The FTC's complaint alleges that by pairing Meta's leading platform with Within's "killer app" Supernatural, the acquisition places Meta "one more step along [a] path towards dominance" in the virtual reality (VR) space. The FTC's challenge to is significant both in the gaming industry and for M&A in the technology space, demonstrating that:
- The current FTC is willing to push aggressive theories, especially when it perceives a large integrated company is making an acquisition as part of an "aspiration" to gain "control of the entire ecosystem," which the FTC alleges may "tend to create a monopoly."
- Harm to consumers of a specific and narrow product set (here VR fitness apps) may be enough to invite a challenge.
- Acquisitions by "big tech" companies are likely to get heightened scrutiny even where conventional antitrust analysis would not raise concerns.
Meta owns the leading VR ecosystem, with the Meta Quest 2 (headset), Quest Store (VR app distribution platform), and many first-party and third-party apps. Meta's Beat Saber, a dancing game, is one of the most popular VR apps. Within's Supernatural, meanwhile, is one of the most popular fitness-focused apps for the Quest 2. One study found that playing Supernatural allows users to burn 12-13 calories per minute, more than any other VR app. Meta agreed last October to acquire Within,
2 in a deal reportedly worth around $400 million.
3
The FTC alleges that the transaction would violate Section 7 of the Clayton Act under two theories: a potential competition theory for VR Dedicated Fitness Apps, and a traditional horizontal theory for VR Fitness Apps more broadly.
VR Dedicated Fitness Apps: First, the FTC alleges the deal threatens "potential competition" between Meta and Within's Supernatural in the market for "dedicated" VR fitness apps. The FTC claims that Meta—as a massive, well-capitalized enterprise with control over many aspects of the VR ecosystem—should simply build its own dedicated fitness app to compete with Supernatural rather than buy Within.
