Editorial: Facebook, its DNA, and the VR ads

Some days ago, Facebook has announced that it will start experimenting with VR ads inside some selected applications (and Blaston will be one of the first) as a new opportunity for developers to make money. Of course, the community reacted pretty badly to this piece of news. So badly that Blaston has been bombed with 1-star reviews just because it has been announced as one of the applications that will test this feature, and people have started tweeting comparisons between Facebook and Ready Player One’s IOI.

Well, let me tell you what I think about all of this, saying some harsh truth that I hope will open the eyes to someone else.

No one should be surprised

I think no one should be surprised about Facebook’s announcement. I mean, I’m surprised that most people were surprised. What Facebook said fits perfectly in its strategy and I personally think it is just one step, and many others are coming in the future.

Remember when during the postmortem of my first startup I said that “a startup is all about the money”? Well, remember that: always follow the money. If a company is able to sustain itself and grow, it is only because of the money it earns. All the rest, all that gravitates around the money is of secondary interest. You may like what I’m saying or not, but this is how business work… and maybe also the reason why I’m not a rich entrepreneur (I don’t always put money first).

Facebook is a social media, it connects people, but at the end of the day, it earns money with advertisements. Looking at the money, it is an ad company, a very sophisticated one, but still an ad company. Connecting people, making you joining a group, making you have new friends… is only what it does (very well) to keep you hooked to the platform, so that it can analyze your data and sell you better ads. Facebook’s executives may tell you something different, but this is the plain truth.

Facebook makes billions out of the ads industry and it is one of the best platforms to provide advertisement. If you have ever had to do a marketing campaign for something (e.g. a product of yours), you for sure know that since it profiles its users very well, Facebook is the platform where you can maximize your conversions the most, and because of this, all the marketers love Facebook. It is a fact that Facebook does its job incredibly well. And for this reason, it makes billions out of its ads business.

Now, we all know that AR and VR are the next technological platform… the evolution of the smartphone, the evolution of the web. Did you really think that Facebook would abandon the business that it does so well and for which it earns tens of billions every year just because you think that it is not healthy for VR? Personally, I did not. I’m not surprised at all: I’m more surprised actually that Facebook entered the hardware business than I am for Facebook doing ads in AR and VR. Deal with it. And this “experiment” is just the beginning…

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The boiling frog

Facebook is steadily pursuing its goal of taking its ad business to AR and VR. Slowly, but steadily. Facebook executives know that their company is not loved at all because of the various privacy scandals, so they are moving with baby steps. First, they acquired Oculus and said that nothing would have changed for the startup, and they promised Palmer that no Oculus Rift would have required a Facebook account. Then they slowly kicked away all the previous executives from Oculus and took control of the company. Then they absorbed Oculus into Facebook. Then they started introducing Facebook-exclusive features in the Oculus runtime. Then the behavior of every VR user on social media Facebook has started influencing the suggestions inside the headset. Then the Facebook login became mandatory. Then the ads are coming to VR. These are some key highlights from the last 7 years.

Every one of these steps made Facebook closer to its goal. Almost all of them had some backlash from the community, some times smaller (e.g. for optional Facebook features), some times bigger (e.g. for the mandatory Facebook login). But this never stopped Facebook from continuing its march towards its goal of dominating the new technology platform and expanding its ad business on it. They did a step, waited for the community to vent, and when the water cooled down, they did the next one. If you look closely, almost no backlash from the community had any kind of effect, if not for minor things. The march has gone on exactly as planned.

And if you believe that this announcement is the last one, you are very naive. I expect these ads to expand soon, integration with Facebook to become tighter, and also data harvesting to become more aggressive. For these ads, the “[collected] VR data includes whether you’ve viewed content, installed, activated, or subscribed to an Oculus app, added an app to your cart or wishlist, if you’ve initiated checkout or purchased an app on the Oculus platform, and lastly, whether you’ve viewed, hovered, saved or clicked on an ad within a third-party app” (quote from Upload VR). This is much more than what Oculus promised to track some years ago (“only the height of the user is sent to Facebook, for statistical purposes”), and the amount of tracking info is going to slowly increase. When there will be eye-tracking on the Quest 2 Pro, for instance, I bet that viewing and hovering may regard also what you are looking at with your eyes.

