Meta is in a legal dispute with the US antitrust authority FTC. And he defends himself with an unusual argument.
In late 2021, the FTC launched an investigation against Meta and blocked the acquisition of VR studio Within, which develops the hit fitness app Supernatural. Meta had announced the acquisition in October 2021.
Just under two years earlier, Meta acquired the team behind Beat Saber, the best-selling VR game that started the VR fitness trend in 2018.
The FTC alleges that through these acquisitions, Meta is trying to monopolize the VR fitness market. “Instead of competing on the merits, Meta is trying to buy its way to the top,” Competition Bureau Deputy Director John Newman said over the summer. He said the FTC would take “all appropriate steps” to prevent “unlawful acquisition” and filed a lawsuit.
Meta admits a serious omission
In Meta’s Defense Submission, which is freely available online, the attorneys set out the reasons for Within’s acquisition of Meta. Among other things, court documents say the company has no fitness experience, has limited and irreplaceable VR developer resources, and has never successfully developed a VR app from scratch. Because of this, Meta didn’t even attempt to develop its own VR fitness app.
Brutal. ? This is Meta claiming that “Meta has […] no history of successfully building VR apps from scratch. » ; of its response in the Within case.
— NyaVR (@nya_vr_) November 14, 2022
The argument is not far-fetched. Meta’s VR app attempts didn’t go well. From the inherently cool but underutilized Facebook spaces to the current prime example, Meta’s proto-metaverse Horizon Worlds, which recently saw its targeted user count cut in half and continues to generate ridiculous, negative headlines.
When Meta has had success with VR apps, they or their developers have always been acquired. The company has acquired nine VR studios since late 2019, including Within, whose acquisition is currently on hold.
The FTC does not want to repeat a capital error
Meta’s argument is a double-edged sword, as it could also be interpreted in favor of the FTC. After all, contrary to claims, Meta would certainly have the resources to build a development team – even if acquisition is a much easier path to the top of the VR fitness market.
Meta is not known for innovation. On the contrary, he is known to buy promising startups early on and shamelessly copy the ideas of competitors. The acquisition of Instagram and Whatsapp paved the way for Mark Zuckerberg’s social media empire. The FTC did not intervene then and does not want to repeat the same mistake if the Metaverse does indeed become the successor to the Internet and the next wave of social technology.
But Meta’s omnipotence is collapsing: the number of Facebook and Co. users is no longer growing as fast as before, and social usage is shifting in favor of TikTok. These and other difficulties are currently giving Meta a hard time and have caused the group’s shares to fall over the past year. It is quite possible that the court will take these circumstances into account.