Zhang Yiming, founder of TikTok’s owner, ByteDance, has long had an ambition to follow in the footsteps of Meta Platforms CEO Mark Zuckerberg and grab a piece of the nascent market for augmented and virtual reality. In 2020, the year Meta launched its Quest 2 VR headset, ByteDance engineers worked on a confidential internal project to develop AR glasses, according to a person with direct knowledge of the previously unreported project. Then in April last year, Zhang ramped up his effort and bought Chinese VR headset developer Pico for 9 billion yuan ($1.28 billion), outbidding rival Tencent, the Chinese tech giant that operates WeChat.

So far, though, ByteDance has struggled to make Pico a force in VR. Shortly after ByteDance acquired Pico, that company’s CEO, Henry Zhou, told some ByteDance managers he was aiming for VR headset sales of 1 million units for 2021, according to a person with direct knowledge of the conversations. But Pico’s 2021 shipments turned out to be just 510,000 units, with a market share of 4.7%, compared to market leader Meta’s 81%, according to research firm IDC.