Shulou(Shulou.com)11/24 Report--

According to reports in the morning of October 8, Beijing time, the Federal Trade Commission (FTC), one of the US antitrust agencies, sued social networking giant Meta to prevent it from acquiring virtual reality software maker Within Unlimited, which was also the first "pre-emptive strike" by the agency against external acquisitions of Meta. A few days ago, however, the FTC amended the complaint, which is rare in the agency's history.

FTC filed the antitrust complaint with the court on July 27, but on Friday, FTC asked presiding judge Edward Davila to amend some of the charges against Meta, mainly about the anti-competitive effect of the acquisition on the virtual reality fitness software market.

Meta said FTC's allegations were based entirely on subjective imagination rather than objective evidence. The company said that FTC's newly revised complaint removed a statement that Meta's most popular virtual reality game "Beat Saber" and the acquired Within's fitness software "Supernatural" are direct competitors.

Meta spokesman Stephen Peters said in a statement that the FTC had previously referred to Meta and Supernatural as direct competitors in the complaint, but now said they were not direct competitors. In any case, Meta still believes that FTC's prosecution is a false accusation and lacks the support of objective facts and legal provisions.

Meta denies FTC's allegations about the deal and retorts that FTC is conducting selective antitrust enforcement.

Within develops applications for virtual reality devices, including the above fitness product Supernatural. In its initial complaint, FTC alleges that Meta's acquisition of Within would create a monopolist in a particular market.

In Meta's Beat Saber game, users can beat their targets according to the rhythm of the music. In 2019, Meta acquired game software maker Beat Games and acquired the product. Beat Saber has become the most profitable game in the virtual reality software store of Meta's Oculus Quest devices, with total revenue of more than $100 million as of October 2021.

Within's Supernatural is a membership-based fitness software that allows users of virtual reality devices to exercise or meditate in an immersive music environment.

FTC's complaint initially claimed that the two apps competed directly to snatch users. But in the new complaint, Beat Saber is called "intermittent fitness software," and FTC also said that before the acquisition, Meta is likely to develop an independent virtual reality fitness software to compete with Supernatural.

After the Biden administration, Lena Khan served as president of the FTC. The antitrust lawsuit against the Meta acquisition is seen as a sign that FTC will strengthen antitrust regulation of the technology industry. Over the years, FTC has faced criticism from Congress and society that FTC failed to regulate antitrust and failed to stop US tech giants from buying up startups that could be their competitors in the future.

Prior to this, Meta made a large number of mergers and acquisitions, the vast majority of which strengthened its product line in the field of virtual reality and augmented reality. According to CEO Zuckerberg's vision, meta-universe will become a mainstream social platform in the future, where people can shop, work and party with friends in the virtual world.

Before the Within lawsuit, FTC had already filed another antitrust lawsuit against Meta's historic acquisition of Instagram and WhatsApp. Recently, a Republican member of the US Congress questioned the two lawsuits brought by FTC, arguing that the two lawsuits may be contradictory in the use of legal provisions.

At a hearing on September 20, Mike Lee, a Republican senator from Utah, told Khan, the head of FTC, that the two FTC lawsuits against Meta were contradictory, which could affect FTC's ability to regulate US technology platforms. At the time, Khan said a lawsuit against Within's merger was under way, so he did not directly respond to Li Mack's questions.

In this lawsuit, FTC's goal is to ask the court to issue an injunction prohibiting Meta from acquiring Witin. In addition, in an administrative court within FTC, FTC also filed a largely similar independent lawsuit against Meta.

In a courtroom in San Jose, Calif., Judge Davila has scheduled a two-week court hearing in December, and he plans to make a ruling by the end of the year (when Meta was scheduled to close the deal). FTC's internal court will begin hearing the case in January next year.

Stephen Calkins, an antitrust professor at Wayne State University Law School in the United States, said that it is extremely unusual for FTC to revise the pleadings this time because in past lawsuits against mergers and acquisitions, regulators often want to press ahead with the trial as soon as possible.

Calkins said that in the acquisition lawsuit, the litigation progress is very fast, the amendment of pleadings is rare. And it is even more unusual to amend it again two months after the filing of the complaint. It is reported that during the Clinton administration in the United States, Calkins served as a lawyer for FTC.

In 2009, FTC filed a lawsuit against the acquisition of whole Foods and peer Wild Oats Markets. FTC also amended the complaint in this case. However, Calkins said that unlike the Meta lawsuit, FTC first lost the lawsuit in federal court, and then amended the petition in the internal court to reduce the content of the charges.

FTC said that the result of the high-level vote on the amendment of the complaint was 4:0 (a Republican FTC committee that will soon end its term of office did not vote among the five committee members). In addition, Republican Committee member Christine Wilson had previously voted against the lawsuit against the Within deal, but this time supported the amendment of the complaint. Wilson said it remained opposed to litigation as a whole.

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