The court denied the FTC’s request for an injunction but with a one-week delay for an appeal.
A California judge is allowing Meta to close its acquisition of virtual reality fitness startup Within despite an ongoing antitrust case by the Federal Trade Commission, according to an unsealed ruling. On Wednesday, Bloomberg reported that the court denied the FTC’s request to block the deal but with a one-week delay that will give the FTC time to appeal. The orders were posted on Tuesday, and a status hearing on the case is set for February 7th.
The FTC sued in July of 2022 to stop Meta’s acquisition of Within, which makes the popular VR app Supernatural. The agency argued that Meta’s purchase would expand its dominance in the consumer VR market, where Meta has staked many of its resources in recent years. The commission highlighted Meta’s previous merger with the company behind Beat Saber in 2019, claiming that the addition of Within would eliminate a “beneficial rivalry” between the two companies.
Meta fought the decision, but in December, it agreed to delay its Within acquisition until January 31st — although Meta CTO Andrew Bosworth said in a hearing that the company might drop the deal if it “doesn’t close in a timely manner.”
“Though Meta boasts considerable financial and VR engineering resources, it did not possess the capabilities unique to VR dedicated fitness apps, specifically fitness content creation and studio production facilities,” the ruling reads. “As a VR platform developer, Meta can enjoy many of the promising benefits of VR fitness growth without itself intervening in the VR fitness app market.”
The FTC apparently faced internal disagreements over whether to intervene in Meta and Within’s deal, and its pursuit of the case stands in stark contrast to several relatively smooth Meta (formerly Facebook) acquisitions, including its purchase of VR startup Oculus in 2014. “Out of respect for the court’s orders, the FTC is not in a position to comment at this time,” FTC director of public affairs Douglas Farrar told The Verge in response to a request for comment.
“We are pleased that the Court has denied the FTC’s motion to block our acquisition of Within,” Meta spokesperson Stephen Peters says in a statement to The Verge. “This deal will bring pro-competitive benefits to the ecosystem and spur innovation that will benefit people, developers, and the VR space more broadly. We look forward to closing the transaction soon.”
If this week’s order stands, it would represent a loss for agency head and antitrust crusader Lina Khan. The defeat would come as the FTC fights to stop another game-related merger: Microsoft’s acquisition of Activision. The two cases have significant differences — particularly the small size of the VR market compared to the overall games industry, as well as the FTC’s choice to specifically focus on the market for fitness VR apps in the Within case, not VR or games in general. Nonetheless, the decision could indicate an uphill battle to limit tech industry consolidation — despite persistent attempts to give antitrust watchdogs teeth.
Update February 4th, 12:50PM ET: Updated to add a copy of the unsealed filing as well as a statement from a Meta spokesperson.
