Meta scraped VR fitness plans for Beat Saber, FTC claims
U.S. antitrust regulators allege Meta halted efforts to make Beat Saber a VR fitness app and instead bought the competition.
The dispute between Meta and the US antitrust authority FTC is entering the next round. Bloomberg reports new writings from both parties. According to the FTC, Meta wanted to turn Beat Saber into a VR fitness game but instead inhibited the development of a fledgling market with its planned Within acquisition.
FTC files lawsuit against Meta's Within acquisition
Shortly after refocusing on metaverse development and changing its name from Facebook to Meta, Meta announced its planned acquisition of VR studio Within. The developer, potentially changing hands for over $400M, released the successful VR fitness app Supernatural for Meta Quest (2) in 2020.
However, after the takeover declaration, the US antitrust authority Federal Trade Commission (FTC) filed a lawsuit to prevent the transaction. The reason was that the takeover violated antitrust law. Meta's acquisition of Within, the FTC argued, would eliminate future competition in the new market for VR fitness apps.
FTC: Meta distorts VR fitness market
According to the FTC, the Within acquisition would prevent Meta from entering the fledgling market with its own technologies. This, in turn, inhibits the development of competition and competitor efforts. Within, for example, would have expected Meta to enter the market before the acquisition agreement and reacted accordingly.
Since the former Facebook company previously poached Within's head of product, the startup would have developed competitive strategies for Supernatural in anticipation of a corresponding VR app from Meta. The takeover offer discarded these. Meta, on the other hand, denies its VR fitness plans.
Meta's top two executives - CEO Mark Zuckerberg and XR chief Andrew Bosworth - would have to approve the development of a VR app. Both testified that they neither approved work on a fitness app nor provided the necessary funding for it.
"These ideas never proceeded beyond the discussion stage, never received approval from any senior manager, and were all discarded as impractical for various reasons," the company wrote in its recent report.
FTC: Beat Saber should have become VR fitness app
The most successful VR game of all time was also part of Meta's VR fitness plans, according to the FTC. Meta already has a motion-intensive VR game. Beat Saber can definitely be seen as one of the best VR fitness games for the Quest (2). Still, it's actually considered a rhythm or music game. Players hit colorful cubes with lightsabers that fly to the beat of the music.
Because of its proximity to the fitness genre, there were reportedly plans in the past to turn Beat Saber into a full-fledged VR fitness app. According to the FTC, Beat Games, which was acquired by Meta in 2019, would have started internal planning and presentation of the project in early 2021. In June of the same year, the plans stopped again, as Meta decided to acquire Within instead.
Meta: Unable to develop its own VR fitness app
From the FTC's standpoint, Meta is buying up the competition rather than stoking competition with its innovations. "Meta already has engineers with the skills to both expand Beat Saber into fitness and to build a VR dedicated fitness app from scratch," the FTC filing states.
Meta disputes that claim, saying it has documents from May 2021 in which employees concluded that Meta could not develop its own successful VR fitness apps. If the court blocks the Within acquisition, Meta still couldn't develop its own VR fitness app.
FTC wants to get it right this time
Proving that an acquisition limits the potential of a young industry is difficult. The FTC very rarely sues in such cases. According to Bloomberg, the agency lost a legally similar case in 2015. So why is the FTC taking such a risk?
Meta runs Facebook, one of the world's largest social media platforms. With the acquisitions of Instagram and WhatsApp, the group enormously strengthened its supremacy in this area. The FTC sees this as a monopoly position and has wanted to knock Instagram and WhatsApp out of the group for some time. A corresponding lawsuit against the Facebook monopoly has been running since 2020.
Previously, however, the US authorities had approved these takeovers. A mistake that should not be repeated. That's why the US antitrust authorities are taking a close look at Meta's VR strategy.
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