FTC Blocks Meta From Buying VR Company, Fitness App

WASHINGTON Federal regulators took legal action on Wednesday to prevent Facebook mom Meta and CEO Mark Zuckerberg from acquiring virtual reality company Within Unlimited and its fitness app Supernatural, alleging the deal would hurt competition and violate antitrust laws.

Experts said it was the Federal Trade Commission’s first legal challenge against a Big Tech merger.

The FTC filed a complaint in federal court in San Francisco against the Menlo Park, California-based tech giant and its high-profile CEO seeking a temporary restraining order and preliminary injunction against the proposed acquisition.

The regulators said that Meta is already a major player “at every level of the virtual reality sector”, with the best-selling device, a leading app store, seven of the most successful developers in the world and one of the best-selling apps in the world. all times.

The FTC claimed that Meta and Zuckerberg plan to expand that VR empire by trying to illegally acquire a dedicated fitness app.

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Led by Zuckerberg, Meta began a campaign to conquer virtual reality in 2014 with the acquisition of headset maker Oculus VR. Since then, Meta’s VR headsets have become the cornerstone of its growth in the virtual reality space, according to the complaint. Fueled by the popularity of its best-selling Quest headsets, Meta’s Quest Store has become a leading US app platform with more than 400 apps available for download, it says.

Meta rejected the regulators’ claims.

“The FTC’s case is based on ideology and speculation, not evidence,” the company said in a statement. “By attacking this deal… the FTC is sending a chilling message to anyone looking to innovate in VR. We are confident that our acquisition of Within will be good for people, developers and the VR space.”

The FTC vote to block the takeover was 3-2, with Chairman Lina Khan and the other two Democratic commissioners approving and the two Republicans against.

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The move marked another FTC salvo against Meta — the owner of Instagram, Messenger and WhatsApp in addition to Facebook — in the agency’s fight against what it deems anticompetitive behavior in the tech industry. The FTC filed a landmark antitrust lawsuit against Facebook in late 2020 as the government continued its most significant effort to strengthen competition since its landmark case against Microsoft two decades ago.

In the wide-ranging antitrust case, the FTC is seeking solutions, including a forced spin-off of the popular Instagram and WhatsApp messaging services or a restructuring of the company. The core theory is that Meta is a monopoly engaged in anti-competitive behavior.

In the complaint against the Within Unlimited acquisition, the FTC cites a 2015 email from Zuckerberg to key Facebook executives stating that his vision for “the next wave of computing” was control over apps, as well as the platform on which those apps were used. be distributed. Email says a key part of this strategy is that the company is “completely ubiquitous in killer apps,” apps that prove the value of the technology.

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Meta bought seven of the most successful virtual reality development studios and now has one of the largest first-party virtual reality content catalogs in the world, the FTC says. It cites the acquisition of the Beat Games studio, giving Meta control of the popular Beat Saber app.

The FTC move ensures that “Facebook is earning rather than buying its place in the emerging virtual and augmented reality sector,” Krista Brown, senior policy analyst at the American Economic Liberties Project, said in a statement. “This is the agency’s first challenge to a major tech merger, and it represents its new commitment to protecting fair competition in nascent digital markets. The effects of Facebook’s impending acquisition of Within… would reduce innovation and competition in an industry just getting off the ground.”

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Follow Marcy Gordon at https://twitter.com/mgordonap

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