No - the information from ML boils down to falsehoods - this is not how 'capitalism' should work :)
Granted, it does sometimes happen this way.
More limited investment, with reasonable hype, a longer time frame might have worked better - as a lot of the $$$ spent on ML today will be on marketing, overhead, unecessary staff.
Granted, even if they do go bust, they'll have made some tangible progress that will be leveraged elsewhere.
Google is a big investor - it could be that if ML goes bust, the Google can take hold of the IP, and probably end up hiring a bunch of people and carrying it on. That said, since Alphabet they operate differently.
Yes, that's how capitalism works (technically, America's mixed market).
Now, if Magic Leap were a public company that lied to the public, yes I would be totally in favor of regulatory/civil, maybe criminal, investigations.
"We could do that, and end up like Magic-Leap.." will be the Standard slogan at every pitch.
Comparing AR device with VR device itself is not correct. Every one in VR world knows HTC Vive has far superior experience than Rift.
I understand that AR and VR are very different challenges, I was simply comparing them as two nascent techs that are frequently talked about together as being upcoming. VR is much closer to being ready for primetime, despite Hololens' release. Even the Oculus DK1 was closer to ready for mass adoption.
And most of /r/oculus would vigorously debate your last sentence since Touch came out, which makes that sentence completely false. I say this as a Vive owner, Touch has taken away the Vive's main advantage.
Unlike Theranos (where people's health was also at stake), if/when Magic Leap fails, their investors will lose their money and capitalism will go on - this is how things are supposed to work.