WASHINGTON — The Federal Trade Commission on Wednesday filed a lawsuit to prevent Meta, the company formerly known as Facebook, from buying a virtual reality company called Inside, which could limit the company’s push to The so-called metaverse It points to a shift in how the agency deals with technical deals.
The antitrust lawsuit is the first under which it is filed Lina Khan, the chairman of the committee and one of the most prominent progressive critics of corporate concentration, against one of the tech giants. Ms Khan argued that regulators should stop violations of competition laws and consumer protection when it comes to the bleeding edge of technology, including virtual and augmented reality, and not just in areas where companies are already giants.
FTC request for injunction puts Ms. Khan on a collision course with Mark Zuckerberg, CEO of Meta, who is also mentioned as a defendant in the application. He’s spent billions of dollars building products for virtual and augmented reality, betting that the immersive metaverse is the next frontier of technology. The lawsuit could hinder those ambitions.
“Meta could have chosen to try to compete with Inside for advantages,” the FTC said. in her lawsuit, which was filed in the United States District Court for the Northern District of California. Instead, it chose to buy a ‘major company’ in what the government described as a ‘vitally important’ category.
In a statement, Meta said the FTC’s case is “based on ideology and speculation, not evidence. The idea that this acquisition will lead to non-competitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible.” The company added that the lawsuit was an attack on innovation, with the agency “sending a chilling message to anyone wishing to innovate in virtual reality.”
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Meta said it would acquire Inside, which produces the hugely popular fitness app called Supernatural, last year for an undisclosed amount. The company has been promoting its VR headsets for fitness and health purposes.
The lawsuit is part of a wave of actions against Meta and other big tech companies such as Google, Apple and Amazon, which have faced increased scrutiny due to their power and dominance. Under Ms. Khan’s predecessor, the FTC A lawsuit against Facebook which argued that the company shut down emerging competition through acquisitions. The Ministry of Justice also has A lawsuit against Google About whether the company abused its monopoly on internet search.
More cases can come. The Federal Trade Commission is investigating whether Amazon violated antitrust laws, and the Department of Justice has inquiries about Google’s dominance of advertising technology and in Apple’s App Store policies.
Mr Zuckerberg has pushed Meta away from its roots in social networks as the company’s apps, such as Facebook and Instagram, face increased competition and issues such as privacy and misinformation.
To support the push into the metaverse, Zuckerberg has rehired the staff and appointed a senior lieutenant in charge of the effort. It also authorized the assistants to follow some of the most popular games in the field of virtual reality. in 2019, Bought Facebook Beat Gamescreators of the successful title Beat Saber, one of the best virtual reality games on the Oculus platform.
Meta is due to report its quarterly earnings later on Wednesday. The company recently scaled back employee benefits and reined in spending amid uncertain economic conditions.
The FTC’s move can be seen as an attempt to learn from history. The agency approved Facebook’s 2012 acquisition of InstagramIt is a photo sharing app that has grown to over 1 billion regular users. Instagram Meta helped dominate the market in social photo sharing, although other startups have since emerged.
John Newman, deputy director of the FTC’s Office of Competition, said the agency acted in an internal deal because Meta was “trying to make her way to the top.” He said the company already had a best-selling VR fitness app, but then opted to acquire the Wyozen superhero app to “buy a market position.” He described the deal as an “unlawful takeover, and we will seek all appropriate relief.”
The Federal Trade Commission (FTC) vote on authorization to register was split 3 to 2.
This is an evolving news story and will be updated.
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