The Federal Trade Commission’s decision to sue Facebook parent company Meta Platforms Inc. over its acquisition of virtual-reality company Within Unlimited is a historic move, according to Matt Stoller, research director at the American Economic Liberties Project.
In his BIG newsletter, Stoller wrote that while Meta Inc.’s
$400 million deal for Within Unlimited is relatively small by dollar amount, the FTC’s stance on the acquisition is significant.
“There a number of reasons why this merger challenge is historic,” he wrote. “It’s the first merger challenge to a Big Tech firm, at least since Microsoft-Intuit in 1995.” The FTC is also using a creative legal theory in an attempt to expand the bounds of antitrust law, according to Stoller.
See Now: FTC sues Facebook parent company Meta to block acquisition of VR firm Within Unlimited
In a statement released Wednesday, FTC Bureau of Competition Deputy Director John Newman wrote that Meta is “trying to buy its way to the top.” The FTC’s complaint also alleges that Meta is a potential entrant in the VR fitness-app market, noting that the tech giant possesses resources to build its own app to compete in the space. This, it adds, would increase consumer choice, increase innovation, spur additional competition to attract the best employees, and yield other competitive benefits. “Meta’s acquisition of Within, on the other hand, would eliminate the prospect of such entry, dampening future innovation and competitive rivalry,” the FTC said.
The FTC highlighting the possibility of Meta creating its own VR fitness app is important, according to Stoller. “Such an argument about eliminating potential competition is something we haven’t seen for decades; this is [FTC Chair Lina] Khan and the FTC pushing the bounds of law, which is something that is risky but ultimately necessary,” he wrote.
Meta says there is no merit to the FTC’s case. “Under U.S. law, the FTC is required to prove that an acquisition would ‘substantially lessen competition’ in order to successfully block a deal,” wrote Meta Vice President and Associate General Counsel Nikhil Shanbhag, in a statement. “We believe it’s clear that neither the evidence nor the well-established law will support such a result.”
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The FTC’s case is based on “ideology and speculation, not evidence,” according to Meta. “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 simply not credible,” wrote Shanbhag.
The lawsuit also comes at a time when other, much larger, tech acquisitions are underway, such as Microsoft Corp.’s purchase of Activision Blizzard Inc.
“It’s going to be really weird if Facebook can’t buy a small fitness app but Microsoft can buy Activision Blizzard for $68.7 billion,” tweeted Casey Newton, founder of the Big Tech publication Platformer.
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Shares of Meta, which reported its first-ever year-over-year revenue decline after market close on Wednesday, ended Thursday’s session down 5.2% at $160.72. The tech giant’s shares are down 52.2% year-to-date, compared to the S&P 500 Index’s
14.6% decline and the Dow Jones Industrial Average’s