Meta Wins Anti-Competitive FTC Lawsuit

This Monday, the FTC lost its lawsuits against Meta, accusing the Menlo Park-based firm of anti-competitive practices. The fillings come following Meta’s attempted purchase of virtual reality (VR) fitness application Within in 2020 for a rumoured $400 million.

The FTC claimed that Meta was unfairly buying competition on its Quest digital storefront instead of building first-party applications.

Although, now Judge Edward Davila of the U.S. District Court for the Northern District of California declined the FTC’s request to block Meta’s acquisition of Within.

The FTC could still pursue the case with an internal administrative law judge. Although, the FTC has not made such a move yet. Additionally, Meta has not commented on the decision.

Why Did the FTC Attempt to Sue Meta?

The FTC granted staff permission to issue a preliminary injunction and temporary restraining order in July 2022, suspending the Within purchase. During Facebook’s acquisition of Oculus in 2018, the firm emphasized the importance of being utterly ubiquitous in killer VR apps, a core arguing point of the FTC investigation.

The FTC argued in the U.S. District Court for the Northern District of California that Meta’s acquisition of Within violated anti-competitive conduct.

According to John Newman, Deputy Director of the FTC’s Bureau of Competition, Meta already owns the VR fitness app Beat Saber, which enables Meta to compete closely with Within’s Supernatural fitness app.

In rebuttal, Mark Zuckerberg, the CEO of Meta, mentioned that the firm focuses on gaming, productivity from social interaction, and other use cases over fitness services. He also said that while VR fitness is essential to the business, Meta is not relying on the sector for growth.

A spokesperson for Meta also explained at the time that the case was “based on ideology and speculation, not evidence.”

What Happens to Meta-Acquired Firms?

With the debate over Meta’s intention when acquiring VR developers, it is fair to look at the standing of some of its owned firms.

Notably, this month, Meta closed two immersive gaming services. Meta closed the doors on Echo VR and Creyta, turning each firm’s focus towards killer applications for the Quest portfolio.

One affected platform is Crayta, a Metaverse platform that Meta owns and Unit 2 operates. On March 3, 2023, it will close its doors.

Crayta is a Metaverse platform that encourages world-building and user-generated content (UGC).

Meta bought Crayta in June 2021, long before the company announced its rebranding from Facebook.

The Meta Horizon service and the Crayta platform have a lot in common, like focusing on immersive UGC and online socialization. It is reasonable to assume that several of Crayta’s components influenced Horizon.

The other is Ready at Dawn, a Meta partner. The firm announced that Echo VR, its online multiplayer game, would end operations on August 1, 2023. The developers will no longer support the game to concentrate on a new Meta project.

Ready at Dawn noted:

After many discussions internally and with our partners at Meta, we have made the difficult decision to shut down Echo VR. The studio coming together to focus on our next project. We can’t say anything about it yet, but we are all excited and need all hands on deck.the studio coming together to focus on our next project. We can’t say anything about it yet, but we are all excited and need all hands on deck.

Concerning the closure of Echo VR, Meta’s CTO, Andrew Bosworth, noted the decision reflects the application’s declining player base. Bosworth also explained that Meta is reallocating Ready at Dawn’s resources to focus on providing system-selling software, which drives Meta Quest device adoption.

Meta’s device adoption goal also reflects the firm’s immersive technology losses. In its Q4 earnings report, Meta highlighted that its Reality Lab division lost roughly $4.28 billion, raising its total losses to $13.72 billion.