Remember that at Facebook they have very complex algorithms to try to understand what interests you by using not only your likes, but also how much time do you spend reading every news in your feed, and whatever cue they can use to better understand your tastes. If they are so good at doing that, why shouldn’t they port this to VR too? I guess that the more data, the better for the business.

Step by step, they will port everything they’re doing on the web to VR, I can assure that. Because it’s Facebook, it’s its business. It’s how it makes money: it is in its DNA. You may like or not what they do, but a fact is that it is an ad company, and it will surely keep doing ads.

The positive look at every news

Together with every step, Facebook always presents the good side of it. This is typical of every big corporate, that has many marketers that think about how to propose something in the best way possible.

“Ads in VR are a new way for developers to make money”. True, but the honest truth is also that “Ads in VR are a new way for Facebook to make money”.

“We sell the Quest undercost so more people can use VR to connect”. Yes, but “You sell Quest undercost so that you can kill the competition and have a bigger market of people to propose games and ads to”.

“Facebook login is important to let people in VR use the proven Facebook infrastructure”. Perfect, but “Facebook login is also important to match Web data with VR data for better ads targeting”.

And so on. There is always a good side highlighted, but the whole truth, the one that looks at the money, has also another side.

Another slightly different example is when they acquire a game studio like Beat Games and they say that “Beat Saber will continue being supported on all current platforms”. And this is 100% true. What they don’t mention is that it most probably won’t be available on new platforms, that is new standalone headsets, that so won’t be able to compete with the best games that are exclusive to the Quest.

And usually, there are also some reassurances together with the news of every step. “Devs can opt-out from ads”, “We don’t analyze data of your hands or your environment”, etc… Most of these are things that either are obvious (why they should analyze my hands’ movements? What would be its use for the ads business?) or that maybe will be changed in the future (are we really sure that when we’ll all wear Facebook AR glasses, which will be very thin and should send data to the cloud for analysis, they won’t send data to Facebook servers about what we are doing so our Facebook assistant can help us in our activities?)

Look at what happens on the other platforms…

When I commented on this news on Twitter, someone answered me that I shouldn’t complain… because all these things are already happening in the web and app worlds, so it is natural that they are happening in VR too. And honestly speaking, he’s right. Apps are now a race to the bottom to propose things that are free, and IAP and ads are the only way for many devs to sustain themselves. Websites are full of banners (also very annoying ones). It is pretty natural that they are going to appear in VR too. At the moment the market was too little to get the interest of advertisers, but now, with the millions of people that the Quest is bringing, ads are starting to become relevant.

Facebook has the spotlight on because of the scandals, but it’s not the only company doing that. On the web, Google has similar behaviors. Try looking at the history that Google has about you for your use of Google Maps: you will discover that in Google servers there is exactly where you have been in every moment of your life, and in what places have you been every day. And this also thanks to the non-mandatory but very-much-advised Google login on Android phones. One of the advantages of having a Chinese Phone for me is that Google is missing this data from me, even if I think that now it is going straight to the Chinese government.

I’m not putting ads on my Youtube channel at the moment to not annoy my viewers, but recently Google has written me that it may decide to put banners on my videos and earn money from them without even asking. If I don’t agree, I can close my account. This is very unfair.

The undercost hardware subsidized by other forms of content is something that consoles have made far before Facebook. Recently, one of the previous Xbox executives has said that Microsoft invested $5-7B for selling Xbox consoles undercost, so that to be able to enter the market and establish XBox as one of the leaders.

Apple, the company that many see as the possible savior of privacy in AR and VR is basically the company that invented the walled gardens, and the building of the hardware and the software together so that to control all the technological stack. It has also been recently accused by Epic of anti-competitive practices… exactly the same thing that some people contest to Facebook in XR

Facebook is not inventing anything: it is just taking our happy garden, where we liked to play and where we were all happy nerds, and applied common business practices to reach its own goal, that is the domination of the new technological platform. Are they good or bad? On the business side, this is not an important question: if they are allowed and bring money, then they are something that a company does.

