Meta Opposes FTC’s Bid to Strike its Affirmative Defenses in VR Acquisition Battle

An opposition submitted late last week by Meta Platforms Inc. implores the court overseeing a virtual reality acquisition dispute not to strike a third of Meta’s defenses as the Federal Trade Commission (FTC) requested. The response comes as the parties are poised for an evidentiary hearing on the FTC’s motion for a preliminary injunction, a bid to prevent Meta from closing its acquisition of virtual reality start-up Within Unlimited Inc. until after the FTC resolves an administrative challenge to the transaction.

As previously reported, the FTC, per a 3-2 commissioner vote to issue the complaint, intervened days before the transaction’s scheduled close on July 31. The agency charged Meta with making an illegal move towards cornering the VR market and specifically, the market for VR dedicated fitness apps in view of Within’s app “Supernatural.”

Meta answered the complaint and raised multiple affirmative defenses in late August while protesting Chair Lina Khan’s participation in the suit owing to her alleged bias towards Meta. Defenses included failure to state a claim, that “the relief sought is inequitable and contrary to the public interest,” and that the FTC failed to state critical elements of its antitrust claims.

In response, the FTC took issue with 6 of the 19 defenses, including some that implicated Khan’s supposed bias.

In last week’s opposition, Meta said the FTC’s joint bases for rejecting its defenses are meritless. The brief argued that despite the FTC’s pleas, the agency had plenty of notice of the facts underlying the defenses, which is all that Rule 12(f) requires.

Next, Meta tackled the FTC’s argument that the court lacks jurisdiction to hear defendants’ constitutional defenses under a Ninth Circuit case which is currently under Supreme Court review. Meta said the case, even if the decision stands, is inapplicable as the two are factually distinct.

In addition to its substantive arguments, Meta accused the FTC of gamesmanship by asking the court to “artificially narrow the issues for trial and conceal discoverable evidence—so that it can seek extraordinary equitable relief without having to carry its burden on likelihood of success or on the equitable factors.” Meta further claimed that the FTC is improperly refusing to explain how it can allow Chair Khan’s continued participation in the face of her public statements expressing a desire to halt any acquisition attempt by Meta.

The evidentiary hearing on the FTC’s motion for a preliminary injunction is scheduled for October 21 before Judge Edward J. Davila. 

Meta is represented by Weil, Gotshal & Manges LLP, Kellogg, Hansen, Todd, Figel & Frederick P.L.L.C., and Hogan Lovells US LLP.