FTC to fight virtual reality developer Within for trial
WASHINGTON SAN JOSE, Calif. - The Federal Trade Commission is about to engage in a real-life courtroom fight over virtual reality, according to a report by the Federal Trade Commission.
A high-profile trial kicks off on Thursday, in which the FTC will try to prevent Facebook parent Meta Platforms Inc from buying virtual reality app developer Within Inc.
In July, the FTC sued to stop the deal, saying that Meta's acquisition of Within would lead to a monopoly in the market for virtual reality VR fitness apps. The judge has asked the judge to order a preliminary injunction that would halt the proposed transaction.
The trial that starts on Thursday will serve as a test of the FTC's bid to head off what it sees as a repeat of the company buying its way to dominance, this time in the nascent virtual and augmented reality markets.
The FTC is trying to force Meta to unwind two previous acquisitions, Instagram and WhatsApp, in a lawsuit filed in 2020. At the time the companies were purchased, both of them were in relatively new markets.
A government victory can hampered Meta's ability to maneuver in an area of emerging technology that Chief Executive Mark Zuckerberg has identified as the next generation of computing. If Meta was blocked from making acquisitions in the space, it would face greater pressure to produce its own hit apps and give up the gains associated with bringing innovative developers in-house.
Within the popular subscription-based virtual reality workout app Supernatural, it advertises it as a complete fitness service with expert coaches, beautiful destinations and workouts choreographed to the best music available. It is only available on Meta's Quest devices, which are headsets that offer immersive digital visuals and audio that market research firm IDC estimates capture 90% of global shipments in the virtual reality hardware market.
The majority of the more than 400 apps available in the Quest app store are produced by external developers. Meta has acquired Beat Saber, the most popular virtual reality app on the Quest app store, which is the most popular virtual reality app in the Quest app store.
Meta is expected to argue that the FTC didn't do a good job of defining the relevant market and that it competes with a wide range of fitness content, not just VR-dedicated fitness apps.
It is expected to argue that the FTC underestimated the competition in the market for virtual reality fitness apps.
In October 2021, the social media company decided to buy Within after changing its name from Facebook to Meta, signalling its ambition to build an immersive virtual environment known as the metaverse.
Meta did not reveal the price tag for the deal, but tech publication The Information reported that it was about $400 million.
Zuckerberg will be a witness in the trial. Other potential witnesses are Within CEO Chris Milk and Meta Chief Technology Officer Andrew Bosworth, who runs the company's metaverse-oriented Reality Labs unit.
The trial is in the U.S. District Court for the Northern District of California.
In addition to defending the Within acquisition, Zuckerberg is expected to be questioned about the Facebook parent's strategy for its VR business, as well as the company's plans to support third-party developers, according to a court document.