FTC Moves To Block Meta From Buying Virtual Reality Company

The Federal Trade Commission took action on Wednesday to prevent Facebook parent company, Meta, from buying virtual reality startup Within, sending the strongest message yet that the organization might be more aggressive when it comes to Silicon Valley acquisitions involving cutting-edge technologies.

The FTC claimed in a complaint submitted on Wednesday to a federal court that Meta has the means to create its own VR applications that are comparable to those created by Within, the organization behind the virtual fitness program Supernatural. The FTC asserts that Meta (FB) is instead attempting to acquire the fledgling business, which would “[dampen] future innovation and competitive rivalry.”

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The agency, which is in charge of upholding US antitrust rules, charged the tech giant with trying to illegitimately build up its “virtual reality empire.” The complaint was filed as Meta, which has staked its future on augmented and virtual reality technology, works to develop use cases for its VR headsets. One of the most downloaded apps on Meta’s headgear is Supernatural, which in some cases introduces users to the concept of exercising in virtual reality for the first time.

According to a statement released by the FTC Bureau of Competition’s Deputy Director John Newman on Wednesday, “Meta is seeking to buy its way to the top rather than competing on the merits.” We will seek all necessary action since this acquisition was unlawful. The FTC’s argument, according to Meta spokesperson Stephen Peters, is “based on ideology and assumption, not proof.”

In a dynamic industry with as much entry and growth as online and linked fitness, the notion that this transaction would result in anticompetitive effects is simply unfeasible, according to Peters. “The FTC is sending a frightening message to anyone who wants to innovate in VR by opposing this merger in a 3-2 vote. We are sure that our purchase of Within will benefit users, developers, and the VR industry.”

In its lawsuit, the FTC argued that the agreement would lessen Meta’s motivation to create its own rival to Supernatural or to introduce new features to Beat Saber, a Meta-owned VR software that the FTC claimed competes with fitness apps in a comparable market. Supernatural and Beat Saber is not comparable, according to Meta, who responded to the complaint on their blog, thus the deal won’t hurt the competition.

According to Meta’s blog post, “Beat Saber and Supernatural are fundamentally different products with separate user bases, use cases, and competitive dynamics.” And this is not just our opinion; Within’s executive team firmly feels that Beat Saber and other casual VR games are not the company’s competitors; rather, they are the Pelotons and other well-known fitness businesses.

With its long-standing purchases of Instagram and WhatsApp at the crux of the case, the FTC is currently suing Meta in an effort to break it apart. Additionally, the FTC’s move comes as legislators debate legislation that may limit the influence of dominant big digital corporations like Meta.

When it purchased VR headset manufacturer Oculus in 2014, Meta, then known as Facebook, made its debut in the industry. It has acquired a number of VR-related companies more recently, including the game development platform Unit 2 Games and Beat Games, the creator of Beat Saber. In October 2021, Meta disclosed its intention to purchase Within for an unknown sum.

In April 2020, Within, a six-year-old maker of VR apps released Supernatural. For users to continue exercising in virtual reality, they must pay $19 per month or $180 annually, unlike some other VR apps that just need a one-time payment. According to the FTC’s complaint, Meta already has control over “the best-selling device, a top app store, seven of the most successful developers, and one of the best-selling apps of all time” in the VR market.

The outlet cited a widely circulated email that Zuckerberg allegedly sent to Meta executives, in which he is quoted as saying that the business must be “absolutely ubiquitous in killer apps”—apps that will demonstrate the true worth of new technology.

By way of the Beat Saber app, Meta already competes with Supernatural in some ways, according to the FTC, who also notes that “the two companies currently spur each other to keep adding new features and attract more users, competitive rivalry that would be lost if this acquisition were allowed to proceed.”

According to Charlotte Slaiman, competition policy director at the consumer organization Public Knowledge and a former FTC antitrust official, the FTC’s main argument in the complaint—that the deal would reduce competition by eradicating a competitor—reflects decades of established antitrust thinking.

That’s typically the best legal defense, according to current law, Slaiman added. But I believe they are also considering these specific games as a “killer app” for conquering the larger metaverse. According to Slaiman, the case expressly acknowledges Meta’s potential to rule the virtual reality market. “It’s incredibly encouraging to see the FTC taking action in VR right away,” one person said.

Slaiman added that the timing of the FTC complaint could increase pressure on Congress to establish an antitrust law that focuses on technology and creates new barriers across the various lines of business of internet firms. The Senate is set to vote on the American Innovation and Choice Online Act, but because Senate Majority Leader Chuck Schumer has not placed it on the schedule, time is running out before Congress adjourns for the summer. In China’s property crisis, Asia’s richest woman lost more than half of her wealth.  While a Texas court trial to award the Sandy Hook family damages is ongoing, Alex Jones’ company files for bankruptcy.

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