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Oculus, Facebook weigh in on $2 billion surprise VR deal
Oculus, Facebook weigh in on $2 billion surprise VR deal
March 25, 2014 | By Christian Nutt

March 25, 2014 | By Christian Nutt
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    40 comments
More: Console/PC, Social/Online, Business/Marketing



In a call with investors today following the news that the company has put in motion plans to acquire Oculus VR for $2 billion, Facebook co-founder and CEO Mark Zuckerberg promised that the VR company's immediate plans will not change.

When it comes to VR, "immersive gaming is the first big opportunity, and Oculus has big plans here that will not be changing," Zuckerberg promised. Moreover, he said, Oculus will continue to operate as an independent company under Facebook -- just with increased financial muscle.

Still, there are important facts that came from the call, and questions that arose -- you can find them below.

Why Buy Oculus?

Why did the company acquire Oculus? Facebook sees VR as "the next major computing platform that will come after mobile." Acquiring Oculus is "a long-term bet on the future of computing."

"Immersive virtual and augmented reality will become a part of people's everyday life," Zuckerberg said. "History suggests there will be more platforms to come, and whoever builds and defines these," he said, will shape the future and reap the benefits.

"After games, we'll make Oculus a platform," the Facebook CEO vowed.

"It's different from anything I have ever experienced in my life," Zuckerberg said, and allows for "completely new kinds of experiences." He alluded to "a real breadth of interesting things we just haven't seen before," which he likened to how smartphones have given birth to entirely new applications that would not have appeared in the PC ecosystem.

Oculus' Take

For his part, in a Reddit post, Oculus co-founder Palmer Luckey wrote that he was "skeptical" of partnering with Facebook but that it became "the clear and obvious path to delivering virtual reality to everyone."

"This is a special moment for the gaming industry -- Oculus’ somewhat unpredictable future just became crystal clear: virtual reality is coming, and it’s going to change the way we play games forever," Luckey wrote.

"We're really looking forward to working together to create the best virtual reality platform in the world," said Brendan Iribe, Oculus VR co-founder and CEO, who took part in the call with Zuckerberg.

He described the company's mission as "making incredible, affordable, and ubiquitous virtual reality available to the world," and suggested that Facebook was the natural partner for this. Oculus, he said, is "teaming up with Facebook to invent the future."

"We started in gaming, and that's obviously where Oculus got its kickoff," Iribe said. "We had this vision where it could go with immersive gaming and, long-term, entertainment." Facebook CFO David Ebersman said that Facebook's interest in Oculus is "including and beyond games."

Iribe said that while games began the Oculus project, "something we didn't expect" happened. As development on the project continued, it "became really obvious" how big of a potential there is for a world-changing social experience.

"You're actually present in another space. Your brain is completely convinced it's present and you are okay. Something fundamental changes... if you can see somebody else, and your brain believes they are right in front of you, you get goosebumps. You really start to realize how big this can be -- and social and communications, how big of an impact it can have on these industries," said Iribe.

Sony as Competition, and the Hardware Question

But what of Sony's recently-announced Project Morpheus PS4 headset, or the potential for Microsoft to jump into the space?

Facebook's goal is to "have this transcend the traditional console opportunity. To really make it more of an ubiquitous computing platform." Zuckerberg doesn't believe either of those companies can do that, he said. He was dismissive of the competition, in fact.

Notably, said Zuckerberg, Facebook is "clearly not a hardware company" and is "not going to try and make profits off hardware long term," with Oculus. What that means for the device's ultimate consumer launch is unclear. Zuckerberg would not address launch timing. No further details were discussed.

Still, Zuckerberg promised to push "the different levers that Facebook has to make the product available to be people, affordable, and ubiquitous."

Given Facebook's business model, Zuckerberg sees a "software and services" future for the Oculus technology -- including somehow generating virtual goods and advertising revenue, though he did caution that it's too early to discuss this in any detail.

Betting on the Future

The matchup will "accelerate virtual reality's future," said Iribe. Pairing with Facebook will open doors for the company, while allowing Oculus to concentrate on "doing what we do best: solving hard problems and creating the future of VR."

Zuckerberg clearly sees virtual reality not just as a game platform or a basic technology, but has invested in it the potential to fundamentally shift things the way that the popularization of smartphones has. He sees it as a new frontier in computing and a new pillar for technology alongside PCs and phones.

To that end, his company decided to acquire the leader -- and its talent, he was very definite about pointing out. "There are not that many companies that are building core technology that could be the next computing platform, and Oculus is the clear leader here. It's so much better than anything anyone has built before," Zuckerberg said.

