The antitrust suit is the first filed by Lina Khan, the commission’s chairwoman and a leading progressive critic of the merger, against one of the tech giants. Ms Khan argued that regulators need to stop breaches of competition and consumer protection laws when it comes to cutting edge technology, including virtual and augmented reality, and not just in areas where companies already have become behemoths. The FTC’s request for an injunction puts Ms. Khan on a collision course with Mark Zuckerberg, Meta’s chief executive, who is also named as a defendant in the request. It has poured billions of dollars into building products for virtual and augmented reality, betting that the immersive world of the metaverse is the next technological frontier. The lawsuit could curb those ambitions. “Meta could have chosen to try to compete with Within on the merits,” the FTC said in its lawsuit, which was filed in the United States District Court for the Northern District of California. “Instead, it chose to buy” a leading company in what the government called a “vitally important” category. In a statement, Meta said the FTC’s case was “based on ideology and speculation, not evidence. The idea that this acquisition would lead to anti-competitive effects in a dynamic space with as much entry and growth as online and connected fitness is simply not credible.” The company added that the lawsuit was an attack on innovation, with the agency “sending a chilling message to anyone who wants to innovate in virtual reality.”
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Meta said it would acquire Within, which makes the wildly popular fitness app called Supernatural, last year for an undisclosed sum. The company has promoted the virtual reality headset for fitness and health purposes. Mr Zuckerberg has been pushing Meta away from its social networking roots as the company’s apps, such as Facebook and Instagram, face growing competition and issues such as privacy and misinformation. To support the push into the metaverse, Mr. Zuckerberg has reshuffled employees and put a top lieutenant in charge of the effort. It has also empowered lieutenants to follow some of the most popular games in the VR space. In 2019, Facebook bought Beat Games, makers of the hit title Beat Saber, one of the top VR games on the Oculus platform. Meta is scheduled to report quarterly earnings later on Wednesday. The company recently cut employee benefits and cut spending amid uncertain economic conditions. The FTC’s move could be seen as an attempt to learn from history. The service approved Facebook’s 2012 acquisition of Instagram, the photo-sharing app that has grown to more than a billion regular users. Instagram helped Meta dominate the social photo-sharing market, although other startups have emerged since then. John Newman, deputy director of the FTC’s Bureau of Competition, said the agency acted on the Within deal because Meta was “trying to buy its way to the top.” The company already had a best-selling VR fitness app, he said, but then chose to acquire Within’s Supernatural app “to buy its market position.” He called the deal “an illegal takeover and we will seek all appropriate relief.” The FTC’s vote to approve the filing was split 3 to 2. This is a developing story and will be updated.
