‘Axiomatic’ That Less Competition ‘Harms Consumers,’ Says FTC in Meta Suit

The FTC does not dispute that Meta is an American success story, said the agency Monday in its reply (docket 5:22-cv-04325) at the U.S. District Court for Northern California in San Jose to Meta’s Nov. 14 opposition to the commission’s motion for an injunction to block Meta’s purchase of Within Unlimited. But against the backdrop of Meta’s enormous growth, the company’s arguments that it could not possibly have developed its own virtual-reality dedicated fitness app “ring hollow” and are “just not true,” said the FTC.

So too are Meta’s claims that an injunction “temporarily halting this one unlawful proposed acquisition would chill entrepreneurship,” said the agency. Meta would have the court “ignore uncontroverted evidence” establishing Meta’s resources, capabilities and incentives to enter the VR dedicated fitness app market, it said.

Behind Meta’s “sky-is-falling lamentations” that the entire ecosystem would be jeopardized by an injunction “lies an inconvenient truth,” said the FTC. Meta continues to make other acquisitions in the VR industry, including acquiring three separate studios in the year since its proposed Within Unlimited buy was announced, it said.

The question before the court is “simply whether, within a spectrum of closer and more distant substitutes, VR dedicated fitness apps meet the criteria of a relevant antitrust market,” said the commission. “As explained in the FTC’s opening brief, they do.” Whereas Meta contends that the FTC has failed to show harm to consumers, “it is axiomatic that reduced competition and loss of choice harm consumers.” Meta's newest argument, "an eleventh-hour Hail-Mary failing-firm defense, is precluded by the law -- and the facts here," the FTC said.

Meta urges the court to dismiss “objective evidence” and instead “just accept the after-the-fact word” of CEO Mark Zuckerberg and Chief Technology Officer Andrew Bosworth that no Meta-developed VR fitness app would have been approved before the Within deal, nor would it be approved now, said the FTC. “Courts have long been skeptical of self-serving corporate testimony because executives in potential competition cases invariably opine that they would not have entered but for the challenged acquisition.”

The evidence shows that Meta’s plans for “organic entry” into the VR fitness app market “were tabled when Meta rushed to buy Within to ensure Apple -- which, to date, still has not introduced a VR headset -- would not do so,” said the FTC. “That Meta has not chosen to act on its ability to launch a competing product since announcing the Within acquisition, and its self-serving statements that it will not do so, are not relevant and should not persuade the Court.”

Meta spent five pages in its Nov.14 response “attacking the FTC’s relevant market definition, but their arguments all boil down to one obvious false dichotomy,” said the commission. The agency concedes, and has never disputed, that all fitness products “compete with each other to some degree,” it said. That “undisputed fact,” which Meta wastes pages trying to prove, “is ultimately irrelevant to the issue of the relevant antitrust market in this case,” it said.

“The relevant antitrust market question is whether, within a spectrum of closer and more distant substitutes, VR dedicated fitness apps meet the criteria of a relevant antitrust market,” said the FTC. “As explained in the FTC’s opening brief, they do.” The commission “is the only party that performed a hypothetical monopolist test,” the outcome of which is consistent with Meta viewing VR dedicated fitness apps “as a meaningful market category for undertaking the proposed acquisition,” it said.