FTC, n. Carolina launch probe into Meta VR unit

The Federal Trade Commission and a group of states, including New York, Tennessee and North Carolina, have launched an investigation into Meta's Oculus unit.

Sources told Bloomberg that the investigation is looking into whether Meta is using its market dominance to suppress competition. The sources said third-party developers have been questioned as part of the inquiry about the Oculus app store and sales strategy for the Oculus VR headset.

Representatives for the FTC and North Carolina attorney general didn't want to make a statement. Meta, who bought Oculus in 2014 for $2 billion, sells the Oculus Quest 2 headset for $299. According to its developer agreement, Oculus receives a 30% cut from developers on its app store.

The unit is essential to Meta's business model as it shifts its focus to helping to develop the metaverse, a virtual reality space where users can interact with each other in a computer-generated environment. The company was rebranded in October, and there was a new direction for the company.

Meta will report earnings for the fourth quarter and full year 2021 on February 2. Meta's Reality Labs segment, which covers virtual and augmented reality, will report separately from its family of apps. The company previously said that it expects investment in the segment to reduce operating profit by about $10 billion by the year 2021.

Reality Labs head Andrew Bosworth said in October that the Oculus Quest and Oculus Quest App would be rebranded as Meta Quest and Meta Quest App in early 2022.

The investigation comes after Meta is facing an antitrust lawsuit from the FTC, which claims the company illegally acquired Instagram and WhatsApp to maintain a monopoly. Judge James Boasberg ruled last week that the case can proceed as planned, even though Facebook pushed for the lawsuit to be thrown out in December.