FTC ‘Confident’ Suit Against Meta’s Within Unlimited Buy ‘Will Be Heard’

The FTC said Thursday it’s unfazed by Meta’s motion to dismiss the agency’s amended complaint (docket 5:22-cv-04325) in U.S. District Court in San Jose, in which the FTC seeks an injunction to block Meta’s acquisition of Within Unlimited and its Supernatural virtual-reality fitness app on anticompetitive grounds (see 2210130082).

The agency voted to authorize staff “to file an amended complaint against Meta in federal district court,” emailed an FTC spokesperson. “We are confident that the district court complaint will not be dismissed and this case will be heard."

The FTC amended its complaint Oct. 7 “to abandon its claim that the challenged transaction between Meta and Within would lessen competition in a supposed market for VR fitness apps,” said Meta’s dismissal motion. “This amendment leaves only the FTC’s claim that ‘potential competition’ in a supposed market limited to ‘dedicated’ VR fitness apps would be lessened,” it said.

In the past four decades, “no court has accepted a ‘potential competition’ theory to find an acquisition in violation” of the 1914 Clayton Antitrust Act, said Meta. “On the contrary, every time the FTC has sought to enjoin such a transaction on that theory, the court has denied injunctive relief,” said the motion, citing three authorities in case law. Since the amended complaint “makes clear that the FTC has no viable claim here as a matter of law,” Meta is “promptly moving to dismiss the sole remaining claim with prejudice,” it said.

The FTC’s remaining claim “rests on nothing more than the speculation” that, absent the acquisition, Within and others may have competed harder “for fear of entry by Meta or others,” said the motion. “But the Supreme Court has held that more is required,” in terms of “pleading standards” and “substantive antitrust law,” it said. The law requires that the FTC “allege facts establishing that supposed fear of Meta entry, and Meta entry alone, actually restrained ‘oligopolistic behavior’ by Within or other VR fitness app providers,” it said. “No such facts are pleaded here.”

A “divided” FTC voted 3-2 to file a complaint blocking Meta’s Within buy, said Meta. At the time of filing, the FTC had not addressed Meta’s petition seeking the recusal of Chair Lina Khan “on the ground that her biased participation would render the proceeding constitutionally and procedurally improper,” it said. Khan, instead of recusing, “cast the deciding vote in favor of commencing this action, reportedly against the advice of FTC staff, despite the FTC having taken zero depositions,” it said.

Having abandoned its claim that Meta and Within compete for fitness consumers, “the FTC proceeds only on the claim that Meta and Within could compete, and that the fear of such competition drives Within and others to compete more strenuously,” said the motion. The FTC claim “fails for lack of facts” establishing a plausible claim of a non-competitive market,” it said. The FTC’s “failures to plead facts” showing either current “oligopolistic conduct” or “a concentrated market with high barriers to entry therefore bar its claims,” it said.

To successfully prosecute a case for anticompetitive behavior, the FTC “must come forward with facts showing a stable market that is afflicted by coordinated, profit-maximizing behavior among participants,” said the motion. “The FTC alleges nothing close,” it said. “There is no allegation that the market is stable or even that Within is profitable. There is no allegation that Within or its rivals charge similar or supracompetitive prices.”