Meta Platforms Inc (META.O) struck a deal with Chinese tech giant Tencent Holdings (0700. H.K.) to sell a new, low-cost virtual-reality (V.R.) headset in China in a return to a market where Facebook and Instagram are blocked. Meta would get most of its revenue from device sales, while Tencent would make more off content and services, the Wall Street Journal reported on Thursday.
Meta’s agreement with Tencent could give it access to the colossal Chinese consumer market for the first time since 2009. The company’s V.R. products have sold lukewarmly abroad, but the partnership opens up a huge opportunity to revive sales in China.
The agreement with Tencent, which publishes many of the Western videogames released in China, could give Meta a leg up in a market where it is still battling for market share against TikTok-owner Bytedance’s Pico headset. The deal also presents a chance for Meta to compete in the emerging market of artificial intelligence-powered virtual worlds, where companies from Microsoft (MSFT.O) to Disney (DIS.N) are preparing to invest billions of dollars.
While the deal holds enormous potential, Meta faces significant hurdles in China, where regulators have tightened digital content and video game rules in recent years. It is unclear whether Meta’s headset will penetrate the country’s vast market, which has a population of more than 1.4 billion people.
Deals with Chinese firms are among the few ways big U.S. tech companies can gain a foothold in the market. Apple, which largely relies on Taiwanese manufacturers for its iPhones and other products, has needed help gaining a presence in the Chinese market because Beijing blocked its apps.
In an email to CTV News, a spokesperson for the NDP said the party will continue to communicate with Canadians through Meta platforms. The NDP will monitor the situation in the hopes that the federal government’s ad suspension will pressure web giants to “follow the law and pay their fair share.”
Meta shares closed down 6.9% to $32.40 on Thursday, the lowest since May. The stock is down almost 27% this year, the worst of any large public technology company on the S&P 500 Index. Its shares have plunged this year as investors worry about slowing growth in the U.S. and a global economic slowdown. The company’s latest earnings report, which gave no specific forecast for 2024, sent its stock slumping on Thursday. Meta’s revenue rose by 43% last year, but the growth rate was lower than investors had expected, and profit margins are waning. The company is also scrutinizing how it collects and uses user data. It has been hit by fines from the Norwegian data protection watchdog and has been accused of harvesting personal information such as racial or ethnic origin, religion, and sexual orientation. In a filing in July, Meta denied that it collected such sensitive personal data. The company’s data processing operation is currently enmeshed in a court case against it by the Swedish privacy watchdog over similar concerns.
