A California judge is allowing Meta to close its acquisition of virtual reality fitness startup Within despite an ongoing antitrust case by the Federal Trade Commission, according to an unsealed judgment. On Wednesday, Bloomberg reported that the court denied the FTC’s request to block the deal, but with a one-week delay that would give the FTC time to appeal. The warrants were posted Tuesday and a hearing on the status of the case was set for February 7.
The FTC sued in July 2022 to stop Meta’s acquisition of Within, which makes the popular virtual reality app Supernatural. The agency argued that the purchase of Meta would expand its dominance in the consumer VR market, where Meta has invested much of its resources in recent years. The commission highlighted the previous merger of Meta with the company behind beat saber in 2019, stating that the addition of Within would remove a “beneficial rivalry” between the two companies.
Meta fought the decision, but in December agreed to delay its acquisition of Within until January 31, though Meta CTO Andrew Bosworth told a hearing that the company could walk away from the deal if it “doesn’t close in a timely manner.” .
“Although Meta has considerable financial and VR engineering resources, it did not possess the unique capabilities of dedicated VR fitness apps, specifically fitness content creation and studio production facilities,” the ruling reads. “As a VR platform developer, Meta can enjoy many of the promising benefits of VR fitness growth without tapping into the VR fitness app market.”
The FTC has apparently faced internal disagreements over whether to intervene in the Meta and Within settlement, and its pursuit of the case stands in stark contrast to several relatively soft acquisitions of Meta (formerly Facebook), including its purchase of virtual reality startup Oculus in 2014. … regarding the court orders, the FTC is not in a position to comment at this time,” said FTC director of public affairs Douglas Farrar. the edge in response to a request for comment.
“We are pleased that the Court has denied the FTC’s motion to block our acquisition of Within,” says Meta spokesman Stephen Peters in a statement to the edge. “This deal will bring pro-competitive benefits to the ecosystem and spur innovation that will benefit people, developers, and the VR space as a whole. We look forward to closing the transaction soon.”
If this week’s order is upheld, it would spell a loss for agency head and competition advocate Lina Khan. The defeat would come as the FTC fights to stop another gaming-related merger: Microsoft’s acquisition of Activision. The two cases have significant differences, notably the small size of the VR market compared to the gaming industry in general, as well as the FTC’s decision to specifically target the VR fitness app market in the case. Within, not in VR or gaming in general. Still, the decision could signal an uphill battle to limit consolidation in the tech industry, despite persistent attempts to bolster antitrust watchdogs.
Update February 4, 12:50 pm ET: Updated to add an unsealed copy of the filing, as well as a statement from a Meta spokesperson.
