FTC didn’t stop Facebook-Instagram. How about Meta-Within?

Dec 15, 2022, 2:49 PM | Updated: Dec 16, 2022, 2:59 pm
FILE - Facebook's Meta logo sign is seen at the company headquarters in Menlo Park, Calif., on, Oct...

FILE - Facebook's Meta logo sign is seen at the company headquarters in Menlo Park, Calif., on, Oct. 28, 2021. Facebook parent Meta's quasi-independent oversight board said Tuesday, Dev. 6, 2022 that an internal system that exempted high-profile users including former President Donald Trump from some or all of its content rules needs a major overhaul. (AP Photo/Tony Avelar, File)

(AP Photo/Tony Avelar, File)

SAN JOSE, California (AP) — Facebook parent Meta is sparring with government regulators in federal court over its pending acquisition of a virtual reality fitness company Within Unlimited

CEO Mark Zuckerberg is expected to testify as a witness at the trial in San Jose, California.

At issue is whether Meta’s acquisition of the small company that makes a VR fitness app called Supernatural will hurt competition in the emerging virtual reality market. If the deal is allowed to go through, the Federal Trade Commission argues, it would violate antitrust laws and dampen innovation, hurting consumers who may face higher prices and fewer options outside of Meta-controlled platforms.

Meta, the FTC argued in court this week, scrapped its own plans to enter the nascent VR fitness market in the summer of 2021 when it decided to buy Within. Without the competitive threat of the tech giant’s entry into the market, the agency asserts, innovation stalls, hurting end users.

“The threat is what keeps firms going,” testified economist Hal Singer, a witness for the FTC. “If I know there is a chance that someone could come in and steal my lunch,” he said, companies will innovate and constrain pricing.

But Meta says it had no concrete plans to create a competing app beyond the initial discussion stage, where it concluded it had no ability to do so. Mark Rabkin, a vice president at Meta who leads its VR efforts, testified that while Meta could definitely build a VR fitness app, its chances of success would be “very low.”

“Achieving what Supernatural has achieved is remarkable and it would be very difficult for us to replicate that,” Rabkin said during a Zoom hearing Friday.

Meta, in fact, has a history of trying — and often failing — to copy rival platforms or their features, sometimes when it’s not able to purchase a company or product outright. Meta owns Instagram, which has a Stories feature, for instance, that is very similar to the Story feature on Snapchat. Meta also briefly redesigned Instagram this year to make it look more like rival TikTok, but scrapped the change after an outcry from users, including celebrities.

The agency and Meta also disagree on how to define the market that Within’s popular app falls into. The FTC defines it narrowly as “VR dedicated fitness apps,” while Meta’s definition includes a wider swath of competitors, many of which don’t need VR goggles to work — such as Peloton, for instance.

“Meta has talked about how they want to make virtual reality as ubiquitous as your cellphone,” said Lee Hepner, legal counsel, American Economic Liberties Project, an organization that advocates for government action against business consolidation. “It’s the next platform for widespread communication in Meta’s eyes.”

If the FTC can preserve and boost competition at this stage, Hepner said, there are “different paths that this market could take instead of Meta controlling the whole path, the whole forward trajectory of this market in the next several years.”

The FTC’s challenge to Meta’s acquisition reflects agency chair Lina Khan’s aggressive stance on Big Tech and antitrust.

The case, expected to wrap up Tuesday, is being heard by U.S. District Judge Edward Davila, who also oversaw the trial of disgraced Theranos founder Elizabeth Holmes and her partner Ramesh “Sunny” Balwani. Both were sentenced to over a decade in prison for their roles in the company’s blood-testing hoax.

The FTC also sued this month to block Microsoft’s planned $69 billion takeover of video game company Activision Blizzard, saying it could suppress competition for Microsoft’s Xbox game console and its growing games subscription business.

In 2020 the agency sued Meta, then called Facebook, over its acquisitions of Instagram and WhatsApp that could force a spinoff of Instagram and WhatsApp. Unraveling those deals, which were made 10 and nine years ago, respectively — and previously approved by the FTC — may be more difficult than blocking the Within purchase, which Meta and Within want to close by the end of this year.

