In an effort to prevent the social media behemoth from achieving “its ultimate aim of dominating the whole “metaverse,” the Federal Trade Commission (FTC) of the United States has launched a lawsuit against Meta and CEO Mark Zuckerberg.
Meta was previously sued by a government agency in 2020 for suspected “anticompetitive behavior” in its purchases of WhatsApp and Instagram.
The Federal Trade Commission (FTC) claimed in a complaint submitted to the Northern District of California on Wednesday that Meta and Zuckerberg’s potential acquisition of virtual reality company Within and its fitness app Supernatural violated American antitrust laws and were an attempt by the social media company to “buy its way to the top” rather than “compete on the merits.” According to the complaint, under Zuckerberg, Meta had the capacity to create its own app and was “a prospective entry in the virtual reality dedicated fitness app market,” but instead opted to acquire Within and become the owner of Supernatural. It is claimed that the action will impede “future innovation and competitive competition” among American businesses.
“As Meta fully recognizes, network effects on a digital platform can cause the platform to become more powerful — and its rivals weaker and less able to seriously compete — as it gains more users, content, and developers,” said the complaint. “The acquisition of new users, content and developers each feed into one another, creating a self-reinforcing cycle that entrenches the company’s early lead. This market dynamic can spur companies to compete harder in beneficial ways by, for example, adding useful product features or hiring additional employees.”
In an effort to foster competition and benefit consumers, the FTC declared that it intended to obstruct Meta’s purchase of Within:
“The mere possibility of Meta’s entry has likely influenced competition in the virtual reality dedicated fitness app market. If Meta is allowed to buy Within, that competitive pressure will slacken.”
It’s nothing new for Meta to purportedly be acquiring any dangers to its financial health. Prior to the company changing its name to Meta, the FTC filed a complaint against Facebook in 2020 for “anticompetitive conduct” regarding its $1 billion purchase of Instagram in 2012 and its $19 billion acquisition of WhatsApp in 2014. The FTC cited similar concerns about stifling innovation in its complaint. Both applications, which dealt with messaging services and photo sharing, were thought to be competitors to Facebook’s Messenger platform and app.
“Facebook’s acquisition of Instagram for $1 billion in April 2012 allegedly both neutralizes the direct threat posed by Instagram and makes it more difficult for another personal social networking competitor to gain scale,” said the FTC at the time. “[Its] acquisition of WhatsApp allegedly both neutralizes the prospect that WhatsApp itself might threaten Facebook’s personal social networking monopoly and ensures that any future threat will have a more difficult time gaining scale in mobile messaging.”
Since changing its name to Meta in October 2021, Facebook has made a number of announcements aimed at growing its presence in the Metaverse, including the potential launch of a cryptocurrency-friendly payments platform. Meta built a physical location selling gear for virtual reality in the San Francisco Bay Area in May.
According to the complaint, the deal will most likely go place on August 1 unless the court intervenes and prevents Meta from purchasing Within.
