FTC Sues to Block Meta’s Acquisition of Supernatural Developer Within

In 2021 Meta announced its intention to acquire Within, the studio behind popular VR fitness app Supernatural; though neither company announced the deal price, reporting indicated a whopping $400 million price tag which may have caught the attention of the US Federal Trade Commission. Today the FTC moved to formally block the deal in what it says is an effort to protect competition.

Update (July 27th, 2022): Following reports late last year that the US Federal Trade Commission was scrutinizing Meta’s deal to acquire Within, the developer of the popular VR fitness app Supernatural, today the agency announced that it has filed a motion aimed at blocking the deal with a federal court in a 3–2 decision.

“Instead of competing on the merits, Meta is trying to buy its way to the top,” said FTC Bureau of Competition Deputy Director John Newman. “Meta already owns a best-selling virtual reality fitness app [Beat Saber], and it had the capabilities to compete even more closely with Within’s popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief.”

To our knowledge this is the first time the FTC has formally attempted to block Meta’s acquisition of a VR studio. The company has previously acquired Beat Games (Beat Saber), Sanzaru Games (Asgard’s Wrath and others), Ready at Dawn (Lone Echo and others), Downpour Interactive (Onward), and BigBox VR (Population: One), all in just under two years.

The FTC says its goal is to protect competition among companies in the VR fitness space.

“Meta already participates in this broader market with its Beat Saber app, as does Within with its premium rival app Supernatural. The two companies currently spur each other to keep adding new features and attract more users, competitive rivalry that would be lost if this acquisition were allowed to proceed,” the agency says.

In a statement to the New York Times about the matter, Meta said the FTC’s position is “based on ideology and speculation, not evidence. The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible.” Adding that the lawsuit would send “a chilling message to anyone who wishes to innovate in VR.”

The original article, which covered initial reports of the FTC’s scrutiny of the Within deal which is reportedly priced above $400 million, continues below.

Original Article (December 17th, 2021): Meta announced the acquisition of Within at the end of October, saying that the studio would be run under the umbrella of Meta Reality Labs, the company’s XR organization. The price of the acquisition was not announced at the time. Like previous VR studio acquisitions, Meta said the studio will “continue to be operated independently.”

This would mark the company’s sixth acquisition of a VR studio, though it turns out the deal may not be finalized just yet.

According to a report from The Information, the deal price was to be “$400+ million,” citing two unnamed sources. Further, the report claims that the US Federal Trade Commission, which oversees antitrust and consumer protection, has “opened an in-depth probe of the acquisition, meaning Meta may not be able to finalize the acquisition for another year, assuming the agency doesn’t formally challenge the deal in court, causing additional delays.”

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The FTC’s interest in the deal is reportedly connected to its ongoing case alleging that Meta engaged in anticompetitive practices when acquiring companies like Instagram and WhatsApp. While that case had not previously directly involved any of Meta’s XR business, the size of the Within acquisition has reportedly put it on the FTC’s radar in conjunction with the existing case. We’ve reached out to Meta for comment on The Information report.

Meta’s acquisition of Within would mark the sixth VR studio that the company has bought in an effort to have greater control over the destiny of killer VR apps and the talent behind them. Meta has also acquired Beat Games (Beat Saber), Sanzaru Games (Asgard’s Wrath and others), Ready at Dawn (Lone Echo and others), Downpour Interactive (Onward), and BigBox VR (Population: One), all in just under two years.

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