Facebook begins tying social media use to ads served inside its VR ecosystem

Everything we’ve feared about the Facebookening of Oculus and its virtual reality ecosystem is starting to come true.

A Wednesday blog post has confirmed that Oculus, the VR-specific arm of Facebook, is now displaying advertisements in select VR games and apps to their players. As Facebook has since emphasized in emails sent directly to the press, these ads will leverage “first-party info from Facebook to target these ads”—and FB has yet to announce any limitations for what Facebook account data may be leveraged. (Ars Technica was not briefed about this news ahead of the announcement, and we did not get the opportunity to request the comments that other members of the media received.)

FB’s additional clarifying statements about biometric and use data inside of VR are carefully worded to clarify that the company does examine specific use data as it sees fit, and for now, that data won’t apply to its new advertising platform. Facebook says it processes and keeps track of the following data, uploaded by users while connected to any Oculus services:

• “Weight, height, or gender information that you choose to provide to Oculus Move [a pre-installed fitness suite]”
• “Movement data” that Facebook uses to “keep you safe from bumping into real-world objects”—in other words, every single way your head and hands move around within VR and relative spatial data about the rooms you play VR within, which researchers have concluded can be used to create a recognizable biometric profile after only minutes of training
• “The content of your conversations with people on apps like Messenger, Parties, and [Oculus] chats or your [Oculus] voice interactions”

For now, Facebook continues to tell users that “data that are processed on the device” are not uploaded to Facebook servers, which include “raw images” from Oculus headset sensors and “images of your hands” in its hand-tracking interface. Meanwhile, if you’d like to know how much of your use data inside of Facebook (and Instagram and other FB-connected services) might be leveraged by its combined advertising network, clear the rest of your day’s schedule and dive in.

Today’s announcement emphasizes that this advertising option is meant to generate “new ways for developers to generate revenue. The thing is, Facebook itself created a revenue blocker for VR game and app creators up until now, since its “app policies” agreement has always forbidden third-party advertising services inside of any products. Now that Facebook can operate the advertising platform and skim revenue off the top, things have changed.

How rapidly will the downstream soon run?

Facebook itself suggests that advertising is a key element in its VR business going forward: “This is a key part of ensuring we’re creating a self-sustaining platform that can support a variety of business models.” It also admits that product pricing can vary with advertising in the mix: “It helps us continue to make innovative AR [augmented reality]/VR hardware more accessible to more people.”

That news is unsurprising to anyone who follows Facebook’s quarterly financial results, which revolve largely around its targeted advertising platforms that deftly move from app to app and from service to service. Meanwhile, rival VR hardware manufacturers like HTC have loudly shot back at Facebook’s cheap-hardware sales approach.

Recently, HTC Vive general manager Dan O’Brien said the following to Ars Technica:

When pressed about Oculus as VR’s top-selling consumer option, O’Brien was frank: HTC wants to make its VR money from upfront purchase revenue, not from “downstream” opportunities. He described at length the business model of “some brands” subsidizing expensive hardware at a lower MSRP “with the hope of monetizing downstream on shared services” and “maybe using data-mining tactics to understand user behavior and then run a program that also generates downstream income.”

But also: notice the official mention of augmented reality in Facebook’s Wednesday pitch. The most recent Facebook Connect presentation revolved around Oculus research and hardware, included a wide-open pitch hosted by longtime Oculus lead Michael Abrash. He spoke of the company’s ambitions for Google Glass-like hardware that people may one day wear in public, full of real-time virtual images embedded in your nearby surroundings and high-level processing of all nearby audio and conversations. While we aren’t surprised that Facebook might want its eventual always-on-your-face device to tap into its advertising ecosystem, today’s announcement is a clear warning: if such a product should reach the market, it, like the $299 Oculus Quest 2, could very well be priced to move—but at a cost outside of shoppers’ dollars and cents.

As a reminder, all new Oculus-branded hardware going forward requires a Facebook account to work. Meanwhile, hardware sold before that rules change went into effect will require a ToS agreement beginning January 1, 2023. And the company’s combined ToS can penalize users for creating phantom or dummy Facebook accounts for the sole purpose of enabling connected Oculus VR features; by agreeing to that ToS, Facebook can void your account and its related purchases, should they be found in violation of its rules.

And as Facebook continues acquiring VR-focused video game developers, particularly the makers of megahit Beat Saber, those fully owned development houses could reasonably become prime targets for Facebook’s internal advertising tools. Big companies don’t acquire successful, smaller ones for charity, after all.