’s heated rivalry with Apple enters new phase as the tech giants go after headsets

Meta founder Mark Zuckerberg and An apple CEO Tim Cook has spent the past few years embroiled in controversy over internet privacy and digital advertising. But they never competed head-to-head in a real way.

That’s about to change.

After Apple officially announced its long-awaited mixed reality headset – the Vision Pro – on Monday, the iPhone maker and Facebook’s parent company are now firmly in the same market.

Both Zuckerberg and Cook see the next big era of personal computing as one that involves people putting on headsets to enter a virtual world and interact with digital objects in 3D. Cook describes it as spatial computing, and Zuckerberg calls it a metaverse. Other technologists call it mixed or augmented reality because digital images can be superimposed on the physical world.

Facebook jumped into 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 per quarter to develop the core VR and AR technologies needed to make his vision of the future a reality.

To date, Meta has the lion’s share of the nascent market, far ahead of rivals like Sony, HTC and Magic Leap in handset sales. Research firm CCS Insight recently reported that global shipments of VR and AR headsets fell more than 12% to 9.6 million in 2022 from the previous year as consumers moved away from discretionary spending.

Several tech analysts told CNBC in December that Apple’s entry into the VR and AR market could give the sector the push it needs to start getting consumers more excited about the technology’s benefits.

As CCS Insight analyst Leo Gebbi said, “If one company has the ability to transform the VR market overnight, it’s Apple.”

But Apple didn’t say exactly when the Vision Pro will be available — only that it will be sometime early next year. More importantly, it’s hardly designed to be a mass-market product, at least not 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 in the fall. The company’s Reality Labs division, which is responsible for hardware and software development, lost $13.72 billion last year and $3.99 billion in the first quarter.

Wall Street pummeled Meta in 2022, sending the stock down by nearly two-thirds, in part due to concerns about the excessive costs of the meta universe. But shares have risen this year as Zuckerberg grappled with costs in other parts of the company, including customer service and trust and safety.

For Zuckerberg, making mixed reality a business reality has become central to the company’s future.

Unlike parent Apple or Google Alphabet, Meta does not control an operating system similar to 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 2021 privacy switch to iOS hurt Facebook so badly that the company soon after predicted it would take a $10 billion hit to revenue in 2022. The update limited the ability of Facebook and other social media companies to track users on the web and deliver targeted advertising. Meta’s huge and fast-growing online advertising business suddenly found its business shrinking.

Zuckerberg has been vocal about what he sees as Apple’s unfair iOS and app store policies. His company said that by removing targeting capabilities, Apple has seriously harmed many small businesses that use Facebook’s advertising model to reach new customers in an efficient way.

Last November, Zuckerberg said at a conference that “Apple has kind of singled itself out as the only company that’s trying to unilaterally control what apps go into a device.” He added: “I don’t think it’s a sustainable or a good place.”

For his part, Cook was unsympathetic, having long criticized Facebook for making money off users’ personal information instead of selling a product people want to buy. In 2021, Cook linked Facebook’s business model to real-world consequences such as violence or a reduction in public trust in Covid.

“If a business is built on misleading consumers, on exploiting data, on elections that aren’t elections at all, it doesn’t deserve our praise. It deserves reform,” Cook said at a data privacy conference in Brussels. He didn’t mention Facebook by name then.

By developing the metauniverse on its own terms, Meta has the best chance of circumventing Apple’s dominance and writing its own rules. However, it’s a huge gamble predicting that the metaverse will go mainstream.

Meanwhile, Apple knows all about creating consumer products for the masses, whether it’s computers, digital music players, smartphones, tablets or watches. And Apple has its own new operating system for the Vision Pro, which it calls visionOS. This means that Meta and Apple will be competing for developers who want to bring their games and apps to the widest possible audience.

Disney delivered some potentially troubling news on that Meta front on Monday.

Having previously touted the promise of the metaverse, Disney recently killed off its metaverse division under Bob Iger, who returned to the company last year.

On Monday, Iger took the stage at Apple’s WWDC event and said that his company’s streaming service would be available for the new headphones. While some of the Disney content is available on the Quest devices, Iger suggested that a whole new set of experiences is coming to Apple.

“We are constantly looking for new ways to entertain, inform and inspire our fans, combining extraordinary creativity with innovative technology to create truly remarkable experiences,” Iger said during the keynote address. “And we believe 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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