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Meta's second anti-monopoly lawsuit opens: Accused of wanting to use mergers and acquisitions to dominate the Metaverse
According to reports, on Thursday local time, the Biden administration of the United States accused the social media giant Meta platform company in court of attempting to gain dominance over the Metaverse market through mergers and acquisitions. On the same day, the U.S. government's antitrust lawsuit to prevent Facebook's parent company from acquiring virtual reality software maker "Within" officially began its trial.
In July this year, the US Federal Trade Commission (FTC) formally filed an antitrust lawsuit in court. The agency alleges that Meta acquired Within to monopolize the market in virtual reality fitness software. The FTC asked the court to issue an injunction to block the acquisition.
In an opening statement on Thursday, FTC attorney Abby Dennis said the acquisition of Within was part of a grand plan behind Meta to acquire as many virtual reality users as possible through acquisitions of third-party products, including Supernatural, a well-known virtual reality fitness software owned by Within.
Dennis said the acquisition will add to Meta's existing virtual reality software users. Among them, these users are mainly young and male, and they are more enthusiastic about virtual reality games.
Dennis mentioned a plan that Meta made in early 2021, which is to use its own resources and capabilities to develop its own virtual reality fitness software. Before acquiring Within, Meta had always thought so.
Dennis said that the name of Meta's plan is "Operation Cake". In 2019, Meta acquired a rhythm game software through acquisition. The company is preparing to cooperate with connected fitness equipment manufacturer Peloton to transform this software into a virtual reality fitness tool.
Dennis cites an email from Meta CEO Mark Zuckerberg. Zuckerberg said in the email that he is very optimistic about the market of virtual reality fitness software, and the cooperation with Peloton will be very satisfying.
In court, lawyers for Meta and Within said the FTC was somewhat confused in defining the relevant software market. In the market, the two companies compete with a wide variety of fitness software, not just virtual reality fitness software.
Attorneys for Meta say plans to develop its own fitness software have been progressing beyond a low-level "brainstorming" development phase. The defendant's lawyer also said that the FTC underestimated the competitiveness of the fitness software market as defined by itself, and companies such as Apple and Google are likely to enter this market.
The FTC has long accused Meta of undermining competition by acquiring small and mid-sized potential competitors. This trial will be a test of the FTC's courage to maintain fairness in the market (except that this time the market it is focusing on is emerging VR/AR software).
In addition to the Within merger, the FTC has another antitrust lawsuit against Meta. In 2020, the FTC filed a lawsuit asking the court to cancel Meta's past two social tool acquisitions (Instagram and WhatsApp). It should be noted that at the time of the merger, both software were in an emerging market.
If the FTC wins the antitrust lawsuit this time, it will weaken Meta's ability to integrate in the virtual reality and augmented reality markets. Zuckerberg, the head of Meta, is very optimistic about the concept of Metaverse and these two markets, and believes that it will become the next generation of computing platforms.
If the courts block Metaverse’s acquisitions, the company will face increased pressure to develop its own products while losing all the benefits of acquisitions—such as revenue, development talent, data, control, etc.
Within is the developer of Supernatural, which the company advertises as a complete fitness service with expert trainers, where users can perform various exercises in beautiful scenery and accompanied by music.
Currently, the Supernatural software is only available on Quest, Meta's virtual reality headset. This device can provide an immersive digital visual and auditory experience. IDC, an American technology market research company, predicts that Quest will be able to capture 90% of the global virtual reality equipment market in the future.
At present, there are more than 400 kinds of software in Quest's software store, most of which are developed by external developers, but the most popular software "Beat Saber" in the store is developed by Meta. This is exactly what Meta is preparing to cooperate with Peloton to transform into an internal product of fitness software.
In October 2021, Meta and Within reached a merger and acquisition transaction, and the day before the deal was announced, the company announced that it would change its name from Facebook to Meta, which also reflected Zuckerberg's determination to gamble on the Metaverse market.
According to reports, in this trial, Zuckerberg will appear as a witness. Other possible witnesses include Chris Milk, CEO of Within, and Andrew Bosworth, chief technology officer of Meta, who is responsible for Metaverse business under Meta. Head of "Reality Lab".
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