Facebook (NASDAQ:FB) recently announced its acquisition of CTRL-labs, a New York-based start-up that is developing a technology to allow people to control computers with their brains. The envisioned technology will enable a wristband to intercept electrical signals between a user's spinal cord and hand to control digital devices.

Facebook will integrate CTRL-labs into Facebook Reality Labs, which houses the development of its augmented reality (AR) and virtual reality (VR) projects. In a Facebook post announcing the deal, its AR/VR chief Andrew Bosworth declared that CTRL-labs' technology represents "how our interactions in VR and AR can one day look."

A digital visualization of a human brain.

Image source: Getty Images.

CNBC reported that Facebook paid between $500 million to $1 billion for the start-up. Facebook previously developed brain-computing technology in its Building 8, but that research lab was shuttered in late 2018 and replaced with smaller silos focused on the development of its Portal devices and AR/VR projects. In July, Facebook admitted that its brain-reading technology was still years away from commercialization.

At the time, it seemed as if Facebook was stepping back from that bleeding-edge technology. But its acquisition of CTRL-labs indicates that it still believes brain-linked interfaces are the future of computing.

What is Facebook's long-term plan?

Facebook generated 98% of its revenue from ads last quarter. The remaining sliver came from other businesses, including its Oculus VR headsets and Portal devices.

CEO Mark Zuckerberg recently claimed that his company was selling the new Oculus Quest "as fast as we can make them." Research firm SuperData estimates that the stand-alone headsets' shipments will hit 1.3 million this year.

That growth is encouraging, but the Quest remains a niche device compared with smartphones, which hit 1.4 billion shipments last year. Nonetheless, Facebook's Oculus division, which gives all its new employees copies of Ernest Cline's Ready Player One, believes that will change in the future as VR becomes a mainstream computing platform.

Within that ecosystem, Facebook says, people will be able to visit one another's Facebook profiles (or rooms) in VR, watch movies and play games together, or even attend live school or sporting events. For now, the ability for Oculus users to interact with their environments is limited to physical controllers or haptic gloves. Facebook's acquisition of CTRL-labs indicates that mind-reading wristbands could replace those cumbersome accessories in the near future.

Facebook's Oculus Quest.

Image source: Facebook.

Facebook is also developing two pairs of AR glasses, Stella and Orion. Stella will reportedly resemble a pair of mainstream glasses with cameras for capturing photos and videos. Orion will be a higher-end headset with more AR features. Both devices could theoreticallybe controlled by Facebook's new voice assistant. Adding CTRL-labs' brain-connected controls to those headsets could enable developers to add more-complex features.

Those controls could also be tethered to its growing family of Portal devices, which currently include smart screens and TV-connected camera devices. Therefore, Facebook likely envisions brain-linked interfaces as the ultimate universal remote for its expanding family of gadgets -- which could eventually diversify its business away from ads.

But will other tech giants get in the way?

Facebook's vision of the future is ambitious, but there are two major issues. First, its security and privacy debacles could prevent consumers from installing its hardware devices in their homes, and tethering them to their brains would be out of the question.

Second, Facebook's industry peers are also expanding in a similar direction. Amazon.com's (NASDAQ:AMZN) Echo speakers, Fire TV devices, cameras, and Alexa-enabled devices all tighten its grip on connected homes. The company also owns Sumerian, a development platform for AR and VR apps in Amazon, and it's dabbled with AR and VR shopping experiences before.

Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google has similar plans for its Google Home speakers, Nest thermostats, Android TV devices, Daydream VR headsets, and ARCore development platform for AR apps. Apple (NASDAQ:AAPL) is also following suit with its HomePod speakers, Apple TVs, and its fragmented AR efforts.

Those rivals generally have better reputations than Facebook. Earlier this year, a poll by NBC News and The Wall Street Journal found that 60% of Americans no longer trusted Facebook with their personal data -- versus 37% and 28% who didn't trust Google and Amazon, respectively. That's a bright red flag for any brain-linked computing projects.

Facebook needs to read the room

I can't fault Facebook for thinking decades ahead, but its takeover of CTRL-labs seems too pricey -- especially when it's still struggling with softer growth in higher-revenue markets like the U.S. and Canada, and rising legal expenses.

It also repeatedly refuses to read the room and realize that VR remains a tiny niche market, and that consumers aren't eager to install its Portal devices, wear its upcoming AR glasses, or control them with their brains.

Instead, it should fix its ongoing problems with fake news, trolls, and data leaks; avoid crushing Instagram with its meddling, and focus on promising new markets like online dating. Those moves -- not fanciful dreams about brains plugged into Facebook -- will matter more to investors over the next few years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.