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Facebook profit surges as user base grows Facebook faces $500m hit after defeat in virtual reality case
(about 2 hours later)
Facebook said it grew profits by 177% to $10.2bn (£8bn) last year, as more users logged onto the social network. A US court has put Facebook on the hook for $500m (£395m) in damages over claims it unlawfully used another firm's virtual reality technology.
The company said it had 1.86 billion monthly active users during 2016, an increase of 17% on the previous year. The jury found Oculus, which Facebook bought in 2014, used computer code belonging to video game developer Zenimax to launch its own VR headset.
However, the results threatened to be overshadowed by reports that a US jury had ruled against Facebook in a case over its virtual reality business. Oculus said it was "disappointed" and would appeal the ruling.
Facebook said it was "disappointed" by aspects of the verdict but was "undeterred". The case threatened to overshadow Facebook's latest results, which showed the social network's profits rose 177%.
Facebook and other defendants were ordered to pay damages of $500m, according to the reports. Facebook reported that net income jumped to $10.2bn last year, helped by higher advertising revenues from its nearly two billion users.
"The heart of this case was about whether Oculus stole Zenimax's trade secrets, and the jury found decisively in our favour," a Facebook spokesperson said. 'Trade secrets'
The firm did not comment on reports of the damages. Shortly before the results came out, the court awarded Zenimax damages from Facebook, Oculus and other defendants after a three-week trial.
Oculus was bought by Facebook in 2014, and is seen as a major part of the firm's strategy over the next 10 years. Zenimax argued in the case that its early innovations in virtual reality were unlawfully copied when Oculus built its own headset, the Rift.
Zenimax Media was suing Facebook for $2bn, arguing its early innovations in VR were unlawfully copied when Oculus built the Rift headset. "We are pleased that the jury in our case in the US District Court in Dallas has awarded Zenimax $500m for defendants' unlawful infringement of our copyrights and trademarks," said Zenimax chief executive Robert Altman.
Palmer Luckey, the founder of Oculus, was also found to have broken a non-disclosure agreement with the firm.
However, the jury ruled that none of the defendants misappropriated Zenimax's trade secrets.
Analysis: Dave Lee, BBC North America technology reporter
Few people will have given Mark Zuckerberg as many headaches as Palmer Luckey.
The 24-year-old founded Oculus VR, and when Facebook stepped in to buy the firm for $2bn, he was rewarded very handsomely indeed. Then it went a bit downhill.
First, it was revealed he was using some of that money to fund a pro-Donald Trump trolling campaign, which led to Facebook removing him from public view. He didn't even turn up his own company's developer's conference last year.
And now, a jury has ruled that he broke a non-disclosure agreement that'll mean $500m in damages (unless Facebook wins on appeal).
Mark Zuckerberg doesn't display many emotions - but you wonder what he'll be like behind closed doors on this one.
As it stands, Palmer Luckey is still a Facebook employee, but what he's doing there is anyone's guess - the company won't even tell me his job title.
An Oculus spokesperson said: "The heart of this case was about whether Oculus stole Zenimax's trade secrets, and the jury found decisively in our favour."
The firm did not comment on the $500m damages.
Facebook chief executive Mark Zuckerberg testified last month that "the idea that Oculus products are based on someone else's technology is just wrong".
Zenimax, which owns id Software, a video games developer, was suing Facebook for $2bn.
Along with the claims against Palmer Luckey, it alleged that John Carmack, co-founder of id, took intellectual property belonging to Zenimax when he left the firm to join Oculus as its full-time chief technology officer.