Facebook Strikes Deal for AR Displays, Squeezing Out Apple

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Facebook has struck a deal to buy all of the augmented reality displays made by British firm Plessey, as the social network looks to build AR glasses capable of overlaying virtual objects onto the real world. The deal could give Facebook an edge over Apple, which recently looked at buying Plessey, one of the few makers of AR displays, according to two people familiar with the matter.

Instead, Plessey will license its technology to Facebook and dedicate its U.K.-based factory to supplying Facebook over several years, both companies confirmed. Facebook could have tried to buy Plessey to gain access to its AR displays, but that would likely have brought intense regulatory scrutiny. Striking an exclusive supply deal speeds up the work and gives Facebook the benefits of an acquisition without a lengthy regulatory review.

The Takeaway

Facebook will be exclusive customer of AR display maker Plessey
By partnering with Plessey, Facebook avoided regulatory scrutiny
Apple also looked at buying Plessey

An Apple spokesperson declined to comment and Plessey execs didn’t return requests for comment on the Apple talks.

Facebook’s deal with Plessey illustrates how tech giants are racing to secure the building blocks needed for AR headwear—technology experts believe could be as transformational as the introduction of PCs and smartphones. Facebook CEO Mark Zuckerberg recently predicted that “we will get breakthrough AR glasses that will redefine our relationship with technology” in the 2020s.

To create such a device, Facebook has teams building its own operating system, apps, silicon chips, and tech capable of deciphering human thoughts. It also continues to invest in VR headset maker Oculus, which it acquired for roughly $2 billion in 2014.

In a statement, Facebook said it wants to build “a glasses form factor that lets devices melt away so we can be more present with our friends, families, and surroundings.”

“This will take years, so across AR/VR we’re continuing to invest in extensive research on this deep tech stack and components such as small-scale displays,” the company said.

The AR devices that have been released so far from the likes of Magic Leap and Microsoft are clunky, expensive headsets with extremely limited graphics capabilities that haven’t sold well.

Display technology represents one of the key hurdles for tech giants developing AR hardware. To be good enough for everyday use, AR glasses need to have optics that can accommodate wide ranges of light, show the real world with clarity and last all day without losing power or overheating.

“There is no publicly available known display system that meets those requirements,” Michael Abrash, Facebook’s head of AR and VR research, told The Information in an interview late last year.

But Plessey claims it has developed microLED displays that provide rich colors and contrast while consuming less power than other screens. Even if the displays aren’t ready for mass use, the industry is a narrow field with few players, which is why Facebook wanted to lock up supply early.

Plessey formed roughly a decade ago to build display tech for customers including General Electric. In 2017, it focused its business entirely on creating microLEDs for wearables and AR or VR devices at its U.K. factory.

Alex Heath is a reporter at The Information covering social media companies along with augmented and virtual reality. He is based in Los Angeles and you can find him on Twitter @alexeheath.

Amir Efrati is executive editor at The Information, which he helped to launch in 2013. Previously he spent nine years as a reporter at the Wall Street Journal, reporting on white-collar crime and later about technology. He can be reached at [email protected] and is on X @amir