[Asia Economy Reporter Yujin Cho] A court has ruled in favor of Meta in a lawsuit filed by the U.S. Federal Trade Commission (FTC) seeking to block Meta's acquisition of the virtual reality (VR) company Within. This outcome is expected to put a brake on the Biden administration's efforts to regulate big tech expansion.
According to Bloomberg and The Wall Street Journal (WSJ) on the 1st (local time), Edward Davila, a judge at the U.S. District Court for the Northern District of California in San Jose, rejected the FTC's preliminary injunction request to halt Meta's merger and acquisition (M&A) of Within.
The court plans to begin trial proceedings on the 13th as requested by the FTC, but WSJ reported that typically, when a judge denies a preliminary injunction, many cases are dropped. The FTC may decide by next week whether to appeal the dismissal of the injunction request.
Foreign media have evaluated this result as the first defeat for the FTC, a major pillar of the Biden administration's big tech regulation efforts, in an antitrust lawsuit. Bloomberg stated, "The defeat of the FTC, led by the staunch regulator Lina Khan, in its first lawsuit aimed at blocking big tech mergers and acquisitions, represents a significant setback for the FTC's big tech regulation."
Within is a startup that developed the app "Supernatural," which helps users perform full-body workouts through the VR device Oculus. Meta pursued the acquisition in October 2021. However, the FTC filed the lawsuit arguing that Meta's acquisition was intended to build market dominance in the VR sector, similar to how it strengthened its monopoly power in the social media market by acquiring Instagram and WhatsApp.
This lawsuit is the first case in which the FTC has sued Meta, which has expanded its dominance in its core business by acquiring dozens of companies over the past decade. The industry has been closely watching, noting that the outcome could put a stop to big tech's attempts at corporate mergers and acquisitions.
Both inside and outside the industry, there is speculation that this result could bring a new phase to Microsoft’s (MS) acquisition of Activision Blizzard, which has been at risk of collapse.
Earlier, in January last year, the FTC filed a lawsuit opposing Microsoft’s $68.7 billion (approximately 85 trillion won) acquisition of North America’s largest game developer, Activision Blizzard. This mega deal, the largest in IT industry history, has faced difficulties due to the FTC’s intervention. Although the lawsuit will take months to conclude, the industry has reacted by saying that the acquisition has effectively been halted as competition authorities have increased the level of big tech regulation.
Bloomberg commented, "The denial of Meta’s preliminary injunction request to halt the Within acquisition will send a message regarding the FTC’s future actions as it escalates regulatory pressure on big tech, including the halt of Microsoft’s Activision acquisition."
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