In a decisive ruling that strengthens the US government's regulatory offensive against Big Tech, a federal court has rejected Meta's attempt to throw out a groundbreaking antitrust lawsuit. The Federal Trade Commission's (FTC) case, which accuses the social media behemoth of illegally maintaining a monopoly in the virtual reality sector, will now proceed, setting the stage for a monumental legal battle.
The FTC's complaint, initially filed in 2022 and amended last year, centres on Meta's strategic acquisition of the VR fitness app Supernatural and its parent company, Within Unlimited. Regulators argue this purchase was a deliberate 'a dagger to the heart' of potential competition, designed to eliminate a rising rival rather than develop similar technology in-house.
A Battle Over the Future of the Metaverse
At the heart of the lawsuit is the allegation that Meta, through its ownership of the popular Quest VR headset store, has pursued a 'buy-or-bury' strategy towards software developers. The FTC contends this approach stifles innovation and cements Meta's dominance in a key future market, ensuring it reaps 'monopoly profits' at the expense of consumer choice and fair competition.
Judge Edward Davila of the US District Court for the Northern District of California acknowledged the FTC's updated complaint was 'far more robust and detailed' than its first attempt. While he dismissed the FTC's claim regarding the market for VR-dedicated fitness apps, he found the broader argument about Meta's control over the entire VR app market compelling enough to move forward.
Meta's Defence and the Road Ahead
Meta has vehemently denied the allegations, framing the FTC's case as a 'political stunt' that ignores the reality of a dynamic and competitive tech landscape. The company argues that its acquisitions, like that of Within, are pro-competitive and benefit consumers by bringing more innovative products to market.
This legal defeat for Meta is part of a wider wave of antitrust scrutiny facing the world's largest tech firms. Both the FTC and the Justice Department have embarked on an aggressive campaign to challenge the market power of companies like Google, Amazon, and Apple.
The court's decision ensures that one of the most significant tests of modern antitrust law will play out in the courtroom, with profound implications for how tech giants can operate and acquire companies in the future.
