The lawsuit was the first of the cases fully developed by Ms Khan, a legal scholar who rose to fame after she wrote a viral review of Amazon and went to court. Seeking to avoid more “vertical” deals, in which the two companies don’t compete directly, the FTC also questioned Microsoft’s $69 billion purchase of video game publisher Activision Blizzard in December. Last month, the Justice Department accused Google of abusing a monopoly on technology that places ads on websites.
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William E. Kovacic, former chairman of the FTC, said the sealed ruling in the Meta case would be more problematic for the agency if the judge analyzes the legal theories behind the challenge. But if Judge Dávila found the FTC’s newer approach plausible, even if the agency’s factual claims were weak in this case, “that’s a low-impact defeat” that probably won’t hurt its future efforts, Kovacic said.
The case was heard in San Jose, California, in December. During the seven-day hearing, Meta CEO Mark Zuckerberg and its CTO Andrew Bosworth testified. The FTC argued that if Meta did not buy Supernatural, it would develop its own virtual reality fitness game.
Meta’s case was built on proving that developing or acquiring a fitness app was only a small part of a strategy that would eventually propel virtual reality, and by extension the metaverse, to great popularity.
During the hearing, Mr. Zuckerberg was asked by an FTC attorney whether it was true that acquiring or developing a fitness app was keeping him up at night. Fitness apps, Zuckerberg said, were just one type of app the company was interested in.
“Fitness was probably the fourth or fifth use case that I thought would be important,” he said, ranking apps that focused on gaming, productivity and social interactions as higher priorities. Developing a fitness app, he told the lawyer, he didn’t have trouble sleeping.
Zuckerberg also told Judge Davila that if he blocked the deal, “it would have a chilling effect.”
