Category: FTC

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Meta Wins Bid to Acquire VR Fitness Studio Behind ‘Supernatural’ as FTC Abandons Suit

In 2021 Meta announced it was set to acquire Within, the studio behind popular VR fitness app Supernatural, however the reportedly $400 million deal became subject to investigations by the Federal Trade Commission (FTC) in respect to Meta’s supposed monopolization of the VR fitness space. After the lengthy court battle, now the FTC says it’s no longer pursuing the suit to block Meta’s acquisition of Within.

Update (February 27th, 2023): As previously reported by Bloomberg, the FTC lost an important final step to officially block Meta’s acquisition of Within. At the time though, the process was still pending a possible FTC appeal.

Now the FTC announced it is abandoning the suit and will not appeal, which will now allow Meta to officially ink the deal to acquire Within. The original report follows below:

Original Article (February 2nd, 2023): Unreleased documents from the closed court proceedings appear to vindicate Meta’s acquisition of Within, Bloomberg reports, citing people familiar with the ruling. The sealed decision was made Wednesday morning by US District Judge Edward Davila in San Jose, California, which effectively denies the FTC’s request for a preliminary injunction to block the acquisition.

The final outcome of the trial isn’t entirely official just yet though. It’s said Judge Davila also issued a temporary restraining order with the aim of pausing Meta from closing the transaction for a further week, allowing time for the FTC to make an appeal. Provided the reports are accurate, the chances of the FTC potentially clawing back from the loss seem fairly slim at this point.

Last July, the FTC under sitting Chair Lina Khan revealed it had filed a motion aimed at blocking the deal with a federal court in a 3–2 decision, which aimed at reigning in Meta’s ability to “buy market position instead of earning it on the merits,” FTC Bureau of Competition Deputy Director John Newman said at the time.

Neither Meta nor the FTC has commented on the report regarding Meta’s win. In a statement to the New York Times about the matter in July, Meta called the FTC’s position “based on ideology and speculation, not evidence. The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible.” Adding that the lawsuit would send “a chilling message to anyone who wishes to innovate in VR.”

Over the past four years, Meta has gone unchallenged in several VR studio acquisitions, including Beat Games (Beat Saber), Sanzaru Games (Asgard’s Wrath), Ready at Dawn (Lone Echo & Echo Arena), Downpour Interactive (Onward), BigBox VR (Population: One), Camouflaj (Marvel’s Iron Man VR), Twisted Pixel (Wilson’s Heart, Path of the Warrior), and Armature Studio (Resident Evil 4 VR port for Quest 2).

In particular, the FTC used Meta’s acquisition of Beat Saber as evidence that the company already had engineers with the skill set to both expand Beat Saber into fitness and to build a VR dedicated fitness app from scratch, an FTC court filing stated, maintaining that buying Within “was not the only way Meta could have developed the production capabilities and expertise needed to create a premium VR fitness experience.”

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Report: FTC Investigating Meta’s Competitive Practices

The United States Federal Trade Commission (FTC) is investigating Meta for potentially anti-competitive practices, Bloomberg reports.

The recent report from Bloomberg’s Mark Gurman and Naomi Nix indicates the FTC is investigating Meta’s virtual reality units over potential anti-competitive practices.

Last month, a report from The Information indicated the FTC opened an antitrust probe into Meta’s acquisition of VR fitness platform Supernatural. The new report from Bloomberg indicates the FTC’s investigation is “scrutinizing how Meta, the world’s largest social media company, may be using its market power in the VR space to stifle competition,” including asking about Meta’s sales strategy for Quest 2 which sees it priced starting at just $299, far below the nearest competition.

Apps like Virtual Desktop and Bigscreen have faced situations where Meta (formerly Facebook) made it either difficult or unprofitable for certain aspects of those products to function on Quest. In the case of Virtual Desktop, for example, developer Guy Godin wasn’t allowed to release a PC VR streaming feature for his app through official channels for more than 20 months. When Facebook finally allowed the feature officially it was just a couple months before Facebook launched its own version of PC VR streaming called Air Link. The Bloomberg story reports the FTC “quizzed outside developers that make Oculus apps in recent months as part of the inquiry,” particularly in relation to how the company might discriminate against third-party services or apps that compete with solutions or apps offered by Meta directly.

The full report from Bloomberg, which may be behind a paywall, is available here. It’s been a busy start to the year — other recent reports indicate that Apple’s unannounced mixed reality headset might not ship this year, amid reports of lucrative hiring pushes between Meta, Apple and Microsoft.