Meta takes on the US antitrust agency over the future of virtual reality

Meta takes on the US antitrust agency over the future of virtual reality

WASHINGTON/SAN JOSE, Calif., Dec 8 (Reuters) – The Federal Trade Commission, which enforces antitrust law, is about to engage in a real court battle over virtual reality.

On Thursday, a high-profile lawsuit kicks off in which the FTC will try to stop Facebook parent company Meta Platforms Inc (META.O) from buying virtual reality app developer Within Inc.

The FTC filed a lawsuit in July to end the deal, saying Meta’s acquisition of Within would “tend to create a monopoly” in the market for virtual reality (VR) fitness apps. She asked the judge to order a preliminary injunction that would stop the proposed transaction.

The lawsuit, which begins Thursday, will serve as a test case for the FTC’s attempt to avoid what it sees as a repeat of the company’s purchase of its path to dominance, this time in the nascent virtual reality and increased.

The FTC is separately trying to force Meta to unwind two previous acquisitions, Instagram and WhatsApp, in a lawsuit filed in 2020. Both were in relatively new markets at the time the companies were purchased.

A government victory could hamper Meta’s ability to maneuver in an area of ​​emerging technology that chief executive Mark Zuckerberg has identified as the “next generation of computing.”

If prevented from making acquisitions in the space, Meta would face greater pressure to produce its own successful apps and forgo the gains – in revenue, talent, data and control – associated with the integration of in-house innovative developers.

As part of the development of popular subscription-based virtual reality workout app Supernatural, which it markets as a “complete fitness service” with “expert trainers”, “beautiful destinations” and ” workouts choreographed to the best music available”.

It’s only available on Meta’s Quest devices, which are headsets with immersive digital visuals and sound that market research firm IDC estimates account for 90% of global reality hardware market shipments. Virtual.

The majority of the over 400 apps available in the Quest app store are produced by external developers. Meta owns the most popular virtual reality app from the Quest app store, Beat Saber, which it acquired in 2019.

Meta should argue that the FTC has mischaracterized the relevant market and that it competes with a range of fitness content, not just dedicated VR fitness apps.

The FTC is also expected to have underestimated the competition in the VR fitness app market.

The social media company agreed to buy Within in October 2021, a day after changing its name from Facebook to Meta, signaling its ambition to create an immersive virtual environment known as the Metaverse.

Meta did not disclose the price of the deal, but tech publication The Information reported it was around $400 million.

Zuckerberg will be a witness at trial. Other potential witnesses are Within CEO Chris Milk and Meta CTO Andrew Bosworth, who heads the company’s metaverse-oriented Reality Labs unit.

The trial is being held in the U.S. District Court for the Northern District of California.

In addition to defending the Within acquisition, Zuckerberg is expected to be questioned about Facebook’s parent company’s strategy for its VR business, as well as the company’s plans to support third-party developers, according to a court document.

Reporting by Diane Bartz in Washington and Katie Paul in San Jose, California. Editing by Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

Diane Bartz

Thomson Reuters

Focused on US antitrust as well as corporate regulation and law, with experience covering the war in Bosnia, elections in Mexico and Nicaragua, as well as stories from Brazil, Chile, Cuba, from El Salvador, Nigeria and Peru.

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