US sues to stop Facebook from buying Temasek-backed VR firm Within

WASHINGTON (REUTERS) – The United States Federal Trade Commission (FTC) sought a court order on Wednesday (July 27) to block Facebook parent Meta Platforms from buying virtual reality (VR) content maker Within Unlimited.

The FTC, in a request filed on Wednesday in federal court in San Francisco for a temporary restraining order and preliminary injunction, called Facebook a “global technology behemoth”, noting its ownership of popular apps including Instagram, Messenger and WhatsApp, and said its “campaign to conquer VR” began in 2014 when it acquired Oculus, a VR headset manufacturer.

The FTC, which voted three-two to approve the request to seek an injunction, argued that the acquisition of Within by Facebook would “tend to create a monopoly” in the market for VR-dedicated fitness apps. Within has a popular fitness app called Supernatural.

Within, founded in 2014, creates original content for VR. It describes itself as “the premier destination for cinematic virtual reality”.

Its investors include Singapore’s Temasek, venture capital firm Andreessen Horowitz and moviemakers like Disney, 21st Century Fox, Annapurna Pictures and Legendary Pictures, its website says.

Facebook agreed to buy Within in October 2021 for an undisclosed sum.

The FTC had separately filed an antitrust lawsuit against Facebook in 2020.

Meta said in a statement that it disagreed with the FTC’s analysis of the market.

“The FTC’s case is based on ideology and speculation, not evidence. The idea that this acquisition would lead to anti-competitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible,” the company said.

“We are confident that our acquisition of Within will be good for people, developers and the VR space,” it added.

The FTC argued in its complaint that the planned acquisition was a way for Meta to dominate VR, a new and fast-growing part of the Internet. VR industry revenues are expected to grow from US$5 billion (S$6.9 billion) last year to more than US$12 billion in 2024, the FTC said in its complaint.

Meta already has the best-selling VR headset, the Quest 2, and controls a Meta Quest Store with hundreds of apps. It has bought game-makers like Beat Games, Sanzaru and Ready At Dawn Studios, among others, the complaint said.

“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,” said Mr John Newsman, director of the FTC’s Bureau of Competition, in a statement.

“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.”