A Federal District Court in California today denied the Federal Trade Commission’s (FTC) request for a preliminary injunction to stop Meta’s purchase of virtual reality company Within Unlimited. The FTC has a week to appeal the decision, and will continue to challenge the deal in its own in-house court either way.
The court’s decision is sealed, so the court’s reasoning is not being made public, but the outcome is no surprise. In opposing the purchase, the nation’s top consumer advocate is playing fortune teller and breaking with 40 years of antitrust precedent. While the agency should focus on consumer welfare, it has instead tried to meddle in a market that does not yet exist.
What market share would Meta have if the deal were consummated? It is impossible to answer that in a meaningful way because the very narrowly defined market for “fitness apps on virtual reality devices” has yet to take shape, if it ever will. There are competing virtual reality headsets on the market with their own app stores. That means Meta already competes on hardware, and wouldn’t be the only game in town for app distribution if it were allowed to purchase Within. With no barriers to entry, it is hard for the FTC to simultaneously claim that this will be a significant enough market to warrant government intervention and that no other competitors will enter that market.
For those same reasons, it’s also difficult for the FTC to prove consumer harm will result from the deal. It’s not likely that higher prices or reduced innovation would arise. And even if they did, perhaps Meta’s superior financial resources, technical expertise, or expansive distribution abilities would offset that and still leave consumers better off.
Consumer welfare has been the lodestar of U.S. antitrust law for four decades. Along with the introduction of economic analysis, the focus on the consumer saved competition law from the contradictory, inconsistent, and often harmful mess it was before. It would be a mistake to let an activist FTC drag us back to that era of economic chaos.