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Meta has a green light to buy virtual reality fitness startup Within, beating a Federal Trade Commission bid to block the acquisition.

Driving the news: Per Bloomberg, U.S. District Judge Edward Davila made the ruling in sealed court documents filed in California district court Wednesday.

The judge also ruled that Meta must wait a week before closing the deal, per Bloomberg. 

Axios has not seen the contents of the sealed court documents detailing Davila's decision.

Why it matters: The ruling is a blow to Chair Lina Khan's antitrust agenda. Khan has aggressively pursued blocking mergers by larger companies, especially in the tech industry.

Meta declined to comment. An FTC  spokesperson declined to comment "out of respect for the Court's orders."

The big picture: Khan has said she wants to take more cases to court rather than reach settlements. Experts critical of the FTC's case previously told Axios they believed it would be extremely difficult to win.

Flashback: The FTC first filed to block Meta's acquisition in July, arguing that Meta is "already a key player at each level of the virtual reality sector," per a release.

The FTC has argued that Meta acquiring Within would reduce future competition in the nascent VR market.

Meta argues that smaller companies like Within often need the resources of larger owners to achieve their potential and reach more potential customers.

What's next: The FTC is set to start a separate trial to block the same deal in its own administrative court on February 13, though it could opt not to move forward after the ruling in California.

Court denies FTC bid to block Meta's VR deal

After a week, Meta will be able to proceed with its acquisition of a virtual fitness company.

Illustration of Meta’s logo wrapped around a gavel.

Meta (company)

Meta has a green light to buy virtual reality fitness startup Within, beating a Federal Trade Commission <a class="gtmContentClick" data-vars-link-text="bid to block the acquisition" data-vars-click-url="https://www.axios.com/2022/07/27/ftc-sues-meta-vr-fitness-firm" data-vars-content-id="43cdad43-585a-4dd7-9e82-8b55b5808fe5" data-vars-headline="Court denies FTC bid to block Meta&#x27;s VR deal" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/07/27/ftc-sues-meta-vr-fitness-firm" target="_self">bid to block the acquisition</a>.Driving the news: <a class="gtmContentClick" data-vars-link-text="Per Bloomberg" data-vars-click-url="https://www.bloomberg.com/news/articles/2023-02-01/meta-wins-court-nod-to-buy-virtual-reality-startup-in-loss-for-lina-khan-s-ftc?utm_medium=email&amp;utm_source=newsletter&amp;utm_term=230201&amp;utm_campaign=author_22796872&amp;sref=yLCixKPR" data-vars-content-id="43cdad43-585a-4dd7-9e82-8b55b5808fe5" data-vars-headline="Court denies FTC bid to block Meta&#x27;s VR deal" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.bloomberg.com/news/articles/2023-02-01/meta-wins-court-nod-to-buy-virtual-reality-startup-in-loss-for-lina-khan-s-ftc?utm_medium=email&amp;utm_source=newsletter&amp;utm_term=230201&amp;utm_campaign=author_22796872&amp;sref=yLCixKPR" target="_blank">Per Bloomberg</a>, U.S. District Judge Edward Davila made the ruling in sealed court documents filed in California district court Wednesday.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

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Meta investors got a double dose of good news on Wednesday. The Facebook parent company reported better-than-expected quarterly results and won a favorable ruling from the judge overseeing the FTC's move to block a virtual reality acquisition.

Why it matters: Meta's positive earnings come amid dour reports from many other flagship tech firms that are struggling in a softening economy.

Meta reported quarterly revenue of $32.16 billion, ahead of Wall Street estimates of approximately $31.5 billion. It also raised its authorized stock buyback by $40 billion and said to expect revenue of between $26 billion and $28.5 billion for the current quarter, which runs through the end of March.

Earlier in the day, a judge gave Meta the go-ahead to buy virtual reality fitness startup Within, rejecting the Federal Trade Commission's bid to block the acquisition. Per Bloomberg, U.S. District Judge Edward Davila made the ruling in sealed court documents, adding that Meta must wait a week before closing the deal to give the agency time to appeal his decision.

