Meta's acquisition of VR dev Within roadblocked by FTC injunction

Meta announced its intent to acquire the virtual reality developer Within back in October, and now the FTC has filed an injunction against the company. With this injunction, the FTC officially moves to fully block Meta's acquisition of Within over its claims that the allegedly "illegal" deal stifles competition in the VR market.

Within develops the VR workout app Supernatural for the Oculus. Meta had planned to acquire the studio for $400 million but in doing so, the company drew the attention of the FTC, who believed its various acquisitions have been done to eliminate competition and dominate the VR space. 

In its lawsuit, the FTC's Bureau of Competition Deputy Director John Newman argues that Meta could have chosen to compete with Within's Supernatural app, rather than acquiring the studio and property outright. Instead, he says that 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."

The crux of the injunction and resulting lawsuit is just as Newman says. The FTC believes that a company with Meta's resources could meaningfully compete in the VR fitness market without the acquisition, and thus acquiring Within seemingly serves to stifle competition in the VR space rather than to expand it. The injunction argues that Meta itself is capable of meaningful competition due to its extensive resources, and already has ownership of Beat Saber, which can be considered a leading VR fitness app in this context.

The antitrust lawsuit is being filed by Lina Khan, a critic of big technology. Khan has argued that regulators had to stop violations of consumer protection laws in the matters of "bleeding edge" technology, particularly virtual and augmented reality.

The injunction throws a wrench into Meta's plans for the metaverse, of which it is competing against Apple for dominance. Mark Zuckerberg said as much, and recently told Meta employees that it and Apple were in a war to "decide what direction the Metaverse would go in." When asked by an employee, he said that the tech company was "going to be a competitor for us [Meta], not just as a product, but philosophically."

Acquisitions have been under scrutiny by the FTC in recent years. In 2020, the FTC filed a lawsuit against Meta (then still known as Facebook) arguing that the company shut down competition through acquisitions. That same year, the Justice Department sued Google, arguing that it abused a monopoly over online search.

The FTC is continuing its investigation into big tech. It's currently investigating whether Amazon has violated any antitrust laws, and the Justice Department is looking into Google's ad technology, along with Apple's policies for its App Store.