If Mark Zuckerberg wants to add Within Unlimited to his growing “metaverse” playpen, he’ll have to acquire the virtual reality fitness company the old-fashioned way.
The Federal Trade Commission this week said it will remove Zuckerberg personally from a lawsuit seeking to block Meta from acquiring the company in exchange for assurances the billionaire won’t try to pull a fast one and purchase the company on his own, according to fillings first seen by The New York Times. Now, if the deal does go through, Meta will have to fork over the big bucks, though the FTC would clearly prefer that didn’t happen either.
Zuckerberg and Meta first expressed interest in acquiring Within, best known for its Supernatural fitness app, last year amid its re-branding and first major push into the so-called Metaverse. Since then, the company has reportedly invested well over $US10 ($14) billion into making what it ambitiously calls, “The next era of human-computer interaction,” a reality.
Where Meta sees an opportunity, the FTC sees a potentially disastrous repeat of the types of acquisitions that entrenched Meta’s current alleged monopoly status in the first place. In a lawsuit filed in late July, the FTC alleged Meta’s Within acquisition was meant to kill competition in the VR fitness space and boost up Beat Saber, the company’s own VR app. Beat Saber, it’s worth noting, wasn’t an in-house Meta creation either and came to the company via its 2019 acquisition of Beat Games. Meta’s made a multi-trillion dollar company out of the mantra, if you can beat em’ make them an offer they can’t refuse.
“Letting Meta acquire Supernatural would combine the makers of two of the most significant VR fitness apps, thereby eliminating the beneficial rivalry between Meta’s Beat Saber app and Within’s Supernatural app,” the FTC wrote in its lawsuit. The complaint alleged the proposed deal could eliminate present and future competition in the VR market and put Meta, “one step closer to its ultimate goal of owning the entire ‘Metaverse.’”
That lawsuit apparently came as a surprise to the folks over at Meta. According to a recent Bloomberg report, Meta executives were allegedly blindsided by the complaint and only learned about it via a Twitter post. Sources speaking with Bloomberg said the agency didn’t seek sworn testimony from executives at either Meta or Within in the weeks leading up to the suit, something unusual for a deal of that size. Meta did not immediately respond to Gizmodo’s request for comment.
It may seem odd to litigate over potentially monopolistic practices in an industry that, for all intents and purposes, won’t truly exist for another decade, but supporters at the FTC would likely say that same short-term thinking led the agency to step off the gas in its efforts to prevent Facebook from acquiring Instagram and WhatsApp. The full downstream effects of those acquisitions were only truly felt years later.
The FTC did not immediately respond to Gizmodo’s request for comment.
The lawsuit update came the same day Meta reached a $US37.5 ($52) million settlement of a lawsuit that accused the company of violating California law by tracking users’ smartphone movements without their permission. The lawsuit, which dates back four years, represented social media users who alleged Facebook inferred their locations via IP addresses even after they had turned location services off on their phones. That seemingly suspicious tracking tactic was all in the name of serving users more ads. Meta has denied any wrongdoing.
Hearings for FTC’s attempt to block the Within deal are reportedly scheduled to take place in California District court in December.