Meta Allowed to Buy VR Startup Within

A federal judge has cleared the way for Facebook parent Meta to buy Within Unlimited, a virtual reality (VR) start-up, which is the maker of the popular fitness app Supernatural. Federal antitrust regulators sought to block the acquisition on the grounds that it would hurt competition in the emerging VR market. However, U.S. District Judge Edward Davila denied the request for a preliminary injunction against the deal made by the Federal Trade Commission (FTC).

The FTC had argued that Meta's acquisition of the small company would violate antitrust laws and dampen innovation, leading to higher prices and fewer options for consumers outside of Meta-controlled platforms. The agency compared the deal to Facebook's earlier purchases of Instagram and WhatsApp.

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The FTC had further argued that Meta scrapped its own plans to enter the VR fitness market when it decided to buy Within, and that the absence of the competitive threat of Meta's entry into the market would result in a stall in innovation, thus hurting end-users.

However, Meta executives, including CEO Mark Zuckerberg, sought to downplay the notion that the company was anywhere close to creating its own VR fitness app. The CEO testified that even though Meta was considering developing its own app, the business environment has changed and it is unlikely that it would start such a project today.

Judge Davila’s ruling, however, says the FTC needed to provide “at least circumstantial evidence” that Meta’s entry into the VR fitness market by itself, not via the acquisition, would have directly and favorably affected consumers by encouraging robust competition.

“Under this standard, the FTC’s evidence on this element is insufficient,” Davila wrote.

In 2014, Meta made a move into virtual reality with its acquisition of headset maker Oculus VR, and since then, Meta's VR headsets have become the cornerstone of its growth in the virtual reality space. Fueled by the popularity of Meta’s top-selling Oculus Quest headsets, the Quest Store has become a leading U.S. app platform with over 500 apps available for download.

Meta said in a statement after the ruling was unsealed that it is "pleased" with the decision and that the deal would bring "pro-competitive benefits to the ecosystem and spur innovation that will benefit people, developers, and the VR space more broadly." The company added that it is looking forward to closing the transaction soon.

Meta has not disclosed what it is paying for Within, but tech publication The Information put the price at about $400 million.