It was a surprising move when Facebook shelled out $2 billion to purchase Oculus in 2014, a 2-year-old virtual reality startup by Palmer Luckey — a company that arguably helped dictate where VR would later go.
But that price is actually a billion dollar short. Facebook acquired the company for $3 billion, new reports suggest.
Facebook Paid $3 Billion To Acquire Oculus
Mark Zuckerberg, Facebook's CEO, disclosed the previously reported price point and the actual price point Tuesday during a deposition in a Texas courtroom, as reported by on-site coverage and tweets from The New York Times, and other publications.
According to Zuckerberg, the extra billion was allocated for retention bonuses — $700 million — and "other incentives" — $300 million. At the time of the acquisition, the reported purchase price was $2 billion as outlined in the official agreement, which in turn also provided another $300 million earn-out in cash and stock which would be based in "the achievement of certain milestones."
Facebook bought Oculus two years after a 19-year-old Palmer Luckey launched the VR company on Kickstarter, not long after Facebook bigwigs got a glimpse of the technology. Zuckerberg has said that VR is the next innovation for online social interactions.
The Lawsuit
In court with Zuckerberg were Luckey and Brendan Iribe, the erstwhile Oculus CEO who was dislodged from the position in December to helm the company's PC division. The Facebook chief is in a Dallas courtroom to face allegations of intellectual property violations issued by ZeniMax Media, owner of game development company Id Software. The accusations are backed up by evidence that "includes the theft of trade secrets and highly confidential information, including computer code."
In April 2012, John Carmack, a ZeniMax engineer and VR pioneer was permitted by his company to help make refinements to Luckey's fledging VR experiment, using, of course, ZeniMax's IP. The company says that it had Luckey sign a non-disclosure agreement, or an NDA, as the collaboration went on. Carmack and other ZeniMax officials then unveiled a proprietary VR tech during E3 in 2012, featuring something starkly modified from the Oculus Rift, Luckey's proprietary VR headset.
Luckey, gleaning from the reaction ZeniMax's VR headset received, then proceeded to commercialize the Oculus Rift.
The problem is, however, as ZeniMax asserts in the lawsuit, Luckey lacked expertise and technical prowess to come out with his own VR headset at the time. Hence, he turned to ZeniMax to fill those gaps. Without seeking help from ZeniMax, the Rift headset wouldn't have existed, ZeniMax now claims.
ZeniMax, relying on Luckey's signed NDA, sought to enter an agreement with Luckey which would see it benefit from the commercialization of the Oculus Rift, but ZeniMax claims that Luckey had become "increasingly evasive and uncooperative."
The case is expected to last three weeks, but Zuckerberg believes the whole charade will favor Facebook.
"We are highly confident that Oculus products are built on Oculus technology," he said. "The idea that Oculus products are based on someone else's technology is just wrong."
