Meta Partners with Palmer Luckey's Anduril to Build XR Tech for American Soldiers

Seven years after Meta fired Palmer Luckey over his political activities, the company just announced it's partnering with his defense startup to compete for one of the military's biggest tech contracts. It's a stunning reversal that puts Meta directly in the business of building weapons systems for the first time.

Key Points:

• Meta and Anduril are jointly bidding on the Army's multibillion-dollar IVAS Next program to replace Microsoft's troubled mixed-reality headset system
• The partnership reunites Palmer Luckey with Meta seven years after he was fired following a political controversy
• The collaboration signals Meta's growing willingness to work directly with the military despite past employee resistance

Luckey's company Anduril announced Thursday it's teaming with Meta to develop extended reality systems for American soldiers. The partnership targets the Army's Soldier Borne Mission Command (SBMC) Next program (formerly IVAS Next), a potential $22 billion contract that Microsoft has held but struggled to execute successfully.

The collaboration marks a remarkable comeback for Luckey, who founded Oculus and sold it to Facebook for $2 billion in 2014. Three years later, the company pushed him out after he donated $10,000 to a pro-Trump political group that created anti-Hillary Clinton memes. Meta claimed politics wasn't the reason, but Luckey has said otherwise.

"I am glad to be working with Meta once again," Luckey said in the announcement, a diplomatic understatement from someone who's now worth over $1 billion and runs a company valued at $14 billion.

The IVAS program has been Microsoft's to lose, and the company has been losing it spectacularly. The system, based on Microsoft's HoloLens technology, was supposed to give soldiers superhuman situational awareness through augmented reality. Instead, it gave them headaches, eye strain, and nausea. Some Army units reportedly stopped using the headsets altogether.

The problems were serious enough that the Army announced a course correction in 2022 and eventually transferred program oversight from Microsoft to Anduril earlier this year. Microsoft remains involved, but the Army has made clear it's open to new approaches.

That's where Meta comes in. The company has spent more than $13 billion developing Reality Labs technology since 2019, creating some of the most advanced VR and AR systems available. While the consumer metaverse hasn't taken off as expected, that investment could find new purpose in military applications.

The Meta-Anduril pitch combines Meta's hardware expertise with Anduril's Lattice platform, an AI-powered command and control system that integrates data from multiple sources to provide real-time battlefield intelligence. Soldiers would get AR interfaces that connect them to this broader intelligence network.

For Meta, the partnership represents a significant shift toward government work. The company has historically kept the military at arm's length, partly due to employee resistance to defense contracts. In 2018, some Meta workers pushed back against even providing AI tools to the Pentagon. Now the company is directly partnering to build military systems.

The change reflects broader industry trends. As competition with China intensifies and conflicts like Ukraine demonstrate the importance of advanced military technology, tech companies are becoming more willing to work with the Defense Department. Meta's competitors, including Google and Amazon, already have substantial government contracts.

Anduril, meanwhile, has built its reputation on disrupting traditional defense procurement. Instead of the cost-plus contracts that have dominated military purchasing for decades with companies like Lockheed Martin and Boeing, where contractors get paid regardless of whether their systems work, Anduril builds products with private funding and sells finished systems to the government.

The approach has worked. Anduril has secured more than $6 billion in contracts and is already supplying drones, surveillance systems, and other equipment to the U.S. military and allies. The company's systems are being used in Ukraine and along the U.S.-Mexico border.

The Army has been particularly receptive to this new model as it struggles to modernize equipment and compete with adversaries who aren't constrained by traditional procurement processes. China, in particular, has been rapidly advancing its military technology by leveraging commercial tech developments.

Whether Meta and Anduril can succeed where Microsoft struggled remains to be seen. The technical challenges that plagued IVAS haven't disappeared, and creating comfortable, reliable AR systems for combat use is genuinely difficult. But the partnership brings together two companies with complementary strengths and a shared interest in proving that Silicon Valley can solve problems the traditional defense industry hasn't.

For Luckey personally, the partnership caps one of the more remarkable redemption stories in recent Silicon Valley history. He went from teenage VR enthusiast to billionaire entrepreneur to political exile to defense industry pioneer, and now back to working with the company that once showed him the door. The fact that Meta is now seeking his help suggests how much both the company and the broader tech industry have changed since 2017.

The stakes extend beyond any individual contract. As warfare becomes increasingly technological and the line between commercial and military technology blurs, partnerships like this one may become the norm rather than the exception. Meta's willingness to work directly on weapons systems signals a new phase in Silicon Valley's relationship with the military establishment, one where the biggest tech companies see national security as core to their business rather than a distraction from it.