This past week has been rough for Meta. Among the news of another quarter of lower-than-hoped-for revenue is the possibility of reduced sales of the Meta Quest 2, thanks to the newly increased price of the headset. As of August 1, the Quest 2 will be $100 more expensive. If things didn’t seem like they could get worse, Meta is now facing a lawsuit from the FTC, alleging that it has created a monopoly on VR fitness apps.But the FTC is missing the forest for the trees with this suit (opens in new tab) which, at its core, states that Meta cannot lawfully acquire two companies that make the two most popular VR fitness games (opens in new tab). Those are Beat Games — the makers of the ever-popular Beat Saber, which Meta purchased years ago — and last October’s announcement of the acquisition of Within, the company that makes the fitness-focused Supernatural.Throughout the suit, the FTC compares how similar both games are to each other, which is a comparison many made when Supernatural debuted one month into the COVID-19 pandemic in 2020. But it’s not the similarities to each other that the FTC needs to be focusing on. It’s not even the idea that Meta wants to own the rights to these two popular games.It’s the fact that Meta wholly runs and operates the store on which all Oculus Quest 2 apps and games can be officially purchased. That creates a direct conflict of interest when the company’s own apps and games are regularly featured over those of smaller developers.But that’s not the only thing that’s strange here. Justice, or vendetta?(Image credit: Nicholas Sutrich / Android Central)The FTC and Meta certainly aren’t friends, but they do seem to know each other quite well these days. This year, alone, we’ve seen several similar suits brought up by the FTC; which include suing Meta over its acquisitions of WhatsApp and Instagram (opens in new tab), and another suit over possible non-competitive business practices (opens in new tab) in its Oculus division. Both of these cases make a lot of sense, and we’ve previously written about specific accounts of developers getting Sherlocked (opens in new tab) and other classic buy-or-bury schemes.But I can’t help but feel this latest suit (opens in new tab) is the FTC holding a vendetta against Meta in an attempt to crush it — any way they can.The logic behind the suit is wonky, at best.The proof is in the pudding, and as I already mentioned, the logic behind the suit is wonky at best. I’m not sure many people think of Beat Saber as a fitness app — even if it can technically be used that way with modifiers, as the suit points out — and this is hardly the first time Meta has attempted to acquire a developer of an incredibly popular game on its platform.Last year, we saw Meta acquire Population: One developer BigBox VR, and Onward developer Downpour Interactive. Both of those companies make two of the most popular multiplayer shooters on the Quest store, so why not target either of those acquisitions? Even if the FTC didn’t want an individual suit against those, it could have at least mentioned these two as a common tactic by Meta if it were going to use the same logic that’s in this latest suit.I spoke with Anshel Sag, a senior analyst at Moor Insights & Strategy, about the FTC suit. He seemed equally perplexed by the FTC’s decision to single out this acquisition over Meta’s many other recent acquisitions. That is, of course, unless some other scorned entity is behind the scenes.Strange bedfellows(Image credit: Nicholas Sutrich / Android Central)While previous acquisitions by Meta for its internal Oculus Studios brand were mostly under undisclosed amounts, the attempted acquisition of Within made waves because of the cost. When bidding had been completed, Meta agreed to pay $400 million for the tiny development studio. Given that this was the company’s first big game, and it was only available on the Quest platform, many scratched their heads at the amount being paid.But, as Sag pointed out, it’s highly likely that Meta wasn’t the only big player in the bidding process for the company — as the term bidding would infer. So who else could have been bidding on a small VR developer with a majorly successful VR fitness app? Apple, of course.Only under this scenario — that is, Apple getting the FTC to stop the acquisition of Within — does this suit make any sense.While Apple is still building (opens in new tab) its AR/VR/XR glasses, it’s important for the company to work to build an impressive repertoire of apps and games that would convince folks to spend money on day one of the headset’s eventual release. Given Apple’s penchant for all things fitness-related these days — and the assumed position AR/VR headsets will take alongside home gyms, now and in the future — it makes perfect sense for Apple to be the other big bidder for Within last year.With the likelihood that Apple was the other bidder, it’s also very likely that Apple was the one who worked to get the FTC to file the suit. After all, it’s not the first time Apple could have done something like this. A similar enough scenario occurred with the attempted acquisition of Qualcomm by Broadcom where, it’s been alleged, Apple pushed the case to get regulatory authorities involved.Given that Meta currently holds an 80% or higher market share (opens in new tab) of VR headsets, it would be important for Apple to stop Meta from becoming further entrenched in the minds and hearts of consumers before its able to actually launch a competing product.Only under this scenario — that is, Apple getting the FTC to stop the acquisition of Within — does this suit make any sense. Otherwise, the FTC is barking up the wrong tree and is failing to do its actual job.Fix the store first(Image credit: Nicholas Sutrich / Android Central)If there’s any real problem in the world of digital marketplaces, it’s the vested interest of controlling parties to feature their own apps and services above the competition. Google and Apple have been guilty of this practice for years, and with the exception of the big Epic Games case against Apple, little has been done to challenge this problematic design.Like these companies, Meta’s Quest Store follows the same formula. Apps are vetted by Meta and approved for posting on the store. Someone (or something) at Meta then curates these apps for users, whether it’s an algorithm-based method of personalization, or hand-picked titles for bundles and other sales.If there’s any real problem in the world of digital marketplaces, it’s the vested interest of controlling parties to feature their own apps and services above the competition.The FTC mentions this as a footnote in point 133 in this suit, but it’s a point that needs to be made far larger. It’s entirely possible that the FTC is already dealing with this via the case it opened in January, but in any case (pun intended), the current suit seems misguided and possibly useless in the grand scheme of things.After all, Meta does allow third-party marketplaces like SideQuest (opens in new tab) to exist, even if you have to jump through hoops to use it. It even has its own App Lab (opens in new tab) that’s less restrictive than the “official” store but, much like the upcoming price increase for Quest headsets, it’s entirely likely that Meta maintains these options as a way of skirting around regulation.In the end, though, holding companies like Meta, Apple, and Google accountable for the stores they maintain and the priorities they place on their own apps, services, and products is what’s going to fix this problem.As Sag pointed out to me, the VR industry is still largely in its infancy, and suits like this almost certainly harm growth, rather than encourage it. These types of suits make the most sense in a mature market — say, two key players like Microsoft and Activision Blizzard (opens in new tab) — and I think the FTC’s time would be far better spent on those cases instead.
