FTC says Meta’s Supernatural purchase could ruin the VR fitness market

FTC says Meta’s Supernatural purchase could ruin the VR fitness market

Enlarge / Artist’s conception of the FTC’s fight against the latest Meta takeover proposal.

The Federal Trade Commission has filed an antitrust lawsuit against Meta in an attempt to prevent Facebook’s parent company from buying Within, which makes the popular virtual reality fitness app. Supernatural.

Meta’s plans to spend $400 million on Within have reportedly come under FTC scrutiny after the proposed acquisition was announced last October. That proposed deal, according to the lawsuit, “would substantially reduce competition, or tend to create a monopoly, in the relevant market for dedicated VR fitness apps and the broader relevant market for VR fitness apps.”

Cornering the VR fitness market?

Meta has been on something of a VR takeover spree for the past two years, picking up game developers including Sanzaru Games (Asgard’s Wrath), ready at dawn (lonely echo), Crooked Pixel (Wilson’s heart), Interactive Downpour (Ahead) and Big Box VR (Population: One). But the planned purchase of Within appears to be setting off antitrust alarm bells at the FTC because of the overlap with beat saber Beat Games, which Meta bought in 2019.

The FTC includes beat saber into a category of what it calls “incidental fitness apps,” which aren’t primarily focused on fitness, but rather “allow users to exercise as a byproduct of their use due to [their] physically active nature”. Thus, Meta is already “poised at the edge of the VR dedicated fitness app market with its popular beat saber application,” argues the FTC.

If Meta is allowed to buy Within, the FTC argues that the company “would no longer have any incentive to develop its own competing app from scratch, [or] add new features to beat saber or other existing Meta apps to compete with Supernatural on the merits… Letting Meta acquire Supernatural would combine the creators of two of the biggest VR fitness apps, thereby eliminating the beneficial rivalry between Meta’s beat saber application and within Supernatural app”.

After buying inside, Meta would have no incentive to upgrade to upgrade your
Enlarge / After shopping inside, Meta would have no incentive to update their “incidental fitness app” beat saberthe FTC argues.

Parts of the FTC lawsuit read like a paid advertisement highlighting the benefits of virtual reality fitness apps over alternative forms of exercise. The suit compares specifically Supernatural—which can be played with a $299 Quest headset (for now) and an $18.99 monthly subscription— to a Peloton “smart bike” that “costs more than $1,000, with an additional subscription cost of $44 per month … [and] he also weighs 135 pounds.

“Virtual reality offers a level of immersion that other in-home fitness experiences don’t and can’t,” the FTC writes in an official government document. “VR technology allows users to exercise from the comfort, privacy and safety of home with the feeling and images of being somewhere else… [and] Unlike flat or two-dimensional home training content, VR apps can also be fully interactive, providing guided movement and real-time haptic feedback in three-dimensional space.”

Meta’s “ultimate goal”

In addition to the VR fitness market, the purchase of Within would bring Meta “one step closer to its ultimate goal of owning the entire ‘Metaverse,'” according to the suit. Meta, which according to the lawsuit is already a “global tech giant” through its billions of messaging and social app users, is now on a “campaign to conquer virtual reality.”

The company’s recent rebranding from Facebook to Meta reflects a company that “has set its sights on building, and ultimately controlling, a virtual reality metaverse,” the FTC writes (whatever that means). And while Meta already has majority control of the multibillion-dollar VR headset market, the company is now working to become “completely ubiquitous in [VR] killer apps,” as Meta CEO Mark Zuckerberg put it.

In a declaration, Meta said the FTC’s case “is based on ideology and speculation, not evidence. The idea that this acquisition would lead to anti-competitive outcomes in a dynamic space with as much entry and growth as online and connected fitness It’s just not believable.” Blocking the acquisition would send “a chilling message to anyone looking to innovate in VR,” the company continued, adding that “we are confident that our acquisition of Within will be good for people, developers and the VR space.” “.

Meta’s lawsuit is the first FTC antitrust action brought under the leadership of Chairman Lina Khan, who has been outspoken in her statements against consolidation into big tech companies. The commission’s final vote to authorize the lawsuit was split 3-2.

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