Facebook tries to buy apps, gets sued for virtual reality monopoly

A person wearing an Oculus Quest virtual reality headset merges the market into Supernatural.

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This has been Very bad year so far for meta, the company formerly known as Facebook, is in many ways unique as one of the largest technology companies in the world. Despite still raking in nearly $7 billion in profits in recent months, TikTok is eating its lunch, the stock price is in shambles, and even The Kardashians have rebelled. Now Meta is also being sued by the Federal Trade Commission for its monopoly in this country VR technology. It’s a shocking case that could have ramifications for other major gaming acquisitions.

It was registered with Meta on the same day The last bad income reportis the FTC Looking for a verdict Against the company’s attempt to acquire Within, a virtual reality startup with a successful training program It is called supernatural. The agency literally called it an “illegal procurement for expansion.” [Meta’s] “Empire of Virtual Reality” In his press release. Meta responded, claiming in a statement that the FTC’s reasoning was based on ideology rather than evidence and would harm future developments in VR.

“It’s a riskier case, but they think it’s worth bringing because if they succeed it will help push the limits of enforcement,” former FTC Chairman William Kovacic said. said New York Times Magazine On Wednesday, the case will be heard in the U.S. District Court for the Northern District of California in the coming weeks and months.

Why the FTC’s Meta Complaint Came as a Surprise

Considering that Within barely even registers as a rounding error on top of the billions of dollars Meta already invests annually in VR development, it seems like an odd deal for the FTC to pass up in the wild. . But for antitrust fans, it’s a great goal to turn back the clock on years of sluggish performance. After allowing Meta to gobble up one competitor after another (most famously Instagram and WhatsApp), the FTC has to start somewhere.

“Because of those and other failures, the FTC (and the DOJ) are now scrambling to make up for it, devoting enormous amounts of time and resources to lawsuits to try to force deals,” writes antitrust researcher Ron Knox. eliminate and stop monopolistic abuses. Exclusive Institute for Local Self-Reliance, In a thread yesterday. “[FTC Chair] Lina Khan has said in this lawsuit against the merger of Within: Not anymore.

In 2020, meta was controlled 62 percent of the market For VR headsets in the first quarter of 2021, its Oculus headset shipments were completed 75% of the market (And this week he announced that he would do so Increase the price by $100). This will direct users to the Oculus Store for VR apps. One of them is Supernatural, a wildly popular immersive fitness experience that lets you box, meditate, and do yoga in virtual reality. Meta’s philosophy, like that of other big tech companies, has long been “if you can’t beat ’em, buy ’em,” and its VR business is the clearest example.

The headset technology, the Oculus Rift, was originally developed by Doom lead designer John Carmack and others and was partially paid for by crowdfunding on Kickstarter. In 2014, Meta bought it for $2 billion. It has been one of the most popular virtual reality games ever hit the saber. Meta bought it in 2019. Since then the company has been hijacked Lots of other VR studios.

“If Meta is allowed to buy Within, this competitive pressure will be reduced,” the FTC wrote in its notice yesterday. “This reduction of competition violates antitrust laws.” The agency goes on to argue that this process itself discourages other manufacturers from innovating in the space.

What it could mean for the game

It’s hard not to see some similarities with Microsoft’s current offering Buy Activision Blizzard. The company has been on a spending spree, gobbling up studios to feed endless content. Furnace that is Game Pass. In some ways, this strategy goes back to buying minecraft in 2014. But the acquisitions of Obsidian, InXile, Ninja Theory, and others in recent years show that buying content instead of making it yourself wasn’t a one-off. with Bethesdait gained hits like Fallout, Large scrollsAnd Doom. With Activision Blizzard will get it call of duty, DiabloAnd Candy Crush.

A key difference It’s that Microsoft doesn’t have the same power in gaming hardware that Meta has in VR. The Xbox maker has also gone out of its way Try to reassure the FTC That nothing he does is anti-competitive. In February, Microsoft committed to a list of “Open App Store Principles” and told the FTC that games like call of duty And Overwatch Exclusive platforms. In June, he pledged to remain neutral about union activity and convinced the American Communications Workers that declare his support for the takeover proposal.

It should be noted that the purchase of Bungie by Sony was also done without problems. That could be because the FTC is focused on conventional technology deals at companies like Apple and Google (the agency is currently investigating Amazon). At the same time, if Activision Blizzard’s takeover goes through, it would be the largest acquisition in tech history. Strangely, Microsoft agreed to pay $95 per share, but Activision Blizzard’s stock is still trading at just $79. The deal is expected to close by June 2023, and Microsoft has done so It has been reported It has already shared all the information the FTC sought. Once Activision Blizzard does the same, the agency has 30 days to complete its review.

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