On Wednesday, the Federal Trade Commission requested an injunction to prevent Meta, the company formerly known as Facebook, from acquiring a virtual reality company called Within, which could limit the company’s efforts to enter the so-called metaverse and signal a shift in the agency’s approach to tech acquisitions.
Since Lina Khan was appointed chief of the panel, the first antitrust litigation against a major tech company has been filed. When it comes to cutting-edge technology, such as virtual and augmented reality, Ms. Khan has suggested that authorities must intervene to prevent competition and consumer protection breaches.
As a result of the FTC’s request for an injunction, Mark Zuckerberg, Meta CEO, is listed as a defendant in the case, as is Ms. Khan. He has invested billions of dollars in virtual and augmented reality technologies, wagering that the metaverse is the next frontier in technology. Litigation may put a stop to their plans.
According to the FTC’s case, Meta might have tried to compete with Within on the merits instead of settling out of court with Within. As a result, it “opted to purchase” a leading business in a sector the government deemed “vitally essential.”
“Based on ideology and supposition, not evidence,” stated Meta in a statement. “Conveying a chilling message to everyone who desires to develop in V.R.” the government was said to be sending by bringing the complaint.
Within, the maker of the popular fitness app Supernatural, was acquired by Meta last year for an unknown fee. Virtual reality headsets for health and fitness have been a major focus of the company’s marketing efforts.
Antitrust law has never seen anything like the F.T.C.’s complaint. Regulators are more interested in mergers and acquisitions involving huge corporations in established markets than they are in tiny start-ups in emerging technology fields. Because of this, courts have been wary of using antitrust laws to stop mergers because they fear that if the acquisition is denied, the firms involved would eventually compete against one other.
Meta and other large corporations, however, have claimed that the government’s inactivity enabled them to acquire services that were formidable. Facebook’s purchase of Instagram, a photo-sharing programme with more than one billion regular users, was authorised by the FTC in 2012. Although other start-ups have risen afterwards, Instagram has helped Meta dominate the market for social picture sharing.
FTC’s case against Meta and other huge internet giants like Google, Apple, and Amazon is part of a larger wave of measures against Meta and other large tech businesses like these. Google has also been sued by the Justice Department for allegedly abusing its internet search monopoly.
Many more instances are possible. The Federal Trade Commission is looking into whether Amazon has broken antitrust rules, while the Justice Department is looking at Google’s dominance in advertising technology and Apple’s App Store standards.
It’s a blow for Mr. Zuckerberg that the FTC is suing him. In light of Facebook and Instagram’s recent privacy and content control blunders, he has been moving Meta away from its social networking origins. When it comes to wagering, he has instead placed his money on the metaverse.
The metaverse initiatives have been handed over to a senior lieutenant appointed by Mr. Zuckerberg. In addition, he’s given the go light to some of the most sought-after virtual reality (VR) titles. Beat Games, the designers of the popular Oculus Rift virtual reality game Beat Saber, was bought by Facebook in 2019. He has also sanctioned the acquisition of nearly half a dozen more virtual reality or gaming firms during the previous three years.
A day before Meta announced its first fall in quarterly sales since going public, the Federal Trade Commission launched a lawsuit against the company. Due to uncertain economic circumstances, the corporation has lately reduced employee incentives and restricted expenditure. Meta was “trying to buy its way to the top,” according to John Newman, deputy director of FTC’s Bureau of Competition. After already having a best-selling virtual reality exercise app, the business purchased Within’s Supernatural app “to buy market position,” he claimed. We will seek all available redress for what we believe is an improper transaction, he added.
The F.T.C. voted 3 to 2 in favour of approving the filing. In a statement, the agency’s Republican commissioner Christine Wilson claimed she was one of the two votes against the complaint. She refused to explain why she had made the decision she had made.
An injunction request by the FTC might be a precursor to the filing of a lawsuit against a merger, according to the agency, which would place Meta and it in an extended trial and appeals process. In response to a question about the FTC’s tactics, a spokesperson claimed the agency has not filed such a lawsuit.
Since President Biden named her last year, Ms. Khan, 33, has worked to keep her pledges to rein down corporate influence. A law school post she authored in 2017 condemning Amazon made her famous. During her time as FTC chair, she has advocated for antitrust enforcement and stated she plans to create comprehensive internet privacy regulations that might affect Silicon Valley corporations.
But Khan’s friends in the IT sector slammed her conduct. With the current case, “the agency is more interested on making headlines than outcomes,” said Adam Kovacevich, CEO of Chamber of Progress, an industry organisation financed in part by Meta. To him, Meta “isn’t any closer than pickleball or synchronised swimming are to locking up the fitness business.”