FTC sues Meta to block acquisition of VR company

The Federal Trade Commission (FTC) is trying to block Meta’s acquisition of a virtual reality (VR) company with a popular fitness app through a lawsuit filed Wednesday. 

The FTC alleged Meta’s acquisition of Within Unlimited, the company behind the fitness app Supernatural, would weaken competition in the VR fitness app market. 

The complaint alleges Meta, the parent company of Facebook, Instagram and WhatsApp, could have built its own virtual reality app to compete in the space but by choosing to buy a potential rival is limiting competition in a way that could lead to less innovation, lower quality, higher prices and less consumer choice. 

The FTC’s lawsuit, against the company and CEO Mark Zuckerberg, more broadly targets Meta’s acquisitions of VR companies in recent years, accusing the company of embarking on a “campaign to conquer VR” dating back to 2014 when it acquired the Oculus VR headset manufacturer. 

“Instead of competing on the merits, Meta is trying to buy its way to the top,” FTC Bureau of Competition Deputy Director John Newman said in a statement. “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.”

A Meta spokesperson said the FTC’s case is based on “ideology and speculation, not evidence.” 

“The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible. By attacking this deal in a 3-2 vote, the FTC is sending a chilling message to anyone who wishes to innovate in VR. We are confident that our acquisition of Within will be good for people, developers, and the VR space,” the spokesperson said in a statement. 

The FTC commissioners voted along party lines on the lawsuit, with the Democratic majority voting to sue over Meta’s acquisition. Republican Commissioners Noah Phillips and Christine Wilson voted against the lawsuit. 

The tech giant rebranded under the parent company name Meta in October. With the name change, Zuckerberg said the company will be focusing more on expanding VR and the so-called metaverse. 

Meta’s focus on VR comes as the company is struggling to adapt its existing social media products with the rise of rival platform TikTok. Meta has also faced hurdles to its ad revenue after Apple rolled out a feature that required companies to ask users on its operating system whether they want to have their data tracked across apps and websites, cutting into Facebook’s targeted advertising business.