The Federal Trade Commission (FTC) is suing Mark Zuckerberg’s social media and metaverse company Meta Platforms to block the acquisition of Within Unlimited – a virtual-reality fitness company – in an effort to stop it from buying “its way to the top”.
In a press release published yesterday, the FTC argued that Meta Platforms has been creating a “virtual reality empire” made up of a top-selling device, the Meta Quest 2, the leading app store, and one of the best-selling apps of all time.
With the proposed acquisition of Within, the company is reportedly “planning to expand Meta’s virtual reality empire with this attempt to illegally acquire a dedicated fitness app that proves the value of virtual reality to users”, the FTC commented.
The acquisitions of Beat Games and Oculus have been some of the most controversial in the eye of the regulatory agency as they position the company as the leader in many corners of the up-and-coming metaverse industry in an instant.
Beat Games is the creator of one of the world’s most popular virtual reality games called Beat Saber. In February alone, Meta Platforms reported that the game produced $100 million in revenue from the sale of 4 million copies. Users buy song packs and titles on Beat Saber to dance and use the Meta Quest 2 device to fully submerge into the experience.
Meta Platforms is Discouraging Competitors from Building VR Fitness Apps
In the specific case of the Within transaction, the FTC states that Meta is directly lessening competition in the virtual reality fitness space as other companies will be discouraged to create similar applications once this big player completes its intended purchase. “That lessening of competition violates antitrust laws”, the complaint stated.
Even though not directly a fitness app, the FTC alleges that Meta’s Beat Saber app competes with Within’s Supernatural app and this makes the operation illegal.
The agency has filed a petition with the Northern District Court of California to stop the completion of the acquisition, which Meta Platforms planned to settle on 1 August this year.
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“A temporary restraining order enjoining the acquisition is necessary to preserve this Court’s ability to provide full and effective relief after considering the Commission’s motion for a preliminary injunction”, the FTC stated in its petition to the court.
The acquisition of Within was announced in October 2021, a day after Mark Zuckerberg’s company rebranded itself as Meta Platforms.
“We are excited because our partnership with Meta means we will have more resources to expand and bring you even more music, more creative ways to workout, more features and more social experiences for VR. And of course, we will still be launching new workouts every single day”. Stated the Chief Executive Officer of Within, Chris Milk, in regards to the transaction back then. The financial details of the operation were not disclosed.
Meta Platforms Shares Suffer After Disappointing Q2 2022 Earnings Report
Meta Platforms (META) stock is diving over 4% this morning in pre-market trading as analysts have slammed the company with several price target cuts after its Q2 2022 financial figures missed on both earnings and revenues compared to Wall Street’s estimates for the period.
During this second quarter of the year, the Reality Labs unit – the company’s metaverse-focused business segment – produced revenues of $425 million, most of which which may come from Beat Saber’s title sales and the commercialization of the Meta Quest 2 VR headset.
However, the business unit produced operating losses of $2.8 billion as the company continues to invest heavily in research and development to position itself as the leading force in this new industry.
In the first half of the year, Meta’s capital expenditures have surged to $13.3 billion, up 44.6% from the $9.16 billion the company invested the precious year as it continues to deploy resources toward the Reality Labs unit.
During the conference call with analysts that followed the release of this quarterly report, Meta’s Zuckerberg stated that they plan to slow down the pace at which they are investing in some initiatives in response to an expected “economic downturn” that will have an impact on the firm’s digital advertising business.
“Given the more recent revenue trajectory that we’re seeing, we are slowing the pace of these investments and pushing some expenses that would have come in the next year or two off to a somewhat longer time line”, Zuckerberg stated.
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