WASHINGTON (AP) — Federal regulators on Wednesday filed a lawsuit to block Facebook parent company Meta and CEO Mark Zuckerberg from acquiring virtual reality company Within Unlimited and its fitness app Supernatural, saying the deal would harm competition and violate antitrust laws.
Experts said this was the first legal challenge to a Big Tech merger by the Federal Trade Commission.
The FTC has filed a lawsuit in federal court in San Francisco against the Menlo Park, Calif.-based tech giant and its top CEO seeking a temporary restraining order and preliminary injunction against the proposed acquisition.
Regulators said Meta is already a key player “at every level of the virtual reality industry”, owning the best-selling device, a top-tier app store, seven of the field’s most successful developers and the one of the best-selling apps. all time.
The FTC alleged that Meta and Zuckerberg planned to expand this VR empire by attempting to illegally acquire a dedicated fitness app.
Under Zuckerberg’s leadership, Meta launched a campaign to conquer virtual reality in 2014 with its acquisition of headset maker Oculus VR. Since then, Meta’s VR headsets have become a cornerstone of its growth in the virtual reality space, according to the complaint. Fueled by the popularity of its best-selling Quest headsets, Meta’s Quest Store has grown into a leading US app platform with more than 400 apps available for download, it says.
Meta rejected the regulators’ claims.
“The FTC’s case is based on ideology and speculation, not evidence,” the company said in a statement. “By attacking this deal…the FTC is sending a chilling message to anyone who wants to innovate in virtual reality. We are confident that our acquisition of Within will benefit people, developers and the VR space.
The FTC’s vote to block the acquisition was 3 to 2, with Chairwoman Lina Khan and the other two Democratic commissioners endorsing it and the two Republicans opposing it.
The action marked a new salvo by the FTC against Meta – the owner of Instagram, Messenger and WhatsApp in addition to Facebook – in the agency’s fight against what it considers anti-competitive conduct in the technology industry. . The FTC filed a landmark antitrust lawsuit against Facebook in late 2020, as the government continued its most significant attempt to bolster competition since its landmark case against Microsoft two decades ago.
In the sweeping antitrust lawsuit, the FTC is seeking solutions that could include a forced spinoff of popular messaging services Instagram and WhatsApp, or corporate restructuring. Its core theory is that Meta is a monopoly engaging in anti-competitive behavior.
In the lawsuit against the acquisition of Within Unlimited, the FTC cites a 2015 email from Zuckerberg to top Facebook executives saying that his vision for “the next wave of computing” was application control as well as the platform. form on which these applications are distributed. The email says a key part of that strategy is for the company to be “completely ubiquitous in killer apps,” which are apps that prove the value of technology.
Meta has purchased seven of the most successful virtual reality development studios and now has one of the largest catalogs of first-party virtual reality content in the world, according to the FTC. He cites the acquisition of the Beat Games studio, giving Meta control of the popular Beat Saber app.
The FTC’s action ensures “Facebook earns, rather than buys, its place in the emerging virtual and augmented reality industry,” said Krista Brown, senior policy analyst at the American Economic Liberties Project, in a statement. communicated. “This is the agency’s first challenge to a grand tech merger, and it represents its new commitment to protecting fair competition in nascent digital markets. The effects of Facebook’s impending acquisition of Within…would reduce the innovation and competition in a sector that is just getting started.
Follow Marcy Gordon at https://twitter.com/mgordonap
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