Name: Facebook's Oculus VR Deal Is Even More Expensive Than We Thought
Uploaded: 2019-12-17
Duration: 2 min 31 s
Description: So is it worth it?

[THEME MUSIC] ANDREW NUSCA: Welcome to Fortune Tech Debate, where we debate the issues of the day in two minutes. Today, we're talking about Mark Zuckerberg's testimony about Oculus VR. All right. Let's put two minutes on the clock. Take it away, Erin. ERIN GRIFFITH: So Mark Zuckerberg is on the stand because-- ANDREW NUSCA: On the stand ERIN GRIFFITH: --Oculus, which he bought in 2013-- [INTERPOSING VOICES] ERIN GRIFFITH: --for $2 billion is accused of stealing IP from one of their co-founder slash rivals. But the interesting thing about this trial is that it is forcing Zuckerberg to talk about all of these undisclosed details about Oculus... ANDREW NUSCA: It's great. ERIN GRIFFITH: ...including the fact that, in addition to the $2 billion price tag for this technology and the fact that Marc Andreessen, a board member of Facebook and investor in Oculus is a little bit shady there. ANDREW NUSCA: Very convoluted, yeah. ERIN GRIFFITH: They are paying another $700 million in earnouts and $300 million on top of that. So this is a really expensive deal for Facebook. ANDREW NUSCA: Really expensive. ERIN GRIFFITH: For something that just launched this year and is maybe a little bit disappointing. ANDREW NUSCA: And it's going to work, Erin. ERIN GRIFFITH: It's looking disappointing. ANDREW NUSCA: It's going to work. You got to look into the future. ERIN GRIFFITH: They had delays. ANDREW NUSCA: One thing that Mark Zuckerberg said on the stand is look, we bought Oculus thinking 5, 10 years out. He wants to make this the platform of the future. They missed on the phone. ERIN GRIFFITH: They really whiffed on phones. ANDREW NUSCA: They really whiffed on the phone. Like we don't even want to talk about it it's so bad. Just sweep that under the rug. They think that this is the platform of the future. And that's why they paid what seemed like top dollar at the time and certainly continues to pile up. Are they making that money back right now? Probably not. We don't really know. But come on, you got to look to the future here. Now is not the time to look at ROI. ERIN GRIFFITH: Yeah, I don't know about that, because the problem is, Facebook's DNA is an advertising based media company. ANDREW NUSCA: Oh, come on. ERIN GRIFFITH: And they're trying to get into hardware and trying to make that work. And I just don't think that we have a lot of historical precedent of that working. ANDREW NUSCA: I don't buy it. ERIN GRIFFITH: For example, remember when Google bought Motorola for a lot and the hardware business was really, really hard. And they realized, oh, this is dragging down our margins. Investors don't like it, we got to get rid of this. I'm wondering if the same thing's going to happen for VR, especially if it doesn't live up to the hype of expectations. ANDREW NUSCA: But Motorola, its mobile business, specifically, was a hardware company. And Oculus is not. It's built as a platform. It's built to license its platform out to other partners. [INTERPOSING VOICES] ANDREW NUSCA: I see lots of money, but we're out of time. So please come to fortune.com for more Tech Debate. [THEME MUSIC] 

Facebook's Oculus VR Deal Is Even More Expensive Than We Thought

Tech

welcome the fortunes activate where we debate the issues of the day in two minutes. Today we're talking about Mark Zuckerberg's testimony about Oculus v r. All right, let's put two minutes on the clock. Take it away. So Mark Zuckerberg is on the stand because Oculus, which he bought in 2013 anything for $2 million is accused of stealing I p from one of their co founders rivals. The interesting thing about this trial is that it is forcing us, Dr Burke, to talk about all of these undisclosed details about including the fact that in addition to the $2 million price tag to this technology and the fact that injury Mark Hendrickson, board member of Facebook and investor innocuous, a little bit very, they're paying another $700 million earn outs and $300 million on top of that. So this is really sensitive deal, really for something that just launched this year and learning and learning no, look into the future. So delay one thing that Mark Zuckerberg said on the standards. Look, uh, you know, we bought Oculus thinking 5 10 years out, he wants to make this the platform of the future. You know, they missed on the phone really, really whiffed on the phone like we don't want to talk about it to sweep that under the rug. They think that this is the platform of the future. And that's why they paid what seemed like top dollar at the time and certainly continues to pile up. Are they making that money back right now? Probably not. We don't really know. But come on, you gotta look to the future here. Now is not the time to look at our I don't know about that because the problem is Facebook's DNA is a kn advertising based media company and they're trying to get into hardware and trying to make that work. And I just don't think that we have a lot of historical precedent of that work on a bike, for example. No. Remember when Google bought Motorola for a lot and the hardware business was really, really hard and they realized, Oh, this dragon on our margins, Investors don't like it. We got to get rid of this. I'm wondering is the same thing's gonna happen for V. R. Especially if it doesn't live up to the hype. But Motorola? Motorola is mobile. Business specifically was hardware company, and Oculus is not built as a platform. It's built a license, its platform out. Other partners Wait. I see a lot of money, but we're out of time. So please come to fortune dot com for more, detective.