The tech world domination

Do you remember the leaked letter written by Zuckerberg when he wanted to acquire Unity? He said that he was annoyed by Facebook having to deal with Google and Apple, the owners of the operating systems for smartphones, when developing features for the Facebook app. He said he wanted to control all the technological stack of the immersive technologies: the operating systems, the best apps, the development tools, the hardware.

Look what is unfolding in front of your eyes: Facebook has its operating system for VR headsets and is building one from scratch for AR glasses. It builds its own hardware. It has some content creation tools (SparkAR). It has its own store. It has bought all the best content on Quest, so it is exclusive to its platform. It is working to control exactly everything. Mark is realizing his vision. Again, slowly but steadily… Facebook will control all the stack and will be independent of everyone else, being able to do whatever it wants on its products.

No competition

What if you don’t like this vision? Well, you’re fu**ed. Because Facebook has no competition at the moment. It doesn’t only control all the technological stack, but it is also establishing a de-facto monopoly. Hardware is so cheap that no other companies can compete. It is absorbing the best talents, it is even buying the best applications. Even if another company (e.g. Samsung) offers a new standalone headset, this headset can’t have famous games like Beat Saber, Echo VR, Population One… and so it becomes immediately less interesting. If a new company wants to enter the VR field and compete, it should start with cool hardware and huge investments in content, maybe with famous IPs. It is very hard. It’s a matter of investing billions.

The fact that there is no competition means that either you undergo Facebook’s rules, or you’re cut out from the best of VR. If you are a developer, at the moment you are de facto forced to publish for Quest if you want to sustain yourself, because it is the most profitable platform (We too have published our game HitMotion on SideQuest). Yes, there is SteamVR, but its market is becoming less relevant. PSVR is in a transitional phase. If you are a user, without a Quest + Facebook account you risk losing some of the best upcoming content, like Resident Evil 4, or Ubisoft’s upcoming VR games. It is not that Facebook is forcing you in any way, it is that you are left with no other choice if you still want to enjoy the best of VR.

This has been studied pretty well: if Facebook left room for competitors, at the announcement of a Facebook login, everyone would have stopped buying Oculus devices and switched to the competition. But there were no alternatives, so everyone bought a Quest 2 anyway and reluctantly used his own Facebook login. It has been a well-studied strategy from the beginning.

“But if we all stop buying Facebook headsets….”

It is not going to happen. It never happens. I have seen protests against many companies, but it has never happened that “all users” stopped using a product. Facebook has already had many boycotting campaigns, but it is still one of the most powerful companies in the world. If you are being useful for your users, they won’t abandon you. And at the moment, the Quest is useful for many people, it is the only headset that has sense to buy for many people. “But you can buy an Index + VR PC for only $2000″… yes, but how many people in the mainstream market want to spend $2000 for VR?

“But Facebook has done so much for VR!”

This is a statement I hear a lot. Well, yes, Facebook has done so much for VR, I agree. But do you think that it did this for you? So that you could have a cheap device to watch VR porn? Sorry to inform you that no, it has done a lot for VR because it was good for its business. Again, look at the money: Facebook plans to do a lot of money by dominating the XR industry, and the best way to do that was selling hardware undercost and kill all the competition. “Doing so much for VR” was what could bring them money.

And again, it is not only Facebook: all the companies out there are like this. NVIDIA, Apple, Tesla, Microsoft, Valve… there is no company that is “good”, or that does things specifically to make you happy. A company is meant to earn money… some of them have a stronger ethic than others, some work better than the others, but in the end, there is no good company. I still remember when Polygon some years ago published an article to remind people that “Valve is not your friend”. Do you find it normal that I have to install a game store (Steam) and have an account on it to be able to use the runtime of a headset? There are many enterprise customers that complained a lot about this. Elon Musk was never your friend either, and his recent behavior with crypto shows that too. Sorry to open your eyes on that.

“Facebook is the new IOI”

This is another statement that I’ve heard: everyone keeps sharing the part of Ready Player One where IOI’s boss talks about occupying 80% of user vision with ads without causing seizures and comparing it with Facebook. Personally, I don’t agree.