Shares of Meta surged more than 17% in after-hours trading Wednesday following the earnings report.

The big picture: Meta has been retrenching of late, announcing plans to lay off workers, cut some hardware projects and scale back its investments in real estate and data centers.

As part of Wednesday's earnings report, Meta said it took a restructuring charge of $4.2 billion in the fourth quarter.

Be smart: The company's optimistic forecast contrasts with the outlook from competitor Snap Inc., this week, which told investors that it expects revenue to decline 2%-10% in the current quarter.

Yes, but: Meta's Reality Labs unit — which is spearheading its metaverse projects — lost $4.27 billion last quarter, bringing its total losses for the year to $13.71 billion. The unit generated $2.15 billion in revenue last year, down slightly from $2.27 billion in 2021. 

Between the lines: The company has also managed to be less in the spotlight in recent months thanks to upheavals at Elon Musk's Twitter, as well as recent regulatory moves against Microsoft and Google.

What to watch: The FTC is set to start a separate trial to block the Within deal in its own administrative court on February 13, though it could opt not to move forward after the ruling in California.

Meta's good day

Wall Street liked what it heard in the Facebook parent's latest earnings, and the company also won a round with the FTC.

Illustrated collage of Facebook’s like button and dollar bills.

Senator urges Apple, Google to remove TikTok from app stores

It's the first time a member of Congress has asked tech companies to boot TikTok.

Illustration of a finger about to delete the TikTok app

TikTok

Data privacy

Sen. Michael Bennet (D-Colo.) wrote to Google and Apple on Thursday, urging both companies to remove TikTok from their app stores.Driving the news: In a letter addressed to Apple CEO Tim Cook and Google CEO Sundar Pichai, Bennet urges both leaders to boot TikTok immediately, calling the popular video-sharing app &quot;an unacceptable threat to the national security of the United States.&quot;

Shares in Google parent Alphabet fell nearly 5% in after-hours trading Thursday, after the tech giant said it missed revenue and earnings estimates for the fourth quarter.

Why it matters: Alphabet and its stock thrived during the pandemic. Now, an ad slowdown and its big investment in headcount are challenging its earnings growth just as it's entering a new phase of competition with Microsoft and others in AI.

"We have significant work underway to improve all aspects of our cost structure, in support of our investments in our highest growth priorities to deliver long-term, profitable growth," CFO Ruth Porat wrote in a letter to investors. 

Details: The company blamed an ad slowdown at YouTube for missing estimates. 

YouTube advertising was down more than 7% last quarter compared to the same quarter the previous year, causing Alphabet's overall revenue growth for the quarter to drop to just 1% year over year. 

Be smart: For years, YouTube has been one of Google's strongest advertising growth engines. Executives said YouTube saw a slowdown in brand ads, or ads that tout a company's reputation, and direct response ads, which push sales. 

Between the lines: Like rival Meta, Google said it would take a loss of $4.2 billion, mostly in the first quarter, for restructuring costs related to severance payments to 12,000 recently-laid off employees.

It also expects to take a roughly $500 million loss related to reduced office space plans this quarter. 

Earnings per share: $1.05 vs $1.18 per share expected, according to Refinitiv 

Revenue: $76.05 billion, vs. $76.53 billion expected, according to Refinitiv

YouTube advertising revenue: $7.96 billion vs. $8.25 billion expected, according to StreetAccount estimates.

Google Cloud revenue: $7.32 billion vs. $7.43 billion expected, according to StreetAccount estimates

Traffic acquisition costs (TAC): $12.93 billion vs. $13.32 billion expected, according to StreetAccount estimates

The big picture: Despite a slowdown in ads, executives pledged to continue Google's artificial intelligence push.

“Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point, and I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond," CEO Sundar Pichai said in the company's investor letter.

The company also said it would separate its artificial intelligence company DeepMind from its other investments when reporting earnings, a nod to its commitment to growing in that space. 

"AI is an Alphabet strategic priority," Porat said, and the reporting change "reflects strategic focus."

