MILAN, Italy: Ray-Ban Meta smart glasses are emerging as one of EssilorLuxottica's most promising innovations, giving the world's largest eyewear maker its first significant revenue lift from AI-enabled products.

However, even as momentum builds, analysts say the technology is heading into a critical phase, one shaped as much by privacy scrutiny as by intensifying competition.

Launched in 2021 through a partnership between Meta and EssilorLuxottica, the frames let users capture photos and videos through tiny built-in cameras, stream directly to Meta apps, and interact with an AI assistant. The features are designed to usher in a post-smartphone era, but they also raise questions about what bystanders can do to avoid being recorded and how data is being used.

"AI smart glasses raise significant privacy concerns," said Kleanthi Sardeli of European digital rights group NOYB. "The main issues are linked to the use of people's personal data to train AI models and transparency for bystanders."

Meta, which relies heavily on user data to power its advertising business, has already faced scrutiny over how it handles information collected through AI tools.

European watchdogs have challenged the product since 2021, when regulators in Italy and Ireland questioned whether the glasses complied with privacy rules. Ireland's Data Protection Commission pushed Meta to enlarge and redesign the LED indicator meant to show when recording is happening.

Under the EU's AI Act and GDPR, clear communication and a legal justification are required when individuals are recorded, except in strictly personal contexts. But enforcing those protections is difficult when the device owner is unknown, NOYB notes.

A 2024 Monash University survey found a stark divide: users say smart glasses enhance self-image and social connection, while non-users fear surveillance and social disruption.

EssilorLuxottica said it partners "with competent authorities to drive innovation, safeguard privacy and set new industry standards." A Meta spokesperson declined to comment beyond referring to that statement.

EssilorLuxottica shares have risen 28 percent this year as strong results and enthusiasm for Ray-Ban Meta glasses offset earlier tariff shocks.

Analysts say Ray-Ban Meta leads the smart-eyewear category essentially because it unites fashion credibility with advanced tech, a combination missing from earlier attempts such as Google Glass. Barclays estimates the company holds about 60 percent of the market.

"Instead of trying to make something cool, Meta partnered with people who know what's cool," said investor Ross Gerber of Gerber Kawasaki.

But Bernstein analyst Luca Solca warns that its advantage may not last, especially if smart glasses begin cannibalising traditional eyewear sales, which still account for roughly a quarter of EssilorLuxottica's revenue.

The competitive landscape is expanding quickly. Alibaba launched its Quark AI glasses in China, where Ray-Ban Meta is not sold. Apple is reportedly preparing its own device. Google is developing smart eyewear with Warby Parker and luxury group Kering, aiming for a 2026 launch — news that sent EssilorLuxottica shares lower. Amazon and Xiaomi are exploring the space as well.

EssilorLuxottica can lean on its 18,000-store network and partnerships with Prada, Armani, and Chanel. "One of the key differentiating elements is not just their ability to produce, but also their ability to distribute, and their ability to leverage a portfolio of brands," said Comgest portfolio manager Bassel Choughari.

Smart glasses play a central role in CEO Francesco Milleri's push into medical technology. They contributed more than four percentage points to the company's nine-month sales growth, prompting a 14 percent rally in shares, even though they represent only 2 percent of global sales.

The company is expanding its lineup, adding Oakley-branded models and introducing glasses with an in-lens display controlled through a gesture-sensing bracelet. It has also held exploratory talks with Prada heir Lorenzo Bertelli.

"A vibrant ecosystem will help us drive market growth, fuel innovation and expand consumer choice," EssilorLuxottica said.