Mark Zuckerberg’s remarks on China cast shadow over Meta’s VR quest

As Meta sets its sight on introducing its virtual reality headsets to the Chinese market, Mark Zuckerberg’s contentious remarks about Beijing in the past may pose a major obstacle to his China dream.

According to a recent report by the Wall Street Journal, Meta is preparing to re-enter China by selling the Oculus Quest VR headset in China. If Tesla can sell cars and Apple can sell phones in China, why isn’t Meta present there? Zuckerberg asked in a recent internal meeting.

But some observers are quick to point out that Zuckerberg has a history of criticizing the Chinese government, a stance that will likely be amplified in the current climate of heightened tensions between the U.S. and China.

Caught in U.S.-China tensions

In a speech delivered in 2019, Zuckerberg criticized TikTok for its censorship practice.

While our services, like WhatsApp, are used by protesters and activists everywhere due to strong encryption and privacy protections, on TikTok, the Chinese app growing quickly around the world, mentions of these protests are censored, even in the U.S.

Not content with criticizing Facebook alone, Zuckerberg went on to level criticisms of China.

It’s one of the reasons we don’t operate Facebook, Instagram or our other services in China. I wanted our services in China because I believe in connecting the whole world and I thought we might help create a more open society. I worked hard to make this happen. But we could never come to agreement on what it would take for us to operate there, and they never let us in. And now we have more freedom to speak out and stand up for the values we believe in and fight for free expression around the world.

And he added:

China is building its own internet focused on very different values, and is now exporting their vision of the internet to other countries. Until recently, the internet in almost every country outside China has been defined by American platforms with strong free expression values. There’s no guarantee these values will win out.

In today’s tenuous U.S.-China relationship, companies that do business between the two countries need to stay on their toes about what they say in public, otherwise, they risk falling out of favor with local authorities.

Indeed, sources told the Wall Street Journal that Chinese officials’ views on Zuckerberg could create some uncertainty for Meta as it seeks approvals for its products and services in China.

Even if Quest gets the green light to enter China, Meta still faces significant political pressure at home. The challenge for Meta is how to balance China’s censorship demands with the expectations of politicians in its home country, especially given that Meta was banned from China back in 2009.

Like other American firms operating in China, Meta will get caught up in the escalating tensions between the two superpowers. At home, Zuckerberg is likely to face questioning from Congress about Quest’s censorship practices in China, just as Tim Cook was grilled by lawmakers over Apple’s removal of apps deemed sensitive by the Chinese government.

The reverse is also true. TikTok’s CEO Shou Zi Chew floundered when Congress shot him with a string of thorny questions about Beijing’s alleged access to the app’s American user data.

Tencent’s CEO Pony Ma has given the green light to negotiations with Meta, according to the Wall Street Journal report, but it’s unlikely to be an easy road ahead should its potential American partner have to testify before Congress about a business it conducts in China.

But who knows what charm offensive Zuckerberg plans to go on for China again? Some of you might recall that the Facebook boss famously ran through the Tiananmen Square in smoggy Beijing without a mask on.

A rough path to China

Recent examples of American tech giants’ attempts to tap into the Chinee market can provide some clues to what lies ahead for Quest in China.

In 2019, the Californian gaming platform Roblox teamed up with Tencent to enter China. The partners formed a joint venture that is 51% owned by Roblox and 49% by Tencent, a rare share structure that allows the foreign investor to hold a controlling stake in a Chinese entity.

The partnership looked promising at first, especially given Roblox’s seemingly welcoming focus on educational content. But before long, China’s sudden crackdown on the online education sector took many by surprise.

In January 2022, Roblox abruptly shuttered its Chinese service for “important transitory actions,” acknowledging that it “always knew that building a compelling platform in China is an iterative process.” There have been no public updates on Roblox China’s progress since.

The other example Meta could draw from is Nintendo Switch, which entered China in 2019 also through a partnership with Tencent. However, the number of games available on the Chinese version is limited due to the country’s stringent content approval process, which has somewhat dampened the appeal of the console platform to gamers who want the full range of Nintendo games.

At this stage, VR headsets need compelling content, particularly games, to drive mass adoption. The good news is that Quest’s potential partner, Tencent, as the world’s largest gaming publisher, has a wealth of gaming IP at its disposal. Nonetheless, China’s content regulations will ultimately determine what games users get.

In addition to navigating political pressures at home and in China, Meta also faces stiff competition in China’s mixed-reality market, which includes both virtual and augmented reality devices. The Chinese XR industry is still relatively small compared to the handset market, having shipped just over 1 million units last year due to a lack of mass adoption and accessible pricing, according to market research firm Counterpoint.

Currently, the industry is largely dominated by Pico, the VR company that was acquired by ByteDance in 2021. The VR company enjoyed a 43% share of China’s XR market and introduced a product that was clearly aimed at Meta’s Quest last September.

Mark Zuckerberg’s remarks on China cast shadow over Meta’s VR quest by Rita Liao originally published on TechCrunch