In response to news that a California federal judge has denied the Federal Trade Commission’s request for a preliminary injunction for Meta’s merger with virtual reality developer Within, the American Economic Liberties Project released the following statement.
“While we wait for an unsealed opinion, we applaud the FTC for challenging Facebook’s attempt at monopolization. For the past four decades, judges have been overwhelmingly pro-monopolist,” said Lee Hepner, Legal Counsel at the American Economic Liberties Project. “This isn’t a setback, but an expected part of the longer project of enforcing the antitrust laws as they were written. We encourage the Commission to continue to pursue their administrative case.”
Facebook, which is facing regulatory pressure due to its predatory behavior in social networking, renamed itself as Meta and began branding all VR/AR technology as part of the “Metaverse.” Facebook has already committed 20 percent of its workforce to VR/AR development, and has considerable resources to invest, yet the firm has already made half a dozen acquisitions in the space adhering to Mark Zuckerberg’s famous mantra of “it’s better to buy than compete.”
By virtue of their already-dominant position in VR, Meta has been able to decide winners and losers across the entire industry. Meta already controls 95% of the market for VR headsets and VR app distribution. In 2022 alone, Meta spent nearly $25 billion to expand their VR footprint. Their proposed $440 million acquisition of rising competitor Within is multiples more than Within’s own internal valuation, underscoring the immense competitive advantage that Meta stands to gain from the acquisition. As the FTC sought to prove to the Court, Meta has been able to box out competitors by placing their stamp on the entire VR ecosystem.
In the recent hearings, the FTC was seeking a preliminary injunction in a California federal district court before Judge Ed Davila. Section 13(b) of the FTC Act authorizes the Commission to halt a proposed merger, in this case until the Commission has had an opportunity to determine whether the merger would substantially lessen competition or tend to create a monopoly in violation of Section 7 of the Clayton Act or Section 5 of the FTC Act. The FTC may still pursue comprehensive review of the merger through administrative proceedings before an Administrative Law Judge, which are scheduled to begin on February 13, 2023.
