The Federal Trade Commission (FTC) filed a lawsuit and sought a temporary restraining order on Wednesday seeking to halt Meta Platforms Inc.’s purchase of virtual reality (VR) company Within Unlimited Inc. The suit says the acquisition would harm competition and consumers and bring Meta one step closer to “its ultimate goal of owning the entire ‘Metaverse.’”
The FTC’s latest enforcement action, authorized by a commissioner vote of 3-2, explains that Within is a software company that develops apps for VR devices, including its highly popular fitness app “Supernatural.” Despite Meta’s current status as the largest provider of VR devices and apps to customers nationwide, the complaint accuses it and controlling shareholder and CEO Mark Zuckerberg of wanting more.
The redacted complaint details Meta’s foray into VR, starting with its acquisition of Oculus in 2014. Since then, Meta’s VR headsets have become the keystone of its growth in the VR space, the complaint notes. The FTC adds that Zuckerberg has publicly stated that Meta subsidizes its VR devices or sells them for no gain in order to attract users.
The agency alleges that targeting Within is part of the company and Zuckerberg’s strategy to be “‘completely ubiquitous in killer apps’— i.e., in significant VR apps that prove the value of the technology.” As such, the FTC accuses Meta of choosing to buy up Within rather than compete with it, restricting potential competition in the VR market, and specifically the market for VR dedicated fitness apps.
Until the merits of the case can be resolved, the agency asks Judge Edward J. Davila to pause the deal, which is otherwise set to close on July 31.
In a statement, FTC Bureau of Competition Deputy Director John Newman applauded the action. “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.”