There was an update on Jul 27th, 2022, at 03:34pm.
The FTC sued Meta in federal court on Wednesday in an attempt to block the company's acquisition of virtual reality app creator Within, the latest effort by the FTC to restrict the tech giant's growing influence.
There is a sign in front of Facebook's headquarters with Meta's name and logo.
The FTC filed a complaint in federal court in California asking for an injunction that would block Meta from completing its acquisition of Within, a virtual reality company.
Meta and Within announced they were entering into a $400 million acquisition deal in October, as Meta seeks to expand its virtual reality offerings and concentrate on the "Metaverse" beyond its suite of apps.
Meta would have a monopoly in the market for virtual reality fitness apps if it is allowed to buy Within, according to the FTC.
According to the FTC, if Meta acquires Within, the company won't have any incentive to improve its products since it won't have any competition.
The FTC argued that removing the need to compete in the marketplace is in violation of federal antitrust laws.
The FTC's complaint is based on ideology and speculation, not evidence, and the company is confident that acquiring Within will be good for people, developers and the virtual reality space.
Meta's second quarter earnings will be released later on Wednesday, and the company and Facebook could discuss the FTC's new legal challenge during its earnings call. A downturn in digital ad spending and increased competition from TikTok are predicted to cause the tech giant's first decline in revenue this quarter.
The FTC Bureau of Competition deputy director said in a statement that Meta is trying to buy its way to the top.
Meta said that the idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is not believable. The FTC is sending a chilling message by attacking this deal.
Information reported in December that the FTC was investigating the Meta's Within deal just after Thanksgiving. The biggest deal that Meta has made so far in the virtual reality market is the acquisition of Within. The FTC, whose chair has been critical of Meta and other tech giants, has already sued Meta in federal court for antitrust violations. The FTC's lawsuit was found to be insufficient and light on specific factual allegations. If the FTC succeeds in its case, the case could result in Meta having to be broken up and the other two companies becoming separate companies again, which would be bad news for both of them. Meta has always maintained that its acquisitions are legal.
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