Meta Can’t Buy V.R. Fitness Company, Must Make Its Own Competing App, Says FTC

Another antitrust lawsuit for Zuckerberg. The Federal Trade Commission (FTC) is suing to stop Facebook parent-company Meta from acquiring the virtual reality company Within Unlimited.

Meta has been betting big that virtual reality (V.R.) and augmented reality (A.R.) will finally have their day, pouring billions of dollars into the “metaverse.” Within makes a popular V.R. fitness app called Supernatural.

The FTC says that Meta acquiring Within amounts to a violation of U.S. antitrust law.

“Meta is a potential entrant in the virtual reality dedicated fitness app market with the required resources and a reasonable probability of building its own virtual reality app to compete in the space,” says the FTC in a statement. “But instead of entering, it chose to try buying Supernatural. Meta’s independent entry would increase consumer choice, increase innovation, spur additional competition to attract the best employees, and yield other competitive benefits. Meta’s acquisition of Within, on the other hand, would eliminate the prospect of such entry, dampening future innovation and competitive rivalry.”

“Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief,” said FTC Bureau of Competition Deputy Director John Newman.

The FTC’s suit is silly for a number of reasons, starting with its very premise.

Meta is set on making its metaverse happen, and presumably it wants the best technology and programs in that world. The creators of Supernatural have been spending a lot of time on developing this program, and presumably they want it to get to a lot of people. Meta acquiring Within allows Meta to bring some of the best virtual reality fitness programs to the metaverse without duplicating Within developers’ efforts, while also allowing the creators of Supernatural to share their expertise and vision with many more people than they would otherwise. Meanwhile, more consumers have easy access to a highly-acclaimed V.R. fitness program. Sometimes, bigger companies buying smaller ones is a win-win-win.

The idea that Meta should have to develop and promote its own virtual reality fitness app (instead of relying on existing technology) and that this would somehow be good for consumers is such a weird, convoluted scheme. With Meta’s mighty marketing power and reach, it may be able to crush Supernatural—but who would that benefit? Or it may make an inferior product, meaning anyone who wants a top-of-the-line V.R. fitness experience integrated into the metaverse is out of luck. Either way, it doesn’t seem like consumers really win here.

Besides, there are a lot of companies—including behemoths like Microsoft and the video game company Epic—working on virtual and augmented reality applications. And there are also all sorts of programs specifically dedicated to V.R. and A.R. fitness. Meta buying Within hardly dries up all competition within this space.

And since the Oculus Quest Store operates like Google Play or the Apple App Store, many competing fitness apps could still run through Oculus Quest headsets, even if Meta’s deal with Within lets it have a preinstalled fitness app in the metaverse.

There are also a lot of more technical issues with the FTC’s lawsuit, which Adam Kovacevich—a self-described “pro-tech Democrat” and the founder and CEO of the tech industry coalition Chamber of Progress—lays out in this Twitter thread. Among other issues, Kovacevich takes issue with the FTC’s market definition.

FTC’s initial stab against Facebook got rejected because of this failure to establish a proper market, and I think this case will fall into the same trap.https://t.co/sQTIjWnbNG 15/

— Adam Kovacevich (@adamkovac) July 27, 2022

In order to prove any antitrust violation, authorities must start by defining the market that is supposedly being monopolized or undermined. The FTC has a history of shadiness in this realm, defining markets in a way that helps their case but defies reality. For instance, in another lawsuit against Meta (this one concerned with personal social networking services), the FTC defined social network to excl