Image Source: Game Developer
The Federal Trade Commission took action on Wednesday to prevent Facebook-parent Meta from buying virtual reality startup Within, sending the strongest message yet that the organization may adopt a harder stance on Silicon Valley acquisitions using more recent technologies.
According to a Wednesday-filed injunction, the FTC claimed that Meta has the capacity to create its own VR applications that are comparable to those created by Within, the firm that is responsible for the virtual fitness program Supernatural. As an alternative, the FTC asserts that Meta (FB) is attempting to acquire the fledgling business, which “[dampens] future innovation and competitive rivalry.”
The internet giant was charged with trying to illegitimately grow its “virtual reality empire” by the FTC, which is in charge of upholding US antitrust rules.
The injunction comes when Meta is working to develop use cases for its virtual reality headgear, a future wager on which it has staked its future. One of the most downloaded apps on the Meta headset is Supernatural, which for some people, is what first gets them interested in exercising in virtual reality.
The FTC’s claim is “based on ideology and assumption, not evidence,” according to Meta spokesperson Stephen Peters in a statement.
Regarding its long-standing acquisitions of Instagram and WhatsApp, Meta is defending itself against yet another antitrust case from the FTC that aims to split up the tech giant. The FTC’s action comes as lawmakers debate measures that may limit the influence of dominant big digital companies, including Meta.
FTC accuses Meta of buying its influence
When it purchased VR headset manufacturer Oculus in 2014, Meta—then known as Facebook—began its VR journey. The game development platform Unit 2 Games and Beat Games, the company behind the well-known game Beat Saber, are just two of the recent VR-related purchases it has made. In October 2021, Meta publicly announced its intention to purchase Within for an unknown fee.
In April 2020, Supernatural was made available by Within, a 6-year-old creator of VR apps. It requires a membership, in contrast to many other VR apps; users must pay $19 per month or $180 annually to continue exercising in virtual reality, as opposed to only paying a one-time cost for the software.
The FTC asserts in its lawsuit that Meta already has influence over “the best-selling device, a top app store, seven of the most successful developers, and one of the best-selling apps of all time” in the VR market. In addition, the agency cited a widely-reported email Zuckerberg sent to Meta executives in which he is alleged to have stated that the business must be “absolutely omnipresent in killer apps,” alluding to applications that will demonstrate the true worth of new technology.
According to Charlotte Slaiman, competition policy director at the consumer group Public Knowledge and a former FTC antitrust official, the FTC’s primary claim in the complaint—that the acquisition would lessen competition by displacing a competitor—reflected decades of accepted antitrust reasoning.
Slaiman continued by saying that the complaint is very clear in its recognition of Meta’s ability to rule the virtual reality market. The FTC’s decision to move forward with VR without “waiting to see what occurs” is incredibly encouraging.
Slaiman added that the FTC’s complaint’s timing might lead to renewed pressure on Congress to establish an antitrust law with a tech component that would construct new barriers between internet firms’ many lines of business.
The American Innovation and Choice Online Act is awaiting a vote on the Senate floor, but Senate Majority Leader Chuck Schumer has not placed the legislation on the schedule, and supporters have a limited amount of time before Congress adjourns for the summer.