His donation sparked a backlash from his colleagues. Six months later, he was out. Neither Facebook nor Mr. Luckey has ever said why he left the social-media giant. When testifying before Congress about data privacy earlier this year, Facebook Chief Executive Mark Zuckerberg denied the departure had anything to do with politics.
Mr. Luckey, it turns out, was put on leave, then fired, according to people familiar with the matter. More recently, he has told people the reason was his support for Donald Trump and the furor that his political beliefs sparked within Facebook and Silicon Valley, some of those people say.
Internal Facebook emails suggest the matter was discussed at the highest levels of the company. In the fall of 2016, as unhappiness over the donation simmered, Facebook executives including Mr. Zuckerberg pressured Mr. Luckey to publicly voice support for libertarian candidate Gary Johnson, despite Mr. Luckey’s yearslong support of Mr. Trump, according to people familiar with the conversations and internal emails viewed by The Wall Street Journal.
Executives from Facebook, Twitter Inc. and Google, a unit of Alphabet Inc., have had to answer questions from lawmakers about potential bias in their treatment of conservative viewpoints. Tech executives concede that Silicon Valley is predominantly liberal—Mr. Zuckerberg said in Senate testimony that it is “an extremely left-leaning place”—yet they have steadfastly maintained that politics doesn’t play a role in how they police content on their sites.
Mr. Luckey, who is 26 years old, hired an employment lawyer who argued to Facebook that it had violated California law, according to people familiar with the conversations, in pressuring the executive to voice support for Mr. Johnson and for punishing an employee for political activity.
Then Mr. Luckey and his lawyer negotiated a payout of at least $100 million, representing an acceleration of stock awards and bonuses he would have received through July 2019, plus cash, according to the people familiar with the matter. The stock awards and bonuses were a result of selling his virtual-reality company, Oculus VR, to Facebook in 2014 for more than $2 billion, a deal that netted him a total of about $600 million.
A Facebook spokeswoman said in an email: “We can say unequivocally that Palmer’s departure was not due to his political views. We’re grateful for Palmer’s contributions to Oculus, and we’re glad he continues to actively support the VR industry.”
Some people at Facebook say it is too simplistic to say Mr. Luckey was fired over his politics, and that his lack of candor during the episode involving the donation and his diminished role in Oculus operations were larger factors.
Mr. Luckey, in an emailed statement, described the episode as being in the past. “I believe the team that remains at Oculus is still the best in the VR industry, and I am rooting for them to succeed.”
Mr. Luckey started Oculus in 2012, while still a teenager, with a $2.4 million crowdfunding campaign. He dropped out of the journalism program at California State University, Long Beach, to work on the company, along with co-founder Brendan Iribe. When they sold to Facebook, Mr. Luckey became the face of the virtual-reality industry, appearing on a Time magazine cover saying the technology was “about to change the world.”
Mr. Luckey, a Long Beach native who was home-schooled by his mother, has sometimes been out of step with the largely liberal culture of Facebook. A fan of big cars and military gear, he drove a giant tan Humvee with machine-gun mounts and orange toy guns. He once was forced to move it from the Facebook parking lot after someone called the police in to investigate, according to people familiar with the episode.
Mr. Luckey has been a longtime supporter of Mr. Trump and wrote a letter to the then-reality-television star in 2011 urging him to run for president. Mr. Luckey has told friends that reading Mr. Trump’s book “The Art of the Deal” at age 13 sparked his entrepreneurial imagination.
In one post on a Reddit chain dedicated to supporting Mr. Trump, the author, called “NimbleRichMan,” said he was donating to the group so it could spread unflattering memes about Mrs. Clinton. In the same post, the author professed to support Mr. Trump’s campaign, saying “Hillary Clinton is corrupt, a warmonger, a freedom-stripper. Not the good kind you see dancing in bikinis on Independence day, the bad kind that strips freedom from citizens and grants it to donors.” The Daily Beast wrote that Mr. Luckey had said he used the pseudonym NimbleRichMan.
Mr. Luckey’s donation and the perception he might be leading a pro-Trump online campaign ignited a firestorm. Facebook employees expressed anger about Mr. Luckey on internal message boards and at a weekly town hall meeting in late September 2016, questioning why he was still employed, according to people familiar with the complaints.
“Multiple women have literally teared up in front of me in the last few days,” an engineering director, Srinivas Narayanan, wrote in one internal post following the meeting. Mr. Narayanan didn’t respond to requests for comment.
Some virtual-reality-game developers said they wouldn’t work with Oculus in the future.
In an apology posted on Facebook that month, Mr. Luckey denied writing the NimbleRichMan posts and said he “contributed $10,000 to NimbleAmerica because I thought the organization had fresh ideas on how to communicate with young voters through the use of several billboards.”
The post said Mr. Luckey is a libertarian and planned to vote for Mr. Johnson in the election.
“I need to tell you that Mark [Zuckerberg] himself drafted this and details are critical,” Facebook Deputy General Counsel Paul Grewal wrote to a lawyer for Mr. Luckey in a September 2016 email, attaching an early draft of the statement, according to the emails reviewed by the Journal. The draft said Mr. Luckey wouldn’t be supporting Mr. Trump in the election.
Mr. Luckey has told people he did vote for Mr. Johnson, but only to avoid having his credibility questioned if he was asked about the issue under oath in unrelated litigation.
The apology went through many drafts, and Mr. Luckey ultimately approved changes suggested by Facebook, according to people familiar with the process. The statement didn’t include a public disavowal of Mr. Trump, but did say he would support Mr. Johnson. Mr. Luckey has supported libertarian candidates in the past.
The Facebook spokeswoman said that throughout the process, “we made it clear that any mention of politics was entirely up to him.”
Soon after the apology was posted, a writer at the Daily Beast posted on Twitter emails he had received from Mr. Luckey in which he said he made at least one post attributed to NimbleRichMan—a contradiction of his public statement. Mr. Luckey has since told people he wasn’t the author, but took responsibility because the post reflected his views.
Facebook executives were irate about the conflicting statements, with some believing that Mr. Luckey had lied to them, according to people familiar with the matter.
Facebook launched a human-resources investigation, which in 2016 found that Mr. Luckey hadn’t violated internal policies, say people familiar with the investigation. His performance reviews were consistently positive, including his last in June 2016, those people say.
Amid the uproar, Facebook placed Mr. Luckey on paid leave, the people say. After Mr. Trump won the election in November, Mr. Luckey donated $100,000 to his inaugural committee. By December 2016, he had returned to work to prepare for and testify at a trial, although he was only on campus for a couple of days.
A videogame publisher, ZeniMax Media Inc., had sued Facebook shortly after it purchased Oculus, contending that a ZeniMax employee took proprietary code when he joined Oculus. After a trial, a judge ordered Facebook to pay $250 million, plus interest. Facebook has appealed.
After the verdict, Mr. Luckey got a call from a Facebook executive asking him to resign, according to people familiar with the call. He declined, seeking instead to get reinstated. Facebook said no.
Ultimately, Mr. Luckey was fired. His last day was March 30, 2017.
After the incident, Mr. Luckey became more, not less, political. One month after he left Facebook, he hosted a fundraiser for Republican Sen. Ted Cruz of Texas. He has since founded Anduril, an Orange County-based tech company focused on using artificial intelligence to protect troops, performing search-and-rescue missions and bringing “Silicon Valley thinking and funding to defense,” according to its website.
Recently, Mr. Luckey came as close as he has ever come to publicly divulging the circumstances of his Facebook departure. At Vanity Fair’s New Establishment Summit in Los Angeles last month, he told CNBC that “it wasn’t my choice to leave.”