Meta could be facing its first real roadblocks in building towards its metaverse vision, with the FTC moving to block its acquisition of VR fitness company Within, and slowing ad revenue forcing it to increase the price of its flagship Quest 2 VR headsets.
As reported by The New York Times, the FTC, under new chair Lina Khan, who’s been a vocal critic of corporate monopolization, has moved to stop Meta from acquiring Within on the basis that the merger would be anti-competitive, with Meta choosing, according to the FTC’s lawsuit, to buy a company, rather than competing with Within ‘on its merits’.
As per the FTC:
“Meta, formerly known as Facebook, is already a key player at each level of the virtual reality sector. The company’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 Zuckerberg are planning to expand Meta’s virtual reality empire with this attempt to illegally acquire a dedicated fitness app that proves the value of virtual reality to users.”
Note the mention of Zuckerberg by name here – in fact, Zuckerberg is mentioned four times in the FTCs release. That makes it feel at least a little personal, which probably doesn’t bode well for Meta’s ongoing process of acquisition under the new FTC leadership.
As the FTC notes, Within is the maker of ‘Supernatural’ the popular VR fitness app.
Meta initially announced its acquisition of Within last October, which seemed like a fairly logical move, given its ongoing focus on VR development, and the next stage of connection.
But with the acquisitions of Instagram and WhatsApp likely front of mind, the FTC says that Meta is looking to dominate the market, rather than building its own tools.
“[Meta has] the required resources and a reasonable probability of building its own virtual reality app to compete in the space. But instead of entering, it chose to try buying Supernatural. Meta’s independent entry would increase consumer choice, increase innovation, spur additional competition to attract the best employees, and yield other competitive benefits. Meta’s acquisition of Within, on the other hand, would eliminate the prospect of such entry, dampening future innovation and competitive rivalry.”
There’s probably some truth to that, with respect to how Meta’s growth through acquisition quashes at least some level of competition. But it seems like a weaker case than the Instagram and WhatsApp examples, where Meta bought out rising rivals to its dominance.
Within is already reliant on Meta’s VR tools to reach its customers, and in that sense, a partnership seems fairly logical, but the FTC says that the deal could send ‘a chilling message to anyone who wishes to innovate in VR’.
Now we’ll have to wait and see whether Meta’s acquisition can go ahead, and with the company also considering new acquisitions, like smart glasses maker AdHawk Microsystems (likely for its own AR wearables), that could throw a big spanner in Meta’s plans for its all-consuming metaverse experience.
And this likely also won’t help:
In order to continue investing in moving the VR industry forward for the long term, we are adjusting the price of Meta Quest 2 headsets to $399.99 (128GB) and $499.99 (256GB) starting on 8/1/22.— Meta Quest (@MetaQuestVR) July 26, 2022
Due to ongoing market pressures, and rising costs, Meta has been forced to increase the price of its flagship Quest 2 VR headsets by $100, which could be a big blow to expanding take-up.
Which, in turn, will slow the development of the metaverse – because in order for it to become the all-consuming, all-purpose, omnipresent space that Zuck and Co. foresee, it needs people to be involved, and it’s impossible to get that full experience without a VR headset.
In the past, Zuckerberg has talked about reducing barriers to entry, including costs, in order to facilitate more reach for its VR tools, which underlines just how significant a decision this must have been at Meta HQ.
In the broader scheme of things, it may not mean a lot, especially with Meta also planning to release a lower cost VR headset in the next year or so. But in combination, these two updates form a significant speed hump in Meta’s broader plan, which could mean harder times ahead for the company, at least in the short term.
Will that impact Zuckerberg’s overall metaverse vision, and how Meta approaches the next stage? It seems unlikely – but if this is a signal that the FTC is going to take a harder line, Meta’s path could be a lot more difficult.