Feb 1, 2017

Facebook ordered to pay $500M over Oculus technology

Facebook and its virtual reality company, Oculus, will have to pay $500 million to ZeniMax for using its technology, a Texas jury found on Wednesday.

Background: ZeniMax Media sued Facebook, alleging that Oculus, which the social network acquired in 2014 for $2 billion, stole part of its technology. According to ZeniMax, a former employee, John Carmack, shared the company's virtual reality technology with Luckey, who went on to found Oculus and later employed Carmack.

The breakdown: Of the total award, Oculus will pay $200 million for breaking the non-disclosure agreement and $50 million for copyright infringement. Oculus and co-founder Palmer Luckey will each pay $50 million for "false designation" (lying about the original maker of its product). Brendan Iribe, also a co-founder of Oculus, will pay $150 million for this as well, according to gaming news site Polygon.

Why it matters: This is sure to put a dent in Facebook and Oculus' reputations, which recently had to mitigate a controversy around Luckey's alleged support for Trump. And though Facebook will likely appeal the verdict or try to get the award decreased, investors are unlikely to be happy about the company having to pay millions of dollars for stealing technology—technology that was supposed to usher in the next generation of social networking.

Go deeper