It has been a rough week for Meta. There is a chance of reduced sales of the Meta Quest 2 due to the price increase of the headset. The price of the Quest 2 will go up as of August 1. Meta is being sued by the FTC for creating a monopoly on virtual reality fitness apps.
The FTC is missing the forest for the trees with this suit which states that Meta can't legally acquire two companies that make the two most popular virtual reality fitness games. Last October, Meta announced the acquisition of Within, the company that makes the fitness-focused Supernatural.
The FTC compares how similar both games are to each other, which is a comparison that was made when Supernatural first came out. The similarity to each other is not what the FTC needs to be focused on. Meta doesn't want to own the rights to these games.
It's the fact that Meta runs and operates the store on which all the games and apps can be bought. The company's own apps and games are frequently featured over those of smaller developers.
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There are other things that are strange here.
The FTC and Meta seem to know each other well, even though they aren't friends. This year alone, we have seen several suits brought up by the FTC, which include suing Meta over its acquisitions ofWhatsApp andInstagram, and another suit over possible non-competitive business practices.
Both of these cases make a lot of sense, and we have previously written about specific accounts of developers getting Sherlocked.
The FTC has a vendetta against Meta and they are trying to crush it.
The logic behind the suit is wonky, at best.
The logic behind the suit is not very well thought out. I don't think many people think of Beat Saber as a fitness app, even if it can technically be used that way with modifiers, and this is not the first time Meta has attempted to acquire a developer of an incredibly popular game.
Last year, we saw Meta acquire two developers. Both of those companies make two of the most popular games on the store.
If Meta were going to use the same logic in this suit, it would have at least mentioned these two as a common tactic.
Anshel Sag is an analyst at Moor Insights and Strategy. He was confused by the FTC's decision to single out this acquisition over others. Unless something else is behind the scenes.
The attempt to acquire Within made waves because of the high cost.
Meta agreed to pay $400 million for the tiny development studio. Many people were confused by the amount of money being paid for the first big game.
It is highly likely that Meta was not the only big player in the bidding process for the company. Who else would have bid on a small developer with a successful app for virtual reality?
It's Apple.
Only under this scenario — that is, Apple getting the FTC to stop the acquisition of Within — does this suit make any sense.
It's important for Apple to build an impressive collection of apps and games that will convince people to spend money on the headset's first day of availability. It makes perfect sense for Apple to be the other big bidder for Within last year given their penchant for all things fitness related these days.
It is very likely that Apple was the one who got the FTC to file the suit. It is not the first time Apple has done this. It has been claimed that Apple pushed the case to get regulatory authorities involved in the attempted acquisition ofQUALCOMM by BRCM.
It would be important for Apple to stop Meta from getting further entrenched in the minds and hearts of consumers before it can actually launch a competing product.
Does this suit make sense if Apple gets the FTC to stop the acquisition of Within? The FTC is barking up the wrong tree and not doing it's job.
It is the vested interest of controlling parties to feature their own apps and services above the competition in the world of digital marketplaces. With the exception of the case against Apple, little has been done to challenge the problematic design of the products.
The same formula is used by Meta's Quest Store. Meta approves the apps that are posted on the store. Someone at Meta selects the best apps for users to use, whether it's an algorithm-based method of personalization, or hand-picking titles for bundles and other sales.
If there’s any real problem in the world of digital marketplaces, it’s the vested interest of controlling parties to feature their own apps and services above the competition.
There is a point that needs to be made larger after the FTC mentioned it as a footnote. It is possible that the FTC is already dealing with this via the case it opened in January, but it is also possible that the current suit is pointless.
Even if you have to jump through hoops to use a third-party marketplace, Meta will allow it. It even has its own App Lab that is less restrictive than the official store, but it is likely that Meta maintains these options as a way of skirting around regulation.
Holding companies like Meta, Apple, and Google accountable for the stores they maintain and the priorities they place on their own apps, services, and products is what will fix this problem.
Sag pointed out that the VR industry is still in its infancy and that suits like this are likely to harm growth. I think the FTC's time would be better spent on the cases that make the most sense in a mature market, for example, Microsoft and Activision.
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