The US Federal Trade Commission (FTC) aims to block Meta Platforms and Mark Zuckerberg, Meta’s Chief Executive and Founder, from buying out Within Unlimited, the organisation announced on Wednesday.
Within’s hit fitness app Supernatural has become involved in a fresh anticompetitive case against the Menlo Park-based firm, with the FTC slamming Meta’s “attempt to illegally acquire” the app.
FTC seeks to block virtual reality giant Meta’s acquisition of popular app creator Within: https://t.co/b87juAolBw
— FTC (@FTC) July 27, 2022
The FTC voted 3-2 to allow staff to issue a temporary restraining order and preliminary injunction, with a further federal court complaint and preliminary relief request filed at the US District Court for the Northern District of California to suspend the buyout.
John Newman, FTC Bureau of Competition Deputy Director, said in a statement,
“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”
Meta, which owns the largest market share of virtual reality (VR) headset sales, was slapped with the complaint, which accuses the company of monopolising the VR market.
The document also notes Meta’s acquisition of Oculus VR in 2018 and an email where Zuckerberg said it was crucial to be “completely ubiquitous in killer apps,” or programmes that demonstrate the capabilities of the headset’s technologies, among others.
The complaint adds that Meta had the “required resources and a reasonable probability” of developing its own VR fitness app, but instead “chose to try buying Supernatural.”
The FTC wrote in a comment on the complaint,
“Meta’s independent entry would increase consumer choice, increase innovation, spur additional competition to attract the best employees, and yield other competitive benefits. Meta’s acquisition of Within, on the other hand, would eliminate the prospect of such entry, dampening future innovation and competitive rivalry”
The complaint also alleges Meta’s entry into VR fitness could influence competition, but that buying Within would “slacken” pressure, leading to violations of antitrust laws. It added Meta’s acquisition of Beat Saber could potentially weaken competition by limiting innovation after buying out Supernatural.
Meta Faces FTC, Earnings Woes
The news comes after the FTC launched an anticompetitive case in January against the metaverse tech giant, along with representatives from North Carolina, New York, and Tennessee.
The claim cited complaints from numerous XR software developers that Meta’s software updates blocked third-party coders from optimising apps on Quest devices.
In August last year, before Facebook rebranded its operations to Meta Platforms, the FTC reopened a dismissed case accusing it of further violations following acquisitions of Unit 2 and Big Box that year.
The news comes just a day after Meta released its quarterly investors’ report, which found revenues of $28.8 billion USD in the second quarter (Q2), down roughly 1 percent from $29.08 billion in 2021.
Shares for the company fell 5 percent after its earnings report missed Wall Street expectations of $28.9 billion. Meta’s profits also plummeted 36 percent compared to last year, at $6.69 billion and $10.39 billion, respectively.
