The Federal Trade Commission (FTC) has decided to withdraw its antitrust complaint against Meta Platforms concerning the company’s acquisition of the virtual-reality startup Within Unlimited, effectively concluding the agency’s case.
Last year, the FTC initiated legal action to block the purchase, submitting dual complaints in both federal court and its internal administrative court. Following a trial in December presided over by US District Judge Edward Davila in San Jose, the court ruled in favor of Meta, determining that the FTC had not provided adequate evidence to demonstrate that the acquisition would undermine competition within the emerging virtual-reality sector.
This month, the FTC chose against appealing Judge Davila’s ruling and decided to pause the administrative proceedings while it considered its next moves. Although the court’s decision allowed Meta to finalize the acquisition on February 10, the FTC could have pursued its case in administrative court to potentially reverse the transaction. However, on Friday, the agency voted to formally withdraw the complaint and close the case.
In a statement, a Meta spokesperson expressed enthusiasm about the acquisition, saying, “We’re excited that the Within team has joined Meta, and we’re eager to partner with this talented group in bringing the future of VR fitness to life.”
The FTC’s decision marks a significant setback for Chair Lina Khan, who was appointed by President Joe Biden to strengthen antitrust enforcement efforts. Khan has adopted a more assertive stance on mergers, particularly focusing on the influence of tech giants that could swiftly monopolize emerging markets. The FTC has also raised concerns over Microsoft’s proposed acquisition of Activision Blizzard, citing similar risks related to the burgeoning cloud-gaming landscape.
Despite the outcome, the FTC maintains that the case yielded valuable insights. They argue that Judge Davila’s ruling affirms their position that mergers which may not immediately harm competition could nonetheless pose future risks and should be blocked.
Commissioner Rebecca Kelly Slaughter noted at a conference in Arlington, Virginia, Friday that “the judge sided with the FTC on basically every question of law,” emphasizing that his opinion confirmed the agency’s understanding of the legal framework.
© Thomson Reuters 2023