"If we want to help push this forward, this is the team, and they are years ahead," said Zuckerberg.

Now, said Ebersman, comes the challenge of "making these services relevant for millions of people." Zuckerberg compared VR's potential to the 10-year journey smartphones took from 2003 to 2013 -- from their first blush of popularity through to their ubiquity. He repeatedly said that the acquisition of Oculus is a long-term bet on the future of computing.

That's All... For Now

So far, this is all the communication we are able to get or foresee getting in the immediate future. Oculus directed Gamasutra's interview request to Facebook, and Facebook said that this investor call would be the only public communication on the acquisition beyond its original announcement and PR communication.

There are important questions still looming over this move, and Gamasutra will bring you more as soon as it is possible.


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Comments


Ardney Carter
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Well, there goes my interest in ever using this product.

Alan Barton
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Oculus this was a hugely bad move. You had huge potential and you let your VC's greed take your company down for early money, instead of staying the course. :(

I've sadly lost hope in Oculus ... but there is still hope for VR in the form of CastAR. It may well be better for gaming long term, as it can do VR & AR so more options for all games developers and it'll be free from InYourFaceBook spying on everyone's every move.

Here's the CastAR link:
https://www.kickstarter.com/projects/technicalillusions/castar-the-most-versatile-ar-a nd-vr-system

Greg Scheel
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Stop spamming please, and to be real, and as I asked you on the last thread you spammed, how many folks are ready to go for another ride?

Alan Barton
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I'm not spamming, you are being closed minded. I believe in VR but we need an open system and CastAR is the next logical hope for PC based VR gaming. Also CastAR already have their money and you clearly failed to see that, as you chose to instead jump to conclusions without checking the facts. If you don't want to see what is out there, thats fine for you. You stay closed to it. The rest of us are interested in finding out what is coming to market.

Greg Scheel
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For me, it does not matter what else may be out there, currently I cannot afford it; unreal is eating my cpu, and the ug will eat my wallet. My feelings are cynical more than closed, seen too many good things go sour. I get that you want to believe in something, and I will hold off on the accusations in the future.

Christian Philippe Guay
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Quote:
Iribe said that while games began the Oculus project, "something we didn't expect" happened. As development on the project continued, it "became really obvious" how big of a potential there is for a world-changing social experience.

"You're actually present in another space. Your brain is completely convinced it's present and you are okay. Something fundamental changes... if you can see somebody else, and your brain believes they are right in front of you, you get goosebumps. You really start to realize how big this can be -- and social and communications, how big of an impact it can have on these industries," said Iribe.

- -

$2 billion... And how far are they willing to go with all this? Because I'm seriously worried. Actually I'm not. It's just an obvious future, because obviously all those companies totally have your best interests at heart. And very soon you won't even need a physical controller at all and who knows what they'll be able to do with your consciousness. And what about hackers at that point?

Feeling of déjà vue?
http://www.cyberpunkreview.com/images/matrix26.jpg

I enjoy my games on my monitor screen just fine. Be careful with this.

Roberto Dillon
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Somehow I feel like IOI just acquired the OASIS in "Ready Player One"...

Rob Wright
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The question is, who will end up being James Halliday? Carmack or Zuckerzerg -- woops, I mean ZuckerBERG?

Andrew Wallace
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Man, I HATE when a company that made a great product gives a ton of money to a company developing a cool product while letting them keep their independence. It's literally the end of the world.

Ian Morrison
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That'd be great. I'll rest a bit better once I'm convinced it's actually the case. This could be exactly what the PR gobbledygook would have you think it is, or it could be a gigantic sell-out that compromises an overwise game-changing technology for the profit of a corporation whose day to day operations are at least a little dubious.

After reading some of Palmer Luckey's posts on Reddit, today, I'm feeling at least a little more inclined towards the former. Luckey certainly seems to believe that it is. Whether that's an accurate assessment or naive optimism is yet to be seen, but I'm prepared to wait and listen a bit longer before making up my mind.

I do know that opening my browser and seeing this news felt a heck of a lot like a kick to the gut.

Valentine Kozin
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While an odd move, true, I'm still not convinced I see any reason for the panic that's been burning across the discussion threads all over. Facebook is a big, big company that does a lot of questionable big, big company things. Their ethics practices are questionable, yes, but the Oculus as a platform is very tangential to their social media focus.

