Oct 13, 2022 - Technology

Meta files to dismiss FTC suit over Within acquisition

Illustration of Meta’s logo wrapped around a gavel.

Illustration: Shoshana Gordon/Axios

Meta filed to dismiss the Federal Trade Commission's attempt to block its acquisition of virtual reality fitness startup Within, per a federal court filing posted Thursday.

Why it matters: If Meta is successful in its request, it would be free to acquire Within and the agency would have to pursue unwinding the merger once it’s already done, a much harder lift.

Driving the news: Meta's filing in the Northern District of California asks the court to waive the FTC's request for a preliminary injunction, which would prevent the company from closing on its acquisition of Within as the case plays out.

  • Earlier this month, the FTC narrowed its original complaint against Meta, removing some claims about anticompetitive effects in the market for virtual-reality fitness apps.

What they're saying: "The FTC's attempt to fix its ill-conceived complaint still ignores the facts and the law and relies on pure speculation of a hypothetical future state," a Meta spokesperson said in a statement.

  • "There is vibrant competition in the fitness space and across VR, and our acquisition of Within will be good for people, developers, and the VR space. For these reasons, the complaint should be dismissed."

Flashback: The FTC first filed to block Meta's acquisition in July, arguing that it should not be allowed to acquire Within and its associated fitness app, Supernatural, because Meta is "already a key player at each level of the virtual reality sector," per a release.

  • The FTC, in an unusual move, amended its original complaint to get rid of a claim that the acquisition would lessen competition in the market for virtual reality fitness apps.
  • The FTC is now mostly arguing that Within's Supernatural would "substantially lessen competition or tend to create a monopoly" in the market for virtual reality exercise apps, a narrower market compared to "fitness" apps, per Reuters.

Between the lines: Critics previously told Axios it was an unusual case to take on and would be incredibly tough to win, while supporters applauded the agency for bringing the case and sending a message to Big Tech about buying up smaller companies in emerging fields.

  • With this filing, Meta is telling the FTC it does not think the agency has a viable case. But the agency, lead by known tech critic Lina Khan, will not be going down without a fight.

What's next: Meta and the FTC are scheduled for a two-week hearing Northern California in December, but the judge may rule to grant the request to dismiss prior to that.

  • The FTC will also have a chance to reply to Meta's filing.
  • “The Commission voted to authorize FTC staff to file an amended complaint against Meta in federal district court,” an FTC spokesperson said in a statement. “We are confident that the district court complaint will not be dismissed and this case will be heard.”
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