What to watch: Despite record regulatory scrutiny and major market shifts, Google continues to take big swings. YouTube successfully won the NFL's very lucrative Sunday Ticket package, giving it exclusive rights to air out-of-market NFL games beginning next season.

Alphabet stock slips on earnings miss, YouTube ad slowdown

Google missed earnings and revenues estimates for 2022's fourth quarter.

Alphabet Inc.

Shares in Google parent Alphabet fell nearly 5% in after-hours trading Thursday, after the tech giant said it missed revenue and earnings estimates for the fourth quarter.Why it matters: Alphabet and its stock thrived during the pandemic. Now, an ad slowdown and its big investment in headcount are challenging its earnings growth just as it&#x27;s entering a new phase of competition with Microsoft and others in AI.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

 Alondra Nelson, who served as the first woman of color to lead the White House Office of Science and Technology Policy earlier in the Biden administration, is set to step down from her current post as a deputy director at OSTP on February 10, she told Axios exclusively in an interview.

Driving the news: Nelson is leaving the White House after two years to return to the Institute for Advanced Study in Princeton, N.J.

Nelson led the OSTP Science and Society team, which had been newly created under Biden, and led all of OSTP for eight months after Eric Lander resigned last February.

What they're saying: "We have landed some really big planes over these two years, and we're in really good shape," she said. "It's a good moment to step away with some work launched that's on the way to becoming implemented, and leave that work for others to do."

"Alondra Nelson stepped in to lead U.S. science and technology policy at a key moment, and she delivered," Biden deputy chief of staff Bruce Reed told Axios. "She has been a critical voice on equity, civil rights, and opportunity for all Americans. Her impact in this White House will far outlast her time in this building."

The big picture: Nelson led work on artificial intelligence, in addition to rolling out more rigorous scientific research for developing federal policies, making publicly funded research available to the public and boosting STEM programs.

Details: Nelson's team was behind the Blueprint for an AI Bill of Rights, which laid out principles for design, use and deployment of automated systems, focusing on principles including fighting algorithmic discrimination, data privacy, notice and explanation of how systems work and the right to human alternatives.

"The space of automated systems and AI policy moves very quickly, and we really can't be on the sidelines," she said. The popularity of ChatGPT and other generative AI programs being available to the public "is probably going to be a real shift in how people engage with technology and their day-to-day lives."

The big picture: AI is still unregulated at a federal level at a time of rapid advancement, and there's only so much the White House can push forward in the absence of federal laws.

Nelson said the ultimate hope is for Congress to pass laws governing AI, but that the country "is in a stronger place than we were two years ago."

As AI systems becomes more prevalent, Nelson said there are big questions around the sources of AI's data and whether it's representative: "Part of how we restore trust in government and engender trust in new and emerging technologies is being able to be honest with the American public about the upsides and the downsides," she said.

Zoom out: Nelson said it was important for her as the first woman of color to lead OSTP to include "all of the communities you need to be at the table in the innovation space," since historically, the world of science and technology policy has often left out women and people of color.

Nelson said she thinks her perspective "helped marginalized communities... more deeply invest and believe in the power of democracy and innovation."

Exclusive: OSTP official Alondra Nelson to step down

Nelson is leaving the White House's science and tech office after pushing forward policy on AI, research and public health.

Alondra Nelson speaks at a podium at an event in Delaware with President Biden

Alondra Nelson, OSTP Deputy Director for Science and Society, speaks during an announcement January 16, 2021 at the Queen theater in Wilmington, Delaware. (Photo by Alex Wong/Getty Images)

White House

Alondra Nelson, who served as the first woman of color to lead the White House Office of Science and Technology Policy earlier in the Biden administration, is set to step down from her current post as a deputy director at OSTP on February 10, she told Axios exclusively in an interview.Driving the news: Nelson is leaving the White House after two years to return to the Institute for Advanced Study in Princeton, N.J.

Ashley Gold

Stories

Exclusive: OSTP official Alondra Nelson to step down

Alphabet stock slips on earnings miss, YouTube ad slowdown

Meta's good day

Senator urges Apple, Google to remove TikTok from app stores

Court denies FTC bid to block Meta's VR deal