It seems that they are hedging their bets, making sure they are on board the VR ship if it sails and - for that matter - helping it sail. But it would be unreasonably stupid of them to stymie the direction it is going in currently as an open platform for developers to do their thing on and there is no reason to think they will. Undoubtedly, they will want to use it as a communications device, almost undoubtedly they will eventually push consumer versions to be integrated with communications features such as headsets, but unless they completely close off the Rift as a proprietary platform, I really can't see what the ethical/privacy concerns are if you continue to use it as a platform, rather than opting in on whatever Facebook-specific software they choose to develop for it.

I'm not happy about the acquisition and certainly do wish they'd stayed independent, but it's a bit of a knee-jerk reaction, isn't it?

Greg Scheel
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Whut great product?

NSA direct access?

Jeremy Alessi
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Facebook's just this generation's Microsoft. This move shows Zuckerberg's commitment to connecting people. It also demonstrates Oculus' ability to adapt and grow. There's nothing inherently wrong with this deal no matter how surprising it is. VR is bigger than games.

Jeff Cole
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Great, now my VR experience will be just as cluttered as the real world! Full of targeted advertising!

Tom Pyszczuk
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Do You really think that advertisement would be non existent if FB did not acquire Oculus ? Really ?

Gary LaRochelle
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Oculus just went from running around in a game environment to running around in a shopping mall.

Julian Cram
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Here is an excellently argued response to people here who are bitching and moaning about this acquisition:

http://www.kotaku.com.au/2014/03/why-facebook-acquiring-oculus-ri
ft-is-a-good-thing/

Greg Scheel
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Thing is, you cannot push a river.

Fully half of oculus inspired devs have already lost heart in the company, and losing half of your developer audience overnight is bound to be fatal, given that the main limitation of oculus was a lack of completed games. Developer confidence just took a major dive, reddit is proof enough of that.

Facebook, for your face! ... not sure how you think that will market well.
Now, facebook is more in your face than ever.

Tom Pyszczuk
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Well since now FB can devote a whole complex of developers if they wish to the sole purpose of coding Rift games, I would argue that the drop in indie devs is not a big deal .. I am not even counting all the AAA companies that are just waiting to start coding (or are probably already finishing one or two major titles ) ... As a indie developer myself, I think this is great news, since this will popularize the rift a hell lot more than any other marketing campaign could :)

Amir Barak
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One of the problems people have is with the following:
"This partnership ensures that the Oculus platform is coming, and that it’s going to change gaming forever."

The fact is, it ISN'T a partnership. It's an acquisition. Facebook isn't a partner of Oculus Rift, it's the owner of Oculus Rift. Why claim partnership where the correct term is "This acquisition"?

Secondly, the Oculus Rift is not a platform, it's a technology that enables. By tying it to the Facebook platform (service) they've narrowed the tech's application. Given that the company was born on public funding (Kickstarter) and pandered towards an open/independent expectations people are, legitimately, upset.

That article is not a good argument against anyone questioning this acquisition. Specifically because of its following claim:
"Virtual Reality is, and should be, about something bigger than gaming."
Yes, it is about something bigger than gaming. Shouldn't it also be about something bigger than Facebook?

David Klingler
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I'm really just feeling like that's a sad attempt at trying to see the silver lining that doesn't really exist. I'm all for being positive about things, but it's just not believable to me that it's a good thing.

Michael Thornberg
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The most disappointing news I have heard in the gaming area for a very very long time. I place my hope in Valve VR now, and am likely to put all my efforts regarding VR in their product. There is a snowballs chance in hell that I will ever support Facebook.

Hakim Boukellif
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"After games, we'll make Oculus a platform,"
This is what I'm most concerned about. Making VR software easily available and usable for people is fine and all, but what I'm worried about is that they might tie the hardware to the platform (and thereby also to the service the platform will no doubt be dependent on). Which given this statement:
"Facebook is "clearly not a hardware company" and is "not going to try and make profits off hardware long term," with Oculus."
...seems pretty likely.

David Klingler
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I just... I'm not going to lie to myself just because of some PR wording. This is not good. I would be lying to myself if I thought any different about this acquisition.

Gary LaRochelle
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Just wondering how John Carmack feels about this?

Aaron Eastburn
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Ya, more than a few people from the Oculus Dev forums and Reddit are looking at Carmack as the canary in the coalmine.

