Since becoming Chair of the Federal Trade Commission (FTC), Lina Khan has used her agency powers to launch attacks on various big businesses solely for the crime of being too successful. The latest effort in pursuit of this bold, egregious agenda comes in the form of a meritless lawsuit launched against Meta’s acquisition of Within, a VR fitness app developer. This lawsuit attempts to block this acquisition, despite not providing grounds for doing so that abide by current antitrust rules. The effort to restrict Meta’s growth is part of Khan’s politically motivated agenda.
In the lawsuit, the FTC goes out of its way to construe an unusually narrow market definition to justify its irrational concerns of Meta attempting to invade a highly concentrated market. The market definition conveniently excludes fitness-specific VR apps and broad connected fitness apps, intentionally ignoring the existence of competitors such as FitXR and Peloton. The FTC also contends that Meta is attempting to “control” the VR ecosystem. The evidence supporting that claim is flimsy at best and nonexistent at worst. Meta has been consistently making multi-billion-dollar investments to spur innovation in the field. This company also happens to not force developers or consumers to use its Quest Store, despite legal precedent suggesting that even if they did, it would not be an antitrust violation.
The legal principles that the FTC uses within the lawsuit relies on Meta’s size as the biggest reason for blocking this acquisition. Unfortunately, this theory requires the court to accept antitrust principles that are inconsistent with the current law. Instead, it necessitates the court to adopt the radical progressive premise that big companies are bad, solely due to their size. The FTC seemingly wants the court to assume that just because Meta is a large company that has a strong presence in other markets, that they are a threat to every market. Such an analysis ignores the complicated realities that businesses face when expanding into new markets and innovating new products. Meta’s size across other industries determines nothing about Meta’s competitive strength in the VR Fitness App space.
In reality, this politicized lawsuit is the second bite at the apple for an agency that has already embarrassed itself in court in a different lawsuit against Meta. Last year, Obama-appointed Judge James Boasberg dismissed another FTC complaint against Meta, saying “The FTC’s complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market. It is almost as if the agency expects the court to simply nod to the conventional wisdom that Facebook is a monopolist.” That case moved to discovery earlier this year.
The FTC needs to be held accountable for their politically motivated litigation against Meta. This supposedly “unbiased” and “independent” agency has a target on the backs of large companies. They are unfairly making determinations about large companies’ actions within other industries before they have even entered the space. This discriminatory approach to litigation will have a disruptive effect on innovation across all industries if it becomes the normal functioning procedure for the FTC.
Photo Credit: E. Gillet, CC 1.0 Universal https://www.flickr.com/photos/195341417@N07/51982115805/in/photolist-7Hkggg-2kS3v1E-2nbQQCY-2nbPLKi-K1Jz1h-K1JyJA-gvkQT4-2kUd5qE-gvkR6D-2nbPLJg-gvms6X-gvms6g-K1JzjU-2nctW8x-2ncsxA9-2nctVZX-2ncr7mL-2nctWbd-2nctWaw-2nctW6U-2ncr7hH-2ncr7gF-2ncrs6c-2ncr7j1-2nctW6d-2ncrsg2, via Flickr