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

Enlarge / Artist’s conception of the FTC fighting back against Meta’s latest proposed acquisition.

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

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

Cornering the VR fitness market?

Meta has been on something of a VR acquisition spree in the last two years, scooping up game developers including Sanzaru Games (Asgard’s Wrath), Ready at Dawn (Lone Echo), Twisted Pixel (Wilson’s Heart), Downpour Interactive (forward) and BigBox VR (Population: One). But the planned purchase of Within seems to be setting off antitrust alarm bells at the FTC because of the overlap with Beat Saber maker Beat Games, which Meta purchased in 2019.

The FTC includes Beat Saber in a category of what it calls “incidental fitness apps,” which are not focused on fitness primarily but which “allow users to get a workout as a byproduct of their use because of [their] physically active nature.” Thus, Meta is already “poised on the edge of the VR dedicated fitness app market with its popular Beat Saber app,” the FTC argues.

If Meta is allowed to purchase 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 makers of two of the most significant VR fitness apps, thereby eliminating beneficial rivalry between Meta’s Beat Saber app and Within’s Supernatural app.”

After purchasing within, Meta would have no incentive to update to update its
Enlarge / After purchasing within, Meta would have no incentive to update to update its “incidental fitness app” Beat Saberthe FTC argues.

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

“VR offers a level of immersion that other at-home fitness experiences do not, and cannot, offer,” 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 visuals of being somewhere else… [and] unlike flat or two-dimensional at-home workout content, VR apps can also be fully interactive, providing guided motion and haptic feedback in real-time in three-dimensional space.”

Meta’s “ultimate goal”

Apart from the VR fitness market, the Within purchase would put Meta “one step closer to its ultimate goal of owning the entire ‘Metaverse,'” according to the suit. Meta, which the suit points out is already a “global technology behemoth” through its billions of social and messaging app users, is now on a “campaign to conquer VR.”

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

in the statement, Meta said that the FTC’s case is “based on ideology and speculation, not evidence. The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible.” Blocking the acquisition would send “a chilling message to anyone who wishes 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.”

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

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