Matt Marshall
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With such a big shift there are so many things to consider...but after readiong everything I could on this today I have come to the following summary of sorts :

Bad :
- Facebooks reputation.
They are well known for their data mining and ad revenue schemes, and many people are rightfully fearful that this will continue through into the VR space. In truth, it probably will, but it is FAR too early to make the assumption that the oculus rift ITSELF will be designed from the ground up to be used in such a fashion. The services offered ON the rift may be, but not the rift itself. I doubt it very highly that they will spend so much money on CONTINUING their focus on creating a gaming device first and foremost, and then stripping that away to put ads in the corner while playing assassins creed or battlefield 52.
If anything, facebook will focus on a SOFTWARE platform within the services that exist (be it windows, steamOS or whatever else is alive and kicking by that time) that users will have the OPTION to use, aloingside their favourite games. I highly doubt that facebook would cut off support of the rift inside SteamOS for example, I also doubt that they would have access (or valve would give them access) to anything within that framework.
I find it quite amusing that so many people are hating on Facebook, but I can pretty much guarantee that most of those people STILL USE FACEBOOK. THe convenience will outweigh the reality, and I don't think that will change in the future, whether you like it or not...
Still, I doubt facebook is going to cut out the Oculus as a hardware device in it's own right, simply due to the fact that they have said that they intend on letting it fulfil it's current goals. Cutting off those users after that fact would be commercial suicide from a hardware perspective.
The other thing is I don't trust Facebook/Zuckerberg to keep to their current PR of letting Oculus stay independent within Facebook, ESPECIALLY after the 'game phase' is completed. I have no idea how much he will step in however. I'm trying not to think about it to be honest :)

- Two steps forward, one step back.
I think the biggest blow, with all of this, is that all the support that Oculus has recieved in how they have approached VR, their open nature and what seems like genuine interest in getting it done 'right' no matter how long and how much it takes has been COMPLETELY blown out the door by what many see as selling out to facebook. What I felt was going to be the next Valve company in regards to finally moving the industry forward has stumbled back into 'for the money'... If it was ANY company other than Facebook, (and apple in my opinion) then maybe the backlash wouldn't be as much of a blow as business is business and all that and we all have to accept that...but there's reasonable business practices and dodgy business practices and Facebook is well known to be pretty creepy/dodgy in that regards. Even EA probably wouldn't have had the same amount of outcry as facebook...which says something.

Good :

- Money
As much as it is a greed factor for some saying that they sold out, you have to admit Facebook HAS money to throw towards the VR space. At least for the foreseeable future, this should speed the whole process up a bit, maybe reduce the end price of the rift for the consumer and the end result of the experience will be better for it. The HARDWARE will be in a much better place because of this deal. There is simply no other way to look at this fact... More rifts mean more support, more support means YOUR games get made as there is more people with the device in their living room. And thats a damn good thing.

- Trust in Oculus
Even though he agreed to the buyout I trust Oculus enough to HOPEFULLY see through the fineprint in the contract/any obligations and continue to do things right by the hardware's potential and in the end, the end user.

Summary :
Sorry about the long post, but from Kotaku, Joystiq and here...as well as a few other sites theres so much to consider on something of this scale. But anyway, in the end I think it is too early to say how the end result is going to play out. The biggest 'negative' element is the blow to the VR revolution due to the main player hooking up with a semi despised company due to their 'creepy' revenue practices...BUT if he holds to his word (which he probably won't in the LONG run), then for the immediate future I think we are going to be OK if people just get over themselves and see how it all plays out. If you don't like the RESULT, then don't buy the rift or develop for it...but shooting down something for the POTENTIAL negatives seems a bit of a knee jerk to me.

But then again, even now everyone hates on facebook as it is, but is still one of the most used apps in the world.

Leszek Szczepanski
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I'll have a laugh if in 10 years I will be reading an article titled "How Facebook killed the VR" .

Florian Putz
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Well, bad or not - from oculus' perspective this move makes sense. True, kickstarter backers made this project possible, but let's have a look at who invested in oculus: "The company has received a total of $93.4 million in funding so far from Spark, Matrix, Founders Fund, Formation 8, BIG Ventures and Andreessen Horowitz. " These people want to see results, big time results, they've invested a 100mio $ and now they want to see cash. It's more than a tenfold of what kickstarter backers invested.
These firms won't just be happy with a cool product, they want to make money - and u make money by either becoming a big player yourself - or by making yourself interesting so u can be sold to a big player. That's how this business works, that's what happened today - mission accomplished for Horowitz and Co. I highly doubt that oculus could have generated enough ROI to make investors happy by just selling their current hardware. It's still a long way to go for oculus to have a real mainstream, massmarket ready product - I think whether people like it or not, it's a sensible decision if they want to stay alive, fb is at least a strong backer. The only thing I really hope is that they are smart enough to leave the platform open as it is now and don't put their brand on it.