Under Zuckerberg’s, Meta moved aggressively into virtual reality in 2014 with its acquisition of headset maker Oculus VR. Since then, Meta’s VR headsets have become the cornerstone of its growth in the virtual reality space, the FTC noted in its suit. Fueled by the popularity of its top-selling Quest headsets, Meta’s Quest Store has become a leading U.S. app platform with more than 500 apps available to download, according to the agency.

Meta bought seven of the most successful virtual-reality development studios, and now has one of the largest virtual-reality content catalogs in the world, the FTC says.

“It may be true that Meta has become more effective at acquisitions than they are at product innovation,” Hepner said. “But just because they’re better at acquiring and innovating doesn’t mean that it’s legal to do that. The entire tech industry … for the past 20 years has gotten so effective at acquisitions, knowing that they won’t be challenged on it.”

___

This story has been updated to correct the spelling of the FTC chair’s last name. It’s Khan, not Kahn.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Police: Bus overturns in Slovenia, killing 3, injuring more

LJUBLJANA, Slovenia (AP) — A bus overturned early Friday in northeastern Slovenia, killing three people and injuring several, police said. The accident happened around 5 a.m. near the town of Murska Sobota, police said in a statement. They said an investigation is underway to determine the cause of the crash. Local media said the bus […]
1 day ago
FILE - A view of the German consulate in Istanbul, on June 2, 2016. Turkey has slammed a group of W...
Associated Press

Turkey says West failed to share details of security threat

ANKARA, Turkey (AP) — Turkey for a second day on Friday railed against a group of Western countries that temporarily shut their consulates in Istanbul, accusing them of failing to share information on the security threat that led to the closures and of aiming to cause harm to Turkey. This week, nine Western nations either […]
1 day ago
Ukrainian State Emergency Service firefighters put out a fire after Russian shelling hit a shopping...
Associated Press

EU officials hold Kyiv talks in show of support for Ukraine

KYIV, Ukraine (AP) — Top European Union officials were due to meet Friday in Kyiv with Ukrainian President Volodymyr Zelenskyy in a show of support for the country as it battles to counter Russia’s invasion and strives to join the EU as well as NATO. European Commission President Ursula von der Leyen and European Council […]
1 day ago
Tronco, or multiple foot stocks used to to constrain enslaved people, are seen at the Slavery exhib...
Associated Press

Dutch slavery exhibition to open at UN headquarters

THE HAGUE, Netherlands (AP) — A landmark exhibition on slavery in the Dutch colonial era that was first staged at Amsterdam’s Rijksmuseum is going on display at the United Nations in New York. The show, titled “Slavery. Ten True Stories of Dutch Colonial Slavery,” will open in the the U.N. headquarters’ visitors’ lobby from Feb. […]
1 day ago
A sister wears headwear showing a picture of The Last Supper, as she and a group of the Catholic fa...
Associated Press

Pope heads to South Sudan to urge peace as fighting kills 27

KINSHASA, Congo (AP) — Pope Francis opened the second and final leg of his African pilgrimage by heading to South Sudan on Friday, hoping to encourage the young country’s stalled peace process and draw international attention to continued fighting and a worsening humanitarian crisis. Francis had one final appointment Friday in Kinshasa with Congo’s bishops […]
1 day ago
This grab from video released by Adani Enterprises Ltd. on Thursday, Feb.2, 2023 shows Indian billi...
Associated Press

Indian tycoon Adani hit by more losses, calls for probe

NEW DELHI (AP) — Trading in shares in troubled Adani Enterprises gyrated Friday as the flagship company of India’s second-largest conglomerate tumbled 30% and then rebounded after more than a week of heavy losses that have cost it tens of billions of dollars in market value. The debacle, which led Adani to cancel a share […]
1 day ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
FTC didn’t stop Facebook-Instagram. How about Meta-Within?