US antitrust regulators allege Meta halted its efforts to make Beat Saber a VR fitness app and instead bought off the competition.
The dispute between Meta and the US antitrust authority FTC is entering the next round. Bloomberg reports new writings from both sides. According to the FTC, Meta wanted to turn Beat Saber into a VR fitness game, but instead inhibited the development of a nascent market with its planned acquisition of Within.
FTC Files Complaint Against Meta’s Within Acquisition
Shortly after refocusing on Metaverse development and changing its name from Facebook to Meta, Meta announced plans to acquire VR studio Within. The developer, which potentially changed hands for over $400 million, released the hit VR fitness app Supernatural for Meta Quest (2) in 2020.
However, after the takeover declaration, the US antitrust authority Federal Trade Commission (FTC) filed a lawsuit to prevent the transaction. The reason was that the takeover violated antitrust law. According to the FTC, Meta’s acquisition of Within would eliminate future competition in the emerging market for VR fitness apps.
FTC: Meta distorts the VR fitness market
According to the FTC, the acquisition of Within would prevent Meta from entering the nascent market with its own technologies. This, in turn, inhibits the development of competition and competitor efforts. Within, for example, would have expected Meta to enter the market ahead of the takeover deal and reacted accordingly.
Since the former Facebook company previously poached Within’s product manager, the startup is said to have been developing competitive strategies for Supernatural in anticipation of a corresponding VR app from Meta. The takeover bid rejected them. Meta, on the other hand, denies its VR fitness plans.
Meta’s two top executives – CEO Mark Zuckerberg and XR chief Andrew Bosworth – are expected to approve the development of a VR app. The two testified that they had neither approved work on a fitness app nor provided the necessary funding for it.
“These ideas never made it past the discussion stage, never received senior executive approval, and were all dismissed as impractical for a variety of reasons,” the company wrote in its recent report.
FTC: Beat Saber should have become a VR fitness app
The most successful VR game of all time was also part of Meta’s VR fitness plans, according to the FTC. Meta already has a motion-intensive VR game. Beat Saber can definitely be considered one of the best VR fitness games for the Quest (2). Yet, it is actually considered a rhythm or music game. Players hit colored cubes with lightsabers that fly to the beat of the music.
Due to its proximity to the fitness genre, there have reportedly been plans in the past to turn Beat Saber into a full-fledged VR fitness app. According to the FTC, Beat Games, which was acquired by Meta in 2019, reportedly began internal planning and presentation of the project in early 2021. In June of the same year, plans came to a halt again, as Meta decided to acquire Within instead.
Meta: Impossible to develop your own VR fitness app
From the FTC’s perspective, Meta is buying competition rather than fueling competition with its innovations. “Meta already has engineers with the skills to extend Beat Saber to fitness and to build a dedicated VR fitness app from scratch,” the FTC filing said.
Meta disputes this claim, saying it has documents from May 2021 in which employees concluded that Meta could not develop its own successful VR fitness apps. If the court blocks the acquisition of Within, Meta will still not be able to develop its own VR fitness app.
The FTC wants to get it right this time
It is difficult to prove that an acquisition limits the potential of a young industry. The FTC very rarely prosecutes in such cases. According to Bloomberg, the agency lost a similar legal case in 2015. So why is the FTC taking such a risk?
Meta operates Facebook, one of the largest social media platforms in the world. With the acquisitions of Instagram and WhatsApp, the group has enormously reinforced its supremacy in this field. The FTC sees this as a monopoly position and has wanted Instagram and WhatsApp out of the group for some time. A corresponding lawsuit against the Facebook monopoly has been ongoing since 2020.
Previously, however, US authorities had approved these takeovers. A mistake that should not be repeated. This is why US antitrust authorities are closely scrutinizing Meta’s VR strategy.