A federal judge has sided with Facebook parent Meta and cleared the way for the company to buy virtual reality startup Within Unlimited, maker of popular fitness app Supernatural.
Federal antitrust regulators sought to block the acquisition on the grounds that it would harm competition in the emerging virtual reality market.
But US District Judge Edward Davila denied the Federal Trade Commission’s request for a preliminary injunction against the deal. The judge’s ruling said the agency did not provide sufficient evidence to prove its case.
Meta said it will now move forward with the acquisition of Inside Unlimited.
The FTC had argued that the smaller company’s acquisition by Meta — reminiscent of Facebook’s early purchases of Instagram and WhatsApp — would harm competition in the emerging virtual reality market.
Allowing the tech giant to buy out Los Angeles-based Unlimited, the FTC had argued, would violate antitrust laws and stifle innovation, hurting consumers who face higher prices and fewer choices outside of meta-controlled platforms. can face.
Meta Platforms Inc said in a statement late Friday that it was “pleased” with the decision after the ruling.
“This deal will bring competitive advantage to the ecosystem and benefit people, developers and the VR space more broadly,” said the Menlo Park, California-based company. “We look forward to completing the transaction soon.”
The FTC had argued that Meta scrapped its plans to enter the nascent VR fitness market in the summer of 2021 when it decided to buy Within Unlimited. Without the competitive threat of a tech giant entering the market on its own, the agency claims, innovation stalls, hurting end users.
Economist Hal Singer, a witness for the FTC, testified, “Hazard is what keeps firms going.” “If I know there’s a chance that someone could come in and steal my lunch,” he said, companies will innovate and constrain pricing.
But Meta executives — including CEO Mark Zuckerberg — tried to downplay the notion that the company was anywhere close to making its own VR fitness app. The Meta CEO testified that even though his company was “looking at” developing its own VR fitness app before deciding to acquire Within Unlimited in 2021, the business environment has changed and there is “almost no chance is” it will start such a project today.
Under Zuckerberg, Meta went aggressively into virtual reality with the acquisition of headset maker Oculus VR in 2014. Since then, Meta’s VR headsets have become a cornerstone of its growth in the virtual reality space, the FTC noted in its suit. Driven by the popularity of its best-selling Quest headsets, Meta’s Quest Store has become a leading US app platform, with more than 500 apps available for 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 noted.
However, Davila’s decision stated that the FTC needed to provide “at least circumstantial evidence” that Meta’s entry into the VR fitness market, not through an acquisition, would directly and favorably affect consumers by encouraging stronger competition. will affect
“Under this standard, the FTC’s evidence on this element is insufficient,” Davila wrote.
Representatives for the FTC did not immediately respond to a message seeking comment on Monday.
Davila also oversaw the trial of disgraced Theranos founder Elizabeth Holmes and her partner Ramesh “Sunny” Balwani. Both were sentenced to more than a decade in prison for their roles in the company’s blood test hoax.
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