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(Bloomberg) -- Meta Platforms Inc.’s ongoing battle with German regulators has created a stumbling block for the country’s nascent virtual reality industry.
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Local startups have been struggling to get their hands on Meta’s headsets after they were pulled from the shelves. Now they are having to choose whether to develop applications using less popular rival headsets, or give up on the fast-growing $4.4 billion market.
“The sales stop of Oculus Meta already has an immense impact on us, since the complete B2C sector cannot be served with it,” said Christian Gnerlich, founder of Brainjo, a Regensburg-based VR company that specializes in brain-training software. “Almost no one has a pair of VR glasses.”
Meta removed its Oculus headsets from the German market in 2020, fewer than three months after the country’s top court confirmed an allegation that Facebook was abusing its dominant position. Later that year, the Federal Cartel Office opened a probe into the requirement that its Quest 2 headset users register a Facebook account in order to operate the device.
A spokesperson for the company declined to comment on why it doesn’t sell the headsets in Germany.
In the meantime, German virtual reality firms have lagged far behind peers in the UK, France, Israel and Switzerland in fund-raising, according to data compiled by PitchBook.
Meta is the world’s top VR headset maker, with 80% market share according to research firm IDC. Customers have spent over $1 billion on Meta’s Quest store content, in part driven by Facebook founder Mark Zuckerberg’s obsession with the so-called metaverse, a virtual world that blends gaming, VR and social media. JPMorgan estimates spending in the metaverse could eventually reach $1 trillion.
While it is possible to get Quest 2 headsets delivered to Germany via Amazon stores hosted by other EU nations, the workaround is an added cost to developers and depresses demand among potential clients.
Regulatory Battles
The dispute between Meta and the Federal Cartel Office is one of several cases where the company’s data policies and practices have triggered concerns in Germany. Regulators have banned the company from collecting data of German users of its WhatsApp messaging service, while this year the nation’s top civil court ruled Facebook can’t deny locals the right to use invented names.