FTC files suit against Meta over ‘metaverse monopolisation’

Federal Trade Commission alleges acquisition will result in competition to "slacken”

Meta Platforms’ logo appears displayed on a smartphone screen                                 
The FTC has alleged Meta’s entry into the VR dedicated fitness app market has “likely influenced” competition – Photo: Getty Images
                                

A lawsuit has been filed by the US Federal Trade Commission (FTC) against Meta and its CEO Mark Zuckerberg to stop it acquiring technology company Within Unlimited and its fitness app, Supernatural.

The FTC explained in a statement that Meta is “already a key player at each level of the virtual reality (VR) sector”. The Los Angeles-based Within creates, acquires, and distributes 360-degree video, augmented reality (AR) and VR experiences.

The agency alleged that Meta and Zuckerberg are planning to expand Meta’s VR empire with “this attempt to illegally acquire a dedicated fitness app that proves the value of virtual reality to users”.

Meta, formerly Facebook, is the “largest provider of VR devices and also a leading provider of apps in the US”, according to the FTC. Additionally, it alleged Zuckerberg’s leadership has resulted in a Meta campaign to “conquer virtual reality with the acquisition of headset manufacturer Oculus VR”.

As part of Meta’s app expansion, it has bought seven successful VR development studios and, said the FTC, has one of the largest first-party VR content catalogues in the world.   

‘Competitive pressure will slacken’

The complaint stated that the possibility of Meta’s entry into the VR dedicated fitness app market “has likely influenced” competition and its acquisition of Within will most likely lead to “competitive pressure” to “slacken”.

If Meta independently decided to enter the market, the FTC stated, then its “entry would increase consumer choice, increase innovation, spur additional competition to attract the best employees, and yield other competitive benefits.” However, Meta chose to buy Supernatural with its acquisition of Within “dampening future innovation and competitive rivalry”.

The FTC has deemed this acquisition illegal as Meta is already a participant in the broader market of VR fitness apps with its Beat Saber app and so the two companies would spur each other on and “keep adding new features and attract more users, competitive rivalry that would be lost if this acquisition were allowed to proceed.”

‘Meta is trying to buy its way to the top’

John Newman, deputy director of the FTC Bureau of Competition, said: “Instead of competing on the merits, Meta is trying to buy its way to the top. Meta already owns a best-selling virtual reality fitness app, and it had the capabilities to compete even more closely with Within’s popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief.”

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