The FTC claimed in a complaint submitted on Wednesday to the Northern District of California that Meta and Zuckerberg’s potential acquisition of the virtual reality company Within and its wellness app ‘Supernatural’ violated American antitrust laws and were an attempt by the social media company to “buy its way to the top” rather than “compete on the merits.”
According to the complaint, under Zuckerberg, Meta could create its app and was “a potential entry in the virtual reality dedicated fitness app market,” but instead chose to acquire Within and become the owner of Supernatural.
It is claimed that the action will impede “future innovation and competitive rivalry” among American businesses.
The complaint stated that when a digital platform accumulates more users, content, and developers, “Network effects on a digital platform might cause the platform to become stronger — and its rivals weaker and far less able to compete seriously.”
“A self-reinforcing cycle is created by adding additional users, content, and developers, which solidifies the company’s early advantage. This market dynamic may encourage businesses to increase their competitiveness in productive ways, such as by introducing helpful product features or hiring more staff.
To encourage competition and benefit consumers, the FTC declared that it intended to obstruct Meta’s acquisition of Within:
“Instead of competing on the merits, Meta is trying to buy its way to the top. Meta already owns a best-selling virtual reality fitness app, and it had the capabilities to compete even more closely with Within’s popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief.”
FTC seeks to block virtual reality giant Meta’s acquisition of popular app creator Within: https://t.co/b87juAolBwJuly 27, 2022
It’s nothing new for Meta to acquire any dangers to its financial health. Before Facebook changed its name to Meta, the FTC filed a complaint against Facebook in 2020 for “anticompetitive conduct” regarding its $1 billion purchase of Instagram in 2012 and its $19 billion acquisition of WhatsApp in 2014.
Facebook – An Habitual Offender
The FTC cited similar concerns about stifling innovation in its complaint. Both apps, which dealt with messaging services and photo sharing, were considered competitors to Facebook’s Messenger platform and app.
According to the FTC, Facebook’s $1 billion purchase of Instagram in April 2012 “supposedly neutralizes the immediate danger posed by Instagram and makes it more difficult for another personal social networking competitor to attain scale.”
According to reports, Facebook’s acquisition of WhatsApp “neutralizes the possibility that WhatsApp itself would undermine Facebook’s social networking dominance and ensures that any potential alternative will have a harder time achieving scale in mobile messaging.”
Since it changed its name to Meta in October 2021, Facebook has made several announcements to grow its presence in the metaverse, including the probable introduction of a cryptocurrency-friendly payments platform.
In the San Francisco Bay Area, Meta built a physical store in May to offer hardware for the virtual reality industry.
According to the complaint, the deal will likely occur on August 1 unless the court intervenes and prevents Meta from acquiring Within.