On one side, Meta and his giant appetite. On the other, Within. A start-up with 60 employees, based in Los Angeles, known for its fitness programs in virtual reality. And an application, Supernatural, made famous during confinement. An unfair game? This is, in any case, what the American competition authority criticizes, which vetoed the operation last July and opened an investigation for “illegal acquisition” against Meta.
The authority’s statement is severe, but well-argued. “Meta already has its own fitness app,” said John Newman, director of the Competition Bureau at the Federal Trade Commission (FTC). Mark Zuckerberg’s group has, in fact, a video game called Beat Saber, which has many similarities with the one developed by Within. “Meta chose to buy its position in the market rather than earn it on its own merits,” charges the authority in its indictment published on July 27.
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Heavy charges, rejected by Meta’s lawyers who denounce “baseless lawsuits”. Never before has a Silicon Valley giant had to answer such charges before the FTC. While in Paris, Meta’s public policy and competition manager, Nela Lopez-Galdos, did not mince words. At a Dechert LLP law firm conference attended by Challengesthe official denounced in front of several officials of the European Commission an investigation “driven by ideology”.
Thinly veiled allusion to the president of the FTC, Lina Khan, who has become the real pet peeve of Meta. Relations between Mark Zuckerberg and Lina Khan have taken an increasingly confrontational turn. The two personalities have never hidden their deep enmity. At the time of his appointment, Meta had gone so far as to seek the recusal of Lina Khan, considered too hostile to its interests. “Throughout her career, the president has consistently and publicly concluded that Facebook was guilty of violating antitrust laws,” Meta said in a letter to the FTC.
Meta, giant in spite of himself?
The showdown started by the FTC with Mark Zuckerberg promises to be long. But several experts fear that the charges against Meta are not strong enough to quash the sale. Since August, the regulator has already reconsidered some of its arguments. The charges for “illegal acquisition” were thus withdrawn. The FTC now prefers to invoke the absence of potential competition” between two competing players in a “nascent market”.
A caution, which strengthens the position of Meta. In his last indictment, Mark Zuckerberg is, moreover, no longer prosecuted personally by the FTC, which has reviewed his file. A first victory for the founder of Facebook, who mobilized an army of lobbyists to convince the authorities to defend him. On December 2, the group thus urged Washington not to impose excessive regulations against the sector so as not to “restrict innovation” in the field of virtual reality.
Since changing its name last year, Meta has increased its investment in virtual reality. The American giant has already owned the virtual reality headset manufacturer Oculus since 2014. An acquisition made by Facebook for $ 3 billion from its founder, Brendan Iribe. App developers also depend on Meta to sell their products on the Oculus — number one in consumer VR headset sales — where the company takes a 15-30% commission.
It wouldn’t be the first time regulators have barred Meta from pursuing one of its investments. In 2019, the SEC had already buried Libra, Facebook’s cryptocurrency project. But it is Europe that has hit the hardest so far. In October, the British market authority has forced the group to sell its subsidiary Giphyspecializing in animated images.
Penalties for Meta in Europe could reach more than €1 billion this year for privacy breaches, Politico claims. After buying Instagram and WhatsApp in 2014, Facebook’s monopoly in online advertising is increasingly challenged. A monopoly which, at the time, had not attracted the attention of regulators.
