Mark Zuckerberg Testifies in FTC Case to Block Meta-Facebook Virtual-Reality Deal

Meta Platforms Inc., the parent company of Facebook, has seen a 2.05% increase in its stock.

On Tuesday, Mark Zuckerberg, the Chief Executive Officer of the social-media company, appeared in court as a witness in a case in which the Federal Trade Commission is attempting to stop the company from purchasing a virtual-reality startup.

The Federal Trade Commission (FTC) is taking legal action to prevent Meta from acquiring Within Unlimited Inc., the company behind the popular virtual-reality fitness game “Supernatural.” This move is a direct challenge to Meta's plans to focus on the metaverse, a platform where many people interact and engage in virtual worlds.

At Mr. Zuckerberg's hearing, the FTC concentrated on Meta's entrance into the virtual-reality market, bringing up a few remarks the executive had made in which he expressed that the company was going to create its own virtual-reality software.

Mr. Zuckerberg noted that historically, the majority of major platform providers have developed some of the most important applications. He believes that the success of new technology platforms is often due to the software created by the companies that manage the platforms.

The Federal Trade Commission has accused Meta of attempting to gain control of the growing virtual reality industry through acquisitions, rather than competing with other software companies and developing its own applications. This is the main focus of the FTC's complaint.

The case is viewed as a trial of FTC Chair Lina Khan's broad understanding of antitrust law and the commission's capacity to control the influence of the world's largest tech firms. The lawsuit is based on the idea that the agreement could lead to competitive damage because it could restrict potential future rivalry in a new industry, a legal understanding that some antitrust experts said was uncommon.

Meta has consented to postpone the closing of the acquisition of Within to give the court enough time to decide on the FTC's plea to obstruct the transaction, as stated in a court filing on Monday. The postponement will last until either January 31 or the first business day after the court has made its ruling, whichever comes first.

At the start of the Meta case, the tech firm argued that the FTC was attempting to establish a standard that "if a large company has an interest in something and we think they should develop it, we will prevent them from purchasing it and make them build it," according to Mark Hansen, a lawyer for the company.

Mr. Hansen argued that if the proposed law were to be adopted, it would have a detrimental effect on virtually all vertical acquisitions.

In its July complaint, the FTC alleged that Meta was attempting to gain an advantage in the virtual-reality market by purchasing its way to the top, rather than competing or developing its own products.

At the start of the month, the FTC suggested that Meta had the capability to create its own app, and was in the process of doing so until they heard a rumor that Apple Inc. was looking to purchase Within Unlimited, according to Abby Dennis, a senior trial counsel at the FTC, in her opening statement.

Ms. Dennis reported that Meta has chosen to purchase the top VR fitness app, 'Supernatural', instead of creating their own.

Since the rebranding of Facebook to Meta in October 2021, Mark Zuckerberg has expressed his ambition to make his company the leader in the metaverse. However, the company has not seen much success in the past year in terms of selling its Quest VR headsets and attracting users to its metaverse apps.

In October, Meta's Reality Labs unit, which is responsible for the company's virtual-reality and metaverse initiatives, reported a quarterly revenue of $285 million, a decrease of almost 49% from the same period the previous year.

An internal report from the company revealed that their main virtual world, Horizon Worlds, had a goal of reaching 500,000 monthly active users by the end of 2022. However, as of October, the number of users was less than 200,000, according to The Wall Street Journal.