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FTC sues Meta to block VR platform acquisition

Yahoo Finance tech reporter Allie Garfinkle explains why the Federal Trade Commission (FTC) filed a lawsuit to prevent Meta from buying the VR platform known as Supernatural.

Video transcript

DAVE BRIGGS: The Biden administration is accusing Meta of trying to buy a monopoly in the Metaverse. Here with more on this is Yahoo Finance tech reporter Allie Garfinkle. Allie, good to see you. What's the latest drama here with Meta?

ALLIE GARFINKLE: Always good to see you, Dave. I feel like every week, we kind of just check in, we tune in. And Microsoft couldn't have all the fun, right? So yesterday, the FTC kicked off its trial, where it's looking to prevent Meta from buying an app called Within. It's a VR app developer, known for a fitness app called Supernatural. Now, the FTC is arguing that this acquisition is going to help Meta set up a monopoly in fitness and VR.

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Now, Meta, on the other hand, of course, they're saying they have serious competitors on all sides, mentioning TikTok, Apple among them. And what they're saying is that, whether it's fitness apps, VR, they have competitors. So we'll see what happens here. This is a case that Meta has actually already failed to get dismissed, Dave.

The other thing, too, is that FTC chair Lina Khan has been very proactive and vocal about the fact that she believes big tech needs to be reined in, win or lose in some of these trials. So I'd say there are sort of two things to watch here, Dave. The first is that CEO Mark Zuckerberg is expected to testify in this trial. So that could be interesting.

The other thing, too, is, how is that standoff going to affect Meta, as it's coming off an incredibly difficult year? We've talked about it a lot on this show. It's been a difficult year as they have tried to pivot to the Metaverse as the economy has taken a downturn. So in the end, for me, as a former M&A reporter, one of the things I'm wondering about is how this is going to affect M&A for Meta and big tech, as a whole. And we know Chair Khan is looking for ripple effects down the line. So we'll have to see how it plays out.

DAVE BRIGGS: Stock down 65% this year. Allie Garfinkle, thanks so much. Appreciate that.