Mark Nelson
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This is not as bad as if Zynga had acquired Oculus.

But I would have expected an acquisition by Microsoft or Apple. Or perhaps a strategic investment by Amazon.

nikola nikolov
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So, it is really simple! Oculus got scared from Sony's Morpheus and that made them bet safe for the future of the Rift. They didn't think about the reactions of their supporters and maybe that will be a problem. Or it is? We'll wait and see what happens next.

Matt Marshall
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It's interesting how I haven't read one single person say that 'I'll have a laugh if in 10 years I will be reading an article titled "How Facebook completely revolutionized VR in the home". :) Or something similar (just copy/pasting yours Leszek, not taking a dig at you :)

One can dream I guess! Personally I think it will be a bit of a mix...VR isn't dead, no matter what. We still have the PS4 Morpheus and probably Microsoft offering for their consoles. At worst, let facebook foot the bill for the revolution, and let Sony and Microsoft get it 'right' for the gamers.

When it comes down to it, competition means choice. And we certainly have that coming when I assume facebook will be paving the way...'forcing' us to walk along the path :)

Laura Bularca
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Hey all - I have no opinion to share about this acquisition but I do have a question that maybe you can help me answer:

Would you have backed Oculus on Kickstarter if the founder would have said in that campaign that he aims to sell this technology to a big company like Facebook? Thank you in advance for your responses :)

steve smith
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This pretty much sums it up - hell no, and especially not Facebook. The decent and honorable thing to do would be to pay their kickstarters back - but they won't do that. Who needs decency and honor when you've got money?

Matt Marshall
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Yes, I probably would. As much as Facebook isn't exactly the best partner in the world I don't think that actually matters. Kickstarter isn't exactly an investment scheme to get more money back, there are other crowdfunding sites that focus more on putting money in to get actual money back...Kickstarter is more like an investment with a product as the return, rather than actual money. If you got what you asked for as the kickstarter (which I believe they did) then I believe that all bets are off...really.

Generally speaking I feel 'investors' ask a bit much of developers once they have put there $20 in for a kickstarter. If you were ponying up say, $2 billion for a kickstarter, then I would say you should have more of a say in what goes on...but then again I assume that tier would make you CEO of the company :)

If you get what the kickstarter says you'll get, then personally both parties should be happy. I have issues when companies go quiet once they have their money (looking at you Bubl), or of course something dodgy goes on and the whole thing falls through... and Oculus were pretty transparent up until this day, and as much of a surprise as all this may be, it's not like they are trying to HIDE the fact that this is going on.

IF, and thats a big if, it goes as they 'say' then technically this buyout has allowed Oculus to take their vision further. Meaning that original backers will actually have a much better result in the end sooner.

Matt Marshall
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Although I have to note I didn't back the original kickstarter. I have bought the Devkit2 though. And I STILL can't wait to get my hands on it.

Laura Bularca
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Thank you, Steve and Matt, for your feedback. You both have different reactions and this is very interesting to me. In my mind, I saw crowdsourcing platforms like Kickstarter as something social and collaborative with a moral obligation towards the backers, but this is just a personal and unfounded idea. Indeed Oculus delivered towards the promises they made in their campaign. But now that they will be bought by Facebook, it seems to me that people basically funded an R&D project for Facebook, which is the kind of company that really does not need at least the $10 - $75 pledges that were done out of pure support for an awesome idea. But I do tend to judge things and I do tend to have black and white opinions, and this example has many shades of grey in between.

Laura Bularca
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Thank you for your continued feedback. Keep it coming! :)

In the meantime, this happens:
http://kotaku.com/oculus-kickstarter-backers-are-demanding-refund
s-1552041702?utm_campaign=Socialflow_Kotaku_Facebook&utm_source=K
otaku_Facebook&utm_medium=Socialflow

Hakim Boukellif
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I wouldn't. I don't trust the intentions of a company that has being bought out by a larger company as a goal.

Mind you, that doesn't mean I'm opposed to companies buying or merging with other companies, even in this situation (though I do personally prefer there being many, smaller and focused companies than there being a few megacompanies dyeing everything in their color), and in this case the issue for me is more that it's Facebook that that it's a corporate aquisition. Mostly because I don't trust them to not negatively affect the end product.

John Owens
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I think the problem with Facebook is that with their privacy record and heavy regulation of their network then a lot of kickstarter backers who supported to eventually get a product ultimately will feel that anything now won't be fit for purpose.

I'm not too sure I would want to enter a virtual world and have Mark Zuckerberg being able to see everything that I do. Very creepy.


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