When I am on Facebook, I am not bombarded with ads. There are ads on my feed, but they are not annoying, and there are never pop-ups and pop-unders. The Facebook website is less annoying than many other websites out there. I don’t think that Facebook will fill our vision with ads, because it is not its vision (pun intended). Boz always says that he aims at making ads on the Facebook VR platform relevant (if an ad is about something you are interested in, it may be useful); and well-integrated (VR banners should fit well with the rest of the experience). Facebook knows that this way banners are more effective and more tolerated, that is, are better for its business. I strongly believe that this will happen also in the XR future: it is more probable that your Facebook VR assistant will tell you “Hey, what about entering this McDonald’s shop and have a break?” as an ad while you are walking on the street than having all your vision filled with useless banners.

Many characters in movies are good or evil. And IOI is pure evil. But in real life, things are far more nuanced: Facebook is considered evil by many, but I have to say that personally it has helped me in connecting with lots of people, and also enter some interesting VR communities, and this has been good. As we said before, Facebook has also accelerated a lot the development of VR. So no, Facebook is not IOI, it is much smarter than that.

Ads are not even the problem…

Ads are not the evil too. I use them on my website too because they help me in sustaining my business. What is evil is what they bring with them. On my website, using Adwords means that there are annoying popups on mobile phones, and it means that Google is gathering data about you. Yes, I’ve turned off their user profiling feature, but Google is anyway gathering some data. This is why I’m switching to Patreon, hoping to earn more from that so that I can get rid of ads altogether.

Seeing a suggestion of buying something, that in some cases it may also be useful, is not the core problem. The problems are the fact that ads can be annoying and that to work well need user profilation: the more data the ad company knows about you, the more it can show you ads that may convert with you, so the more it can be profitable. And we don’t want either of these things in VR. People are not angry with Facebook for the ads, but for the privacy violations... especially because we all know that data gathering in XR could reach unprecedented levels.

So what in the end?

I wanted to show you an objective view of what is happening. No companies is there to give us the technology we love, no company is there to make us happy. No company is good or bad, it’s always a matter of shades of grey… some are whiter, others are darker, but there is no black and white. Always look at the money, the money never lies.

I think that in the short term future, nothing is going to change. Facebook will keep pursuing its dream of dominating the new technological platform, and to port its present business on immersive realities, also adding new forms of revenue (e.g. gaming). It will advance step by step to its goal of one billion people in Facebook VR, like there are today one billion people on Android phones (even more, actually). It will keep doing steps towards it, completely ignoring the protests of the community. It will keep gathering always more data in these technologies. It is its nature, it is its goal, it is what the money suggests it should do… because if it fails to land the new technological platform, Facebook risks losing a lot of money, as it happened to Microsoft when it missed the smartphone market.

For the short term, things will keep going this way. And you may like it or not, you may agree or not. I’m not telling you what you have to think. But this is what is going to happen. Facebook has won this round of VR, a bit like NOKIA won the round of the pre-smartphone phones, and it is doing everything it wants now.

Things may change in the future, with some technological disruptions, with new companies investing more in the field: for instance, XBox managed to become a leader in the console field even if it arrived after Sony PlayStation. And we need competitors to put some pressure on Facebook, to make it become even more cautious in the steps it is taking. Competition is what can create for all of us a healthier environment. But it is also true that I wonder who could be a “good” competitor: again, Apple is only creating a walled garden that fights against another walled garden, I don’t know how this can be a win for the users. But at least Apple would bring strong attention to privacy in XR, and this could make Facebook be more attentive in the field (and it has already happened, considering that leaked e-mail by Boz that said that Facebook should improve its reputation for what concerns privacy). We will choose with our wallets, but only when there will actually be a choice that can be taken.

We also need legislators to stop some monopolistic business practices, or governments making more laws to protect the privacy of the users in XR. For this, institutions like XRSI may be important to pressure governments in taking actions and forcing companies to abide by some laws that preserve the privacy of the users.

If competitors steal users from a company, or governments prevent a company from operating in their country, then this company loses money, so it is forced to change. This is what we would need to make sure that Facebook takes into serious consideration our privacy, and continues making non-obtrusive ads. Facebook will always be Facebook, an ad company, and is a nonsense to hope that this is going to change. But we can hope that it will do its business in the most ethical way possible.

Am I positive about this for our future? Mmmhhh….

(Header image by Facebook)