Meta’s strategy of acquiring competitors in new sectors is attracting more attention from antitrust forces.
In a lawsuit filed on Wednesday, the Federal Trade Commission accused Meta, formerly known as Facebook, of blocking game developer Within to limit the company’s access to the virtual reality market. The complaint presents relatively unproven theories that antitrust laws cover actions taken by a company that is not yet a monopoly but is on the cusp of becoming one. The legal action potentially signals a move by the agency to limit takeovers of companies dominant in growing technology markets.
“This acquisition presents a reasonable likelihood of eliminating current and future competition,” the FTC wrote in the lawsuit, filed in California federal court. “Reduced competition can lead to reduced innovation, quality and choice, reducing competition for the most talented application developers. And Meta will be one step closer to his ultimate goal of owning the entire “Metaverse”.
Meta acquired Within, which owns an extremely popular fitness app called Supernatural, last year for an undisclosed sum. The purchase was part of CEO Mark Zuckerberg’s bid for the so-called Metaverse.
According to the lawsuit, Meta is seeking to dominate the VR fitness app market as part of a broader campaign to dominate the entire VR market.
Meta’s virtual reality products division was “growing rapidly,” the FTC said, and would generate $2.3 billion in revenue in 2021, more than double the previous year. The company’s two biggest acquisitions in the industry came in 2014 with the acquisition of virtual reality headset maker Oculus VR and in 2019 with the acquisition of game developer Beat Games.
The agency pointed to Meta’s strategy of acquiring multiple studios behind popular virtual reality apps. As of 2020, the company has purchased six game developers, including Ready at Dawn Studios, Downpour Interactive, and Twisted Pixel.
The FTC argued that the proposed acquisition would substantially reduce competition in the market for dedicated VR fitness apps because Meta would have no incentive to develop an app to compete with Supernatural.
“Allowing Meta to acquire Supernatural would combine the creators of two of the most prominent VR fitness apps, eliminating the lucrative rivalry between Meta’s Beat Saber app and Within’s Supernatural app,” the complaint states.
Under the horizontal merger guidelines, transactions “between a holder and a potential participant may raise significant competitive concerns.”
The FTC argued that the deal would lead to less innovation, lower quality, higher prices, fewer incentives to attract and retain employees, and fewer choices for the consumer. To block the deal, the agency would have to show that the acquisition violates Section 7 of the Clayton Act, which prohibits mergers that substantially reduce competition or “tend to create a monopoly.”
Facebook said in a statement that the FTC case was “based on ideology and speculation” rather than evidence.
“It was always clear that our acquisition of Within would mark a new investment in the VR fitness space, enhance the Quest platform to better support all fitness apps, and expand the VR ecosystem as a whole, all for the benefit of people and developers alike. like. .” said the company. “The FTC bases its arguments on numerous flaws and unfounded assumptions that do not stand up to scrutiny.”
On Wednesday, Meta released its first profit cut since the company went public in 2010.
The agency’s lawsuit is the second against Meta. In 2020, the FTC and a coalition of 48 state attorneys general claimed that the tech giant stifled competition in the social media market by illegally collecting user data to identify and buy new competitors. They offered new unknown evidence to the agency when it reviewed Facebook’s purchases of Instagram and WhatsApp in 2014, bolstering accusations that the company acquired companies primarily to fight competition.
In an email cited in the lawsuit, Zuckerberg detailed his motivation for buying Instagram. “Even if new competitors appear, Instagram, Path, Foursquare, etc. “Buying now will give us a year or so to integrate its dynamics before anyone approaches its scale again,” he wrote in a statement. “During that time, if we include the social mechanics they are using, these new products won’t have much traction because we’ll already have their mechanics implemented at scale.”
Source: Hollywood Reporter
Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.
