Saudi Arabia’s main investment arm has put more than $1 billion into a Florida-based virtual reality company that has yet to make any money since opening its doors 15 years ago.
The Public Investment Fund, which manages Saudi Arabia’s sovereign wealth, recently added another $205 million to Magic Leap, marking the latest round of cash for the struggling tech business. The company has pulled in more than $4 billion through various funding deals but still operates at a loss while making mixed reality goggles meant to compete with products from Apple and Meta.
Rony Abovitz started Magic Leap back in 2010, and the company initially got people excited about its plans for headsets that would put virtual images over real-world views. But when the actual product came out in 2018, it flopped. The company ended up cutting more than 80% of its workers and shifted its focus to making augmented reality tools for companies instead of regular consumers.
Saudi takeover fails to turn fortunes around
The Telegraph first reported that Saudi Arabia’s investment fund quietly took control of Magic Leap in 2022. Since that takeover, Saudi backers have had to inject over $1 billion just to keep the doors open. The fund has been putting tens of billions of pounds into technology ventures, including gaming and entertainment projects, as the kingdom tries to move away from depending so heavily on oil money under Crown Prince Mohammed bin Salman’s Vision 2030 plan.
The $1 trillion investment fund recently backed a $55 billion purchase deal for Electronic Arts, the video game maker. During the summer months, it also put on the Esports World Cup for competitive gamers. Beyond tech, the fund has spent billions buying football clubs and bringing star players to Saudi Arabia’s domestic league.
Not all of Saudi Arabia’s ambitious projects have gone smoothly. Developments like the Neom city and The Line smart city have run into problems with delays and costs spinning out of control.
According to paperwork filed for a British branch of Magic Leap, the company expects to get more money from “one of its investors” next month. Additional funding is also planned for 2026, which should keep the company running through what financial documents call “the going concern period.”
Google partnership offers hope
Despite its financial troubles, Magic Leap signed an agreement with Google last year. Google had previously led a $542 million investment in the company more than ten years ago. While the two companies have not shared many specifics about their new partnership, Google said it wants to work with Magic Leap because of what it called the company’s “leadership in optics and manufacturing” to create “a wider range of immersive experiences to market.”
Google has rolled out a new version of its Android operating system designed for mixed reality headsets. Its British-based DeepMind unit is also developing artificial intelligence glasses called Project Astra.
Mark Zuckerberg’s Meta has already put billions into smart glasses powered by artificial intelligence with display technology that could eventually replace smartphones. Apple entered the market with its Vision Pro headset priced at £3,500, which offers advanced graphics and lets people interact with their surroundings, though sales have been modest.
Despite all the investment and development work, augmented reality technology and smart glasses have stayed largely on the sidelines and have not come close to matching the worldwide success of smartphones.
