FTC Admits Defeat in Antitrust Battle With Facebook

FTC Admits Defeat in Antitrust Battle With Facebook

The Federal Trade Commission will not appeal the court ruling rejecting its attempt to block the acquisition of VR fitness company Within by Facebook and parent company Meta. The regulator’s decision marks a major win for Meta and draws renewed scrutiny on the agency’s capacity to successfully bring similar antitrust cases aimed at limiting Big Tech’s market dominance.

An FTC spokesperson revealed the decision during a press conference on Monday afternoon, effectively bringing an end to the agency’s two year battle to block Meta’s acquisition. The spokesperson declined to provide more specific details on its decision but said it was nonetheless still optimistic its legal complaint raised valid antitrust concerns that could play a role in future cases. The FTC and legal experts speaking with Gizmodo, said that despite the wound, the agency may still have some fight left in it for future antitrust action.

The FTC’s decision to refrain from an appeal came hours after federal judge Edward Davila’s ruling rejecting the FTC’s effort was unsealed. Within makes the popular VR fitness app Supernatural. In its complaint, the FTC tried to argue that the proposed acquisition by Meta, the world’s leading consumer VR headset maker, would snuff out VR competition and put the company on track towards obtaining a VR monopoly.

Though Davila sided with the FTC on a handful of legal arguments, he was ultimately left unconvinced that Meta would have opted to enter the VR fitness app market if failed to acquire Within.

“Though Meta boasts considerable financial and VR engineering resources, it did not possess the capabilities unique to VR dedicated fitness apps, specifically fitness content creation and studio production facilities,” Davilla wrote in his ruling.

Davilla’s ruling drew immediate praise from Meta, which argued its acquisition would actually increase competition and be a boon for both VR consumer and developers. CEO Mark Zuckerberg provided testimony in proceedings leading up to the court’s decision.

“We are pleased that the Court has denied the FTC’s motion to block our acquisition of Within,” a Meta spokesperson said in a statement. “This deal will bring pro-competitive benefits to the ecosystem and spur innovation that will benefit people, developers, and the VR space more broadly. We look forward to closing the transaction soon.”

Meta did not immediately respond to Gizmodo’s request for comment.

FTC: Down, but not out

Though the court’s ruling deals a damaging blow to the FTC, the agency and a monopoly expert speaking to Gizmodo said they remained confident in its ability to effectively pursue future actions against other tech companies. For starters, the judge sided with the FTC’s claims that VR fitness products are their own distinct market. The judge also agreed that the FTC’s claims for its case, that Meta’s acquisition could worsen competition, were in fact built on a valid legal theory. Those smaller wins could help the FTC in future cases.

American Economic Liberties Project Legal Council Lee Hepner bolstered the FTC’s optimistic outlook telling Gizmodo the decision not to appeal is, “a smart and strategic move by the FTC.”

“The FTC largely achieved its objective of advancing the legal theory, and only lost on a narrow fact-specific determination,” Hepner said “A reviewing court would be deferential to Judge Davila’s findings of fact, and it’s not worth it for the FTC to risk losing their legal wins on appeal.”

Hepner went on to say the case “vindicates” the FTC and DOJ’s stated approach of bringing forward challenging real world cased to advancement legal theories.

“In that sense, this was a win for the FTC,” Hepner said.

Editor’s Note: Release dates within this article are based in the U.S., but will be updated with local Australian dates as soon as we know more.

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