Latest: Meta reports first revenue decline and a 36 percent profit drop

Advertisements
  • The acquisition of Within by Meta would benefit users and developers alike and pique curiosity about fitness in virtual reality as a potential development area.
  • Virtual reality as a whole will benefit from this transaction.
  • The FTC is incorrect in both law and fact.
  • With today’s filing, the Federal Trade Commission (FTC) is suing Meta, the company behind VR fitness program Supernatural, in an attempt to halt the acquisition by Meta of Within.

Rather than relying on evidence, the FTC relies on ideology and conjecture. That this acquisition will result in anticompetitive effects is simply unconvincing given the dynamism of the online and connected fitness market. A chilling message is being sent to the VR industry by the FTC, which voted 3-2 against this merger. People, VR developers, and the VR industry will all benefit from our acquisition of Within.

FTC’s Case has no basis in fact

There must be a “substantial reduction in competition” in order for the FTC to successfully oppose a merger under US law. In our opinion, there is no evidence or established law to justify this conclusion.

Advertisements

For years, it was evident that our acquisition of Within would bring fresh investment into the VR fitness industry, strengthen the Quest platform to better support all fitness apps, and extend the VR ecosystem as a whole. Faulty premises and unsubstantiated assumptions are used by the FTC to support its claims.

Firstly, they claim that Supernatural competes with Meta’s Beat Saber app, which is a music and rhythm game, and that people’s lives would be in danger if they were brought together. This stance, on the other hand, is based on a faulty understanding of the market and the nature of the sector. Beat Saber is a popular, free-to-play video game with a crowded market. It’s impossible to compare Supernatural to anything else. Boxing, flow, meditation, and stretching are all available as part of a trainer-led virtual exercise program through this subscription-based service.

FitXR, Liteboxer, and Les Mills Body Combat are just a few of the many fitness-specific VR apps that compete with Supernatural (such as Peloton and many others). Although Beat Saber and Supernatural appear to be similar products, they are in fact very distinct. And this isn’t just our opinion; Within’s executive team is certain that its real competition are the Pelotons and other well-known fitness businesses throughout the world, not Beat Saber or other casual VR games.

Advertisements

FTC claims that we would either have to start from scratch or somehow turn Beat Saber into a fitness-specific service like Supernatural, based only on Meta’s size. With so many well-known firms like Apple and Peloton better positioned to bring their existing fitness products and content to virtual reality, Meta’s attempt to do so wouldn’t make any sense. Indeed, we considered launching a fitness-focused service, but determined that we couldn’t afford to do so at this time.

For the third time, the FTC has argued that the mere chance that we might one day develop our own VR fitness software is enough to stop this transaction. As a result, they don’t perceive us as their present or future rival and are instead focused on the established online and linked fitness businesses, as well as well-positioned recent actual entrants like Supernatural.

Meta is accused by the FTC of aiming to “control” the VR ecosystem by purchasing VR apps. The opposite is true: We’ve been working for over a decade and have invested billions in building a robust and sustainable ecosystem for VR developers. More than 1,000 apps have been developed and the number of apps producing more than $1 million in revenue has increased year-over-year because of the ecosystem we are establishing. We don’t push developers or consumers into our store, unlike many of our competitors. Because we want to encourage competition and choice in the VR ecosystem, we provide features like sideloading, connecting to play VR content from PC, and App Lab.

Advertisements

Last but not least, the rapid growth and evolution of virtual reality shows that there is broad belief in the technology’s ability to transform people’s lives. A robust and integrated hardware and developer community is critical to the success of the industry as a whole. With so many competing fitness apps, how might Meta’s acquisition of a single fitness app in a dynamic sector with numerous existing and prospective players hurt competition? The FTC has no answer to this point.

The Burden of the FTC

People and competition will be affected if the FTC can prove that our transaction breaks the law. In our opinion, they don’t have a strong enough case to stand up to the examination required. A nine-month investigation period was given to the FTC, with our full cooperation throughout. We provided the FTC’s Second Request with millions of documents and data, as well as numerous written responses. In addition, at the FTC’s request, we extended the closing date of this transaction to August 1, 2022.

Advertisements

As a result of this transaction, we believe that it does not harm competition in any manner, and that it should be permitted to go forward. After all, no one gains by attempting to prevent Meta from making any acquisitions, especially if the purpose is to encourage innovative business practices and competition. If this transaction goes through, we plan to put a lot of money into expanding Supernatural so that we can provide even more innovation to a fast expanding market that has opportunity for a lot of players.

Leave a Comment