Meta submitted a request to dismiss the Federal Trade Commission’s complaint about its acquisition of Within.
The Los Angeles virtual reality firm makes Supernatural, a rhythm game-turned-workout app that, in our humble opinion, is a legitimately excellent use of VR. It makes sense why Meta wants to absorb the company, but the FTC has raised concerns that it may be an anticompetitive acquisition.
“Meta and [CEO Mark] Zuckerberg are planning to expand Meta’s virtual reality empire with this attempt to illegally acquire a dedicated fitness app that proves the value of virtual reality to users,” the agency wrote in July.
Today, Meta filed a request in the Northern District of California court to move forward with the deal despite the FTC’s complaint.
At first, the FTC argued that the acquisition would limit competition in the VR fitness market. The agency wrote, “Meta already participates in this broader market with its Beat Saber app, as does Within with its premium rival app Supernatural. The two companies currently spur each other to keep adding new features and attract more users, competitive rivalry that would be lost if this acquisition were allowed to proceed.” But the FTC filed a new complaint last week and removed these allegations.
If we want to get technical about it, Beat Saber isn’t really a fitness app — some people just break a sweat because the game requires a lot of fast arm movement, but Beat Saber wasn’t built with exercise in mind. The games just draw comparison because they’re both rhythm games.
In any case, Meta capitalized on the FTC’s less intense filing by arguing that the complaint shouldn’t stand in the way of the acquisition. If Meta were to acquire Within, then the FTC would have a much more difficult time forcing the merged companies to separate.
“Having abandoned its claim that Meta and Within compete for fitness consumers, the FTC proceeds only on the claim that Meta and Within could compete, and that the fear of such competition drives Within and others to compete more strenuously,” Meta’s filing says. But the company’s lawyers argue that, per legal precedent, “perceived potential competition” hasn’t stood up in court as grounds for blocking a vertical merger.
“The FTC alleges only that generalized fear of possible entry by Meta is a spur to competition,” the filing says.
Meta has waged an enormous bet on virtual reality; in 2021, the company spent over $10 billion in its Reality Labs division, and it’s not seeing anywhere near that amount in revenue. At its developer conference this week, the company formerly known as Facebook unveiled its high-end VR headset, the Quest Pro, which retails for $1,499.99.