FTC Runs into the Judicial Wall

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The Federal Trade Commission’s (FTC) antitrust crusade has run into an obstacle: the judiciary. Indeed, the agency wants to expand its authority and broaden enforcement standards so it can win more cases against big businesses, but so far judges have kept its populist turn in check.

The latest rebuff came late on the night of January 31, when a district-court judge ruled that Meta, Facebook’s parent company, may go ahead with its purchase of Within Unlimited, a virtual-reality software maker. The FTC is still trying to stop the deal but has no plans to appeal the decision.

Your authors took at least as dim a view of the case as the judge did, as we wrote for National Review last September. In our view, the FTC’s complaint depended heavily on the relevant-market fallacy, which is when regulators define a company’s market so narrowly that it looks more dominant than it really is.

In this case, the FTC defined the relevant market as the “virtual reality dedicated fitness app market,” and shut down the deal. But in the big picture, such apps compete with other fitness options such as gym memberships, home gym equipment, free YouTube workout videos, and local sports leagues. In its decision last month, the court acknowledged this more holistic view of fitness options but nevertheless accepted the FTC’s market definition as an economically distinct sub-market.

More narrowly, dedicated fitness apps compete with incidental fitness apps such as dancing games and rhythm-based virtual-reality (VR) games that require similar levels of physical activity but aren’t explicitly about fitness. They also compete against dedicated fitness apps for mobile devices and tablets that can be paired with smart watches or TV screens.

Read the full article on National Review.