Law Street Media

Meta Loses Discovery Motion in FTC’s Challenge to Acquisition of VR Competitor Within Unlimited

A woman uses a virtual reality headset.

In the Federal Trade Commission’s effort to prevent Meta Platforms Inc. from purchasing Within Unlimited, a virtual reality (VR) app developer, the magistrate judge assigned to the case denied Meta’s motion to compel discovery from third-party Apple. The decision comes shortly after Judge Edward J. Davila struck several of Meta’s affirmative defenses.

Last week’s four-page discovery opinion explained that Meta sought information “about Apple’s strategic plans and development efforts, if any, with respect to what the FTC has described as a market for Virtual Reality Dedicated Fitness Applications.” According to Magistrate Judge Virginia K. DeMarchi’s order, the dispute was not about the scope of the discovery sought, it was about “how Apple should comply with its obligation to produce responsive documents.”

Meta argued that Apple should be required to apply proposed search strings to the electronically stored information (ESI) of particular Apple custodians for certain requests for production, while Apple countered that it could produce the requested documents without undertaking Meta’s proposed custodial searches. The court held a hearing on the matter earlier this month. 

Judge DeMarchi’s opinion weighed Meta’s principle argument that because Apple is a competitor, its review and selection of documents for production would be slanted by competitive bias, necessitating the proposed custodial searches to provide an “objective check” on the production.

“The Court is skeptical of the premise that Apple’s status as Meta’s competitor necessarily implies that Apple’s counsel and the company representatives working with counsel cannot be relied upon to comply with their discovery obligations under Rule 45,” Judge DeMarchi wrote. Further, the opinion concluded that Meta’s position found no support in case law or in the particular circumstances of the case.

Meta is represented by Weil, Gotshal & Manges LLP and Kellogg, Hansen, Todd, Figel & Frederick P.L.L.C. and Apple by Skadden, Arps, Slate, Meagher & Flom LLP.

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