Google is trying to wedge itself into the Meta and Ray-Ban partnership, but is unlikely to succeed

Meta✴ intends to buy about 5% of EssilorLuxottica, which owns Ray-Ban and is itself valued at $88 billion. But not only the social media giant wants to get closer to the fashion brand – Google recently approached the company’s management with a proposal to release smart glasses with an assistant based on artificial intelligence Gemini. But the partnership with Meta✴ is unlikely to be threatened by anything, The Verge believes.

Image source: Meta✴

The owner of the Ray-Ban brand is the European fashion company EssilorLuxottica, not a risky startup from Silicon Valley. Now EssilorLuxottica is trying to cope with the difficulties caused by inflation and high costs, which are affecting its margins. Over the past year, the company’s shares have risen in price by only 7%, and this is worse than the average performance of European blue chips. At the same time, EssilorLuxottica retains a significant portion of the income from smart glasses for itself – they are more expensive to produce and are not nearly as profitable as regular ones.

So far this has not created any difficulties, because sales of Meta✴ Ray-Ban glasses have not yet reached a level at which they will reduce EssilorLuxottica’s overall margin. But if the current trend continues, shipments of smart glasses will grow into the millions in the coming years: Ray-Ban’s latest Meta✴ model has sold more units in the past few months than the first version has sold in two years.

Meta✴, which is on a mission to create a metaverse, has found in EssilorLuxottica a partner with taste and experience in making glasses that people want to wear. The social media giant wouldn’t spend $5 billion on marketing to get the Supreme (recently acquired by EssilorLuxottica for $1.5 billion) audience to wear glasses designed by Meta✴ – but the same funds on EssilorLuxottica’s balance sheet in exchange for shares could not like that.

At the same time, Google is committed to AI, and the search giant is well aware that the best form factor for Gemini is not a phone, but glasses. Last year, Google abandoned work on its own glasses and decided to limit itself to licensing technological solutions. But it is unlikely that the company will be able to knock Meta✴ out of the partnership with EssilorLuxottica, because for it it is vitally important as a stage in the implementation of the strategy for building a metaverse. However, Google had already worked with Luxottica (before the merger with Essilor) in the era of Sergey Brin’s Google Glass – but that project failed.

Image source: magicleap.com

It’s not the only one that has failed: augmented reality glasses maker Magic Leap is also going through difficult times, and just this week laid off its entire sales and marketing department of 75 people. The company now intends to produce components for other players intending to produce their own augmented reality glasses. Its problems began back in 2018, when sales of the first Magic Leap failed. In 2022, Magic Leap could be saved by the state investment fund of Saudi Arabia, which agreed to buy a controlling stake in the company. But the funds were transferred in installments twice a year, depending on the targets demonstrated by the company, and it was not able to achieve them.

Sales of the Magic Leap 2 headset were much lower than expected last year, and the sales team received only 55% of their bonuses. But the company’s technological developments are still much more interesting than those of its competitors—equipment developers received 150% bonuses last year. Magic Leap is currently developing a modified version of its headset with Google that will run on the Android XR platform, but it will again be an expensive development kit with no clear scenarios for how consumers or businesses will use the device.

The initial hype around Magic Leap can be compared to that of generative AI startups – the new bubble is already starting to burst in different parts of the world, and the decline of the pioneer in the field of augmented reality devices has been slow and painful.