FTC drops Zuckerberg from lawsuit over virtual reality company purchase

The Federal Trade Commission (FTC) entered an agreement with Meta CEO Mark Zuckerberg on Tuesday to drop him from an ongoing antitrust lawsuit attempting to block the company’s purchase of a virtual reality company.

A joint court filing stipulates that Zuckerberg will not purchase the company, Within Unlimited, as an individual or through any entity controlled by Zuckerberg in exchange for being removed as a defendant in the suit.

The lawsuit, filed by the FTC late last month, accuses Meta of a years-long “campaign to conquer VR” that began as early as March 2014, when then-Facebook acquired headset-maker Oculus VR.

Facebook, which also owns Instagram and WhatsApp, rebranded itself as Meta last year as the company sought to refocus its efforts on the so-called metaverse and virtual reality industry.

The suit targets Meta’s attempt to buy Within Unlimited, a virtual reality developer that designed fitness app Supernatural. The app enables users to participate in workout sessions set to music from prominent artists while in a virtual reality environment that mimics destinations across the globe.

The FTC alleges Meta “is trying to buy its way to the top” rather than competing on the merits, but Meta has contested the accusations as being “based on ideology and speculation, not evidence.”

“The idea that this acquisition would lead to anticompetitive outcomes in a dynamic space with as much entry and growth as online and connected fitness is simply not credible,” Meta said in a statement when the suit was filed. “By attacking this deal in a 3-2 vote, the FTC is sending a chilling message to anyone who wishes to innovate in VR.”

The three Democratic FTC commissioners voted to sue Meta over its acquisition of Within Unlimited, while the two Republican commissioners voted against the move.

FTC Chairwoman Lina Khan has taken aim at Big Tech since assuming the post in June 2021, and the lawsuit has been one of her most prominent moves atop the commission.

Meta, which remains a defendant in the suit, declined to comment on the latest filing. The FTC also declined to comment.

The tech giant’s change in focus comes as the company faces hurdles in its social media business. 

Apple rolled out a privacy feature allowing users to block their data from being tracked across apps and websites, creating further roadblocks for Facebook’s targeted advertising business as it also faces stiff competition from TikTok and the threat of a recession.

Meta’s overall revenue dropped to $28.8 billion in the quarter ending in June, and its Facebook platform reported its first-ever user loss at the end of 2021.

Facebook’s rebrand to Meta in October also came as the company faced increased scrutiny following whistleblower Frances Haugen’s leaking of internal company documents.

— Updated at 10:21 a.m.