Augmented-reality startup nabs $542M from Google, others

As the battle for virtual reality heats up, Google -- along with other well-known firms -- makes a big bet on a little-known wearable headset maker called Magic Leap.

The head of Google's Android and Chrome operating systems, Sundar Pichai, will sit on Magic Leap's board. James Martin/CNET

Google's caught Facebook's virtual-reality fever.

The search giant led a $542 million investment round in a startup called Magic Leap, which hopes to eventually replace computer and smartphone screens with virtual-reality interfaces. The company, founded in 2011 and based in Florida, makes a head-mounted device that acts like glasses. Turn the technology on, and it displays computer-generated images on top of what a wearer normally sees.

The move indicates growing interest among tech's largest companies in firms that offer wearable technology that change what we see with computer-generated imagery. Facebook, the world's largest social network, closed a $2 billion deal in July for Oculus VR, a company that makes head-mounted virtual reality goggles. Sony, maker of the PlayStation video game console, is also developing a virtual-reality device , as is smartphone kingpin Samsung .

What Magic Leap offers that others don't is a technology that can keep users from experiencing nausea, a common problem for virtual-reality headset makers.

For Google, Magic Leap represents another investment into 3D technology. In June, Google unveiled do-it-yourself cardboard kits for creating virtual-reality goggles out of smartphones. At the same time, it also demonstrated an initiative called Tango, which attempts to bring 3D mapping and sensing capabilities to smartphones and tablets.

Google also develops a head-mounted device called Glass, which displays information from a smartphone and various apps on a tiny computer screen affixed to a metal frame or glasses. In May, Google released the product to the general public.

Now Google is investing in Magic Leap as well. And its interest goes beyond giving the company money: Sundar Pichai, the Google executive in charge of the company's Android mobile operating system and Chrome Web browser, will join Magic Leap's board of directors.

"We are looking forward to Magic Leap's next stage of growth, and to seeing how it will shape the future of visual computing," Pichai said in a statement.

Google's ultimate plans for Magic Leap are still unclear. Don Harrison, Google's mergers and acquisitions chief, will join Magic Leap's board as an observer. A source familiar with Google's acquisition strategy, however, said the company has no plans to acquire Magic Leap.

Google declined to further comment on the deal. Magic Leap did not immediately respond to a request for comment. Other investors in the company's funding round included chipmaker Qualcomm, film production company Legendary Entertainment, and well-known Silicon Valley venture firms like Andreessen Horowitz and Kleiner Perkins Caufield & Byers.

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