Why a Meta Lawsuit Signals the Battle for the Future of the Metaverse

Competition is key

  • The government claims that Meta is acting as a monopoly by attempting to buy a VR app maker.
  • Some observers say that Meta’s purchase could stifle competition.
  • A dissenter claims the case is overblown, and Meta is unlikely to dominate VR app development.
Young woman using virtual reality simulator gesturing in front of sunset sky

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A judge may soon decide the future of the metaverse, with significant implications for virtual reality (VR) users. 

The Federal Trade Commission is suing to prevent Meta from acquiring Within, the virtual reality fitness app maker. The government argues that allowing Meta's purchase would create a monopoly, and experts say the results of the lawsuit could determine who dominates the metaverse for years to come. 

"If Meta is stopped from continuing its purchasing spree, it means the playing field of the VR industry will be leveled," Eric Alexander, founder of Soundscape VR, an entertainment platform based in the metaverse, told Lifewire in an email interview. "This will benefit every player in the VR space (besides Zuckerberg). For consumers, developers, for smaller VR companies, stopping Meta's VR acquisitions will stimulate growth and creativity in VR development and prevent Meta from stifling innovation."

Monopoly Money? 

The FTC is suing to halt Meta's acquisition of Within on the grounds that it would "tend to create a monopoly" in the market for VR fitness apps. It has asked a judge to order a preliminary injunction to halt the proposed transaction.

According to the FTC, Meta's virtual reality empire includes the top-selling device, a leading app store, seven of the most successful developers, and one of the best-selling apps of all time. The agency alleges that Meta and CEO Zuckerberg are planning to expand Meta's empire with this attempt to acquire a dedicated fitness app. 

"Instead of competing [using its] merits, Meta is trying to buy its way to the top," FTC Bureau of Competition Deputy Director John Newman said in the release. "Meta already owns a best-selling virtual reality fitness app, and it has the capabilities to compete even more closely with Within's popular Supernatural app. But Meta chose to buy market position instead of earning it on [merit]. This is an illegal acquisition, and we will pursue all appropriate relief."

But Lyron Bentovim, CEO of The Glimpse Group, an VR and augmented reality (AR) company, told Lifewire in an email interview that the situation reveals the FTC's discomfort with Meta's dominant position in the VR market and with the acquisitive power of major technology with companies generally. Bentovim said the FTC's cautiousness is rooted in past dealings managing other big tech companies, such as Microsoft's antitrust case in the 1990s.

"But Meta's attempt to acquire Within isn't nearly that serious because Meta isn't preventing users from playing non-Meta VR apps," Bentovim added. "Apps from non-Meta companies are available on the Oculus Store alongside apps made by Meta's companies, with no preferential treatment being given to Meta's in-house apps.

"There's no monopolization going on here, but the FTC is basing its efforts on the precedents set by companies like Microsoft. I suspect that because the majority of VR headsets in the USA are manufactured by Meta, the FTC is simply anxious about Meta dominating another category in VR: the VR game development category."

Less Choice for Metaverse Users?

Alexander said the FTC recognizes that if Meta is allowed to operate unbridled, the company would have the potential to acquire every virtual reality application. And, he said, Meta has an outsize financial advantage over smaller software makers.

"Financially and organizationally, there's a giant divide between Meta and the companies it's trying to acquire. Meta is in a predatory position right now, and given its immense power in the modern tech sector, it has the potential to entirely govern the still-emerging VR space," Alexander added. 

If Meta is stopped from continuing its purchasing spree, it means the playing field of the VR industry will be leveled.

A Meta victory against the FTC would set a risky precedent, said Alexander. "All of the problems we see in the current world of technology will be ushered into the relatively new VR industry. [It'll] become just another tool for advertising and corporate control, rather than a genuine creative place where innovation can be rewarded."

However, Bentovim contends that Meta acquiring Within won't stamp out the competition in VR fitness apps. 

"Unless Meta starts selling Quest 2s with their in-house apps already downloaded and makes it more difficult for users to download competing apps, there really isn't a problem here," he added.

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