US antitrust regulators are suing to block Meta’s purchase of virtual reality startup Within, a move that could seriously hamper the company’s metaverse ambitions and have ripple effects across Big Tech.
Catch-up: Last year, Meta announced its planned acquisition of Within, creators of the popular music-based virtual reality (VR) fitness app Supernatural. This raised concerns about VR market consolidation given that Meta already owns Beat Saber, a very similar app.
What happened: Federal Trade Commission chair Lina Khan clearly felt the same way. The FTC’s suit alleges that the deal would give Meta an unfair advantage in dominating the VR market (where they’re already far ahead of competitors).
- Meta said the charge is “based on ideology and speculation, not evidence” and that the deal actually creates more innovation and competition by driving interest in VR.
Why it’s happening: FTC antitrust cases have historically focused on mergers and acquisitions of large companies in established markets, but Khan has made it clear she wants to pre-emptively block deals that take potential future competitors with Big Tech companies out of the picture.
- That’s a problem for Meta, which has long leaned on acquisitions to drive growth (think Instagram, WhatsApp, and Oculus Rift) rather than in-house innovation.
The timing of the FTC’s shift couldn’t be worse for Meta, which has gone in all in on the metaverse, spending (and, so far, losing) billions of dollars trying to build the virtual world of the future.
- Success in the metaverse may be essential to Meta’s future—the company just reported its first-ever drop in revenue, sparking worries that the growth of its existing products has peaked.
Why it matters: Experts are unsure if the suit will succeed, but the mere fact it's being launched (amid a bevy of other challenges and regulations across the globe) signals a change in the way Big Tech companies will have to do business that may pose a serious threat to Meta’s business model.