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Meta calls FTC Suit to block VR Fitness Deal ‘ill-conceived’

Meta urged a judge to reject the U.S. FTC’s attempt to block the acquisition of the virtual reality app Within Unlimited.

Meta Platforms Inc. urged a judge to dismiss the US Federal Trade Commission’s attempt to block the company’s acquisition of virtual reality app Within Unlimited, because the agency’s claims about competition are based in the area on “pure speculation”.

Meta argued that the FTC has not set out the elements to show that the deal announced in October 2021 would hurt potential competition in a fledgling VR gym, according to a court filing Thursday. The company’s argument to U.S. District Judge Edward Davila follows the FTC’s move last week to narrow down the reasons for blocking the deal.

The FTC’s recently amended complaint dropped allegations that Meta’s virtual reality game, Beat Saber, competes directly with Within’s Supernatural fitness app. Supernatural is a subscription fitness service where users can exercise or meditate to music in immersive environments. The FTC’s complaint now calls Beat Saber an “occasional fitness app” and states that before the acquisition, Meta would likely create its own dedicated fitness app to compete with Within’s offerings.

Virtual reality is Meta’s next big bet as Chief Executive Officer Mark Zuckerberg believes people want to spend time in a digital universe called the metaverse. The company previously bought Oculus, which makes VR headsets. Acquisitions such as Within aim to add the user portfolio to experiences and repeatedly bring them back to Meta’s products and services.

Presenting Within’s Supernatural multiple times at its annual product conference Monday, the Facebook parent is making announcements on his behalf, saying that users will soon be able to add a “knee strike” move, for example.

The FTC claims that Meta would kill future competition in a new market often referred to as “nascent competition.” A lawsuit on these grounds is rare, given the difficulty of proving that a deal would stifle the potential of a fledgling industry. The last time the FTC filed such a case, in a 2015 case involving sterilization technology, the agency lost.

“The FTC’s attempt to resolve its ill-considered complaint still ignores the facts and the law and is based on pure speculation of a hypothetical future state,” a Meta spokesperson said in an email. “There is a lively competition in the gym and in VR, and our acquisition of Within will be good for people, developers and the VR space. For these reasons, the complaint must be dismissed.”

FTC Chairman Lina Khan has taken a more aggressive approach to antitrust enforcement than her predecessors. The agency sued July 27 to stop Meta’s purchase of Within. Davila has scheduled a two-week hearing in December on the FTC’s request for an injunction to block the deal. The judge can decide whether to rule on Meta’s request to dismiss the case, schedule a separate hearing on the matter, or wait until the previously scheduled hearing.

Separately, the FTC has filed a complaint against the merger in the internal court, and an administrative judge has scheduled a trial to begin in January. Even if the warrant is rejected or if Meta gains the upper hand for Davila, the agency may decide to proceed with its administrative process.

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