Mark Zuckerberg Testifies About Metas Virtual Reality Ambitions

Mark Zuckerberg Testifies About Meta’s Virtual Reality Ambitions

Mark Zuckerberg Testifies About Metas Virtual Reality Ambitions

Meta’s chief executive made a rare court appearance as the Federal Trade Commission tries to block his company’s purchase of the virtual reality start-up Within.

Mark Zuckerberg, the chief executive of Meta, was asked a series of questions in federal court on Tuesday about his aspirations for the immersive online world of the metaverse.

Was his company interested in virtual reality? Was it investing in augmented reality? Mr. Zuckerberg responded with clipped yes and no answers until a lawyer asked whether Meta, which owns Facebook, Instagram and WhatsApp, was “trying to shape the future of technology.”

Mr. Zuckerberg hesitated, moved in his seat and replied: “Yes. That’s a fairly broad statement, but yes.”

The exchange came on the seventh day of a hearing in San Jose, Calif., that has the potential to reshape how tech behemoths buy start-ups and to stretch the boundaries of antitrust law. The case is set to determine whether the Federal Trade Commission will be granted an injunction to block Meta’s $400 million acquisition of Within, a small company that makes a popular virtual reality fitness game.

The F.T.C.’s challenge of the acquisition is highly unusual. While antitrust law has traditionally focused on preventing deals in established markets and mature areas, the agency is arguing that Meta’s acquisition of Within could snuff out competition in a nascent market — virtual reality — before it’s even clear if that market will thrive. If the F.T.C. blocks the deal, it could set a precedent for antitrust law.

The stakes are high for both sides. Lina Khan, the F.T.C. chair and a prominent critic of Silicon Valley, has pledged to check the tech giants’ power and take them to court more often. She has signaled that she is willing to sustain courtroom losses if they help expand the uses of antitrust law.

And Meta, which has been spending billions of dollars to develop virtual reality products and has bought many start-ups over time, is trying to use the deal for Within and other small companies to become a power in the emerging field of the metaverse.

On Tuesday, Mr. Zuckerberg was the star witness. While he has made plenty of public appearances and spoken before Congress, the 38-year-old billionaire has rarely testified in court. In one other instance, in 2017, he testified in a federal case involving Oculus, a virtual reality company that Facebook had bought for more than $2 billion, over accusations from a video game publisher that Oculus stole its intellectual property. Facebook lost that case.

Mr. Zuckerberg — wearing a blue suit similar to the color of Facebook’s logo, a bright blue tie and a mask — took the stand just after 9 a.m. The courtroom was packed with lawyers, journalists and spectators, in contrast to Monday, when the room was half empty.

During nearly two hours of testimony, an F.T.C. lawyer sought to establish Mr. Zuckerberg’s excitement over fitness apps, implying that he wanted to corner the market on virtual reality fitness apps. Fitness, the lawyer said, would bring more women and older users to the metaverse and establish Meta’s virtual reality products within the general population.

Mr. Zuckerberg pushed back, saying that while he has discussed fitness apps and how they can work well in virtual reality, they aren’t his focus.

“We talk about games, but also we talk about social being the most important to us,” he said, referring to his company’s roots as a social network. Meta is working on creating apps devoted to productivity and work, he said, as well as “general-use cases.”

Meta announced that it would buy Within in October 2021, soon after Mr. Zuckerberg declared that his social network was transforming itself into a metaverse company. In a blog post about the Within deal, Meta was effusive.

“We believe fitness will be a massive success in VR,” Jason Rubin, a Meta vice president, wrote at the time.

Within makes a popular virtual reality fitness game, Supernatural.Supernatural

Then in July, the F.T.C. sued to block the deal. It asked the U.S. District Court for the Northern District of California to stop the deal from closing and filed a complaint challenging it in the agency’s in-house court.

On Dec. 8, Judge Edward J. Davila of the District Court began hearing arguments over the injunction. In an opening statement, Abby Dennis, a lawyer from the F.T.C., said Meta could have built a competitor to Within’s popular virtual reality fitness game, Supernatural, on its own.

Hal Singer, an economist who is one of the F.T.C.’s witnesses, later testified that the deal harmed competition. Aaron Koblin, the founder of Within, also appeared as a witness, as did Mark Rabkin, a Meta executive. Mr. Rabkin said Meta had considered adding a fitness element to a virtual reality game it owned, Beat Saber, but hadn’t pursued the idea.

On Monday, Meta’s chief technology officer, Andrew Bosworth, who oversees the company’s virtual reality work and was involved in the Within acquisition, testified that Meta saw itself as “a platform, and the idea of a platform is that there is so much software that no one company could possibly create all of that software.”

Meta prefers to acquire companies that created viral games, Mr. Bosworth said, because it isn’t easy to imitate that success. He added that Meta would not favor games or programs it bought over those from other parties.

Hours before his testimony, Mr. Bosworth published a 2,000-word blog post defending Meta’s commitment to artificial and virtual reality, and stressing that the company sees it as a competitive space.

“As new devices hit the market, we believe our industry will enter a new era of growth and competition that will bring enormous benefits to users and the developer community,” he wrote.

Mr. Zuckerberg emphasized that point on Tuesday in court, arguing that his company’s approach to the metaverse would benefit developers with more money for and interest in virtual reality apps. Some apps will be acquired by his company, he said, while others will thrive independently.

If the court approved the injunction, it would have a chilling effect, Mr. Zuckerberg said.

“Maybe Meta gets banned from everything going forward,” he said. “That would make it so investors are less excited for investing in this space.”

Judge Davila pressed Mr. Zuckerberg on whether Meta could fund and support developers without acquiring them. When Mr. Zuckerberg speaks about fitness apps at a public conference, the judge asked, is he giving hints that he wants to buy a specific type of app?

“I don’t think I have anything that clear in mind,” Mr. Zuckerberg said. His goal, he said, is to expand on his company’s previously work by controlling the platform on which apps are built. That would be unlike Facebook and Instagram, which are limited by what mobile phones or computers can support.

“I’ve spent most of the history of our company building software or mobile products on small screens where it is hard to have a lot of social interactions. Our competitors controlled those platforms, so we were limited in what we could build,” he said. “I am excited for the next generation of computing.”

No further sessions are scheduled for the hearing after Tuesday, when arguments were expected to be completed.

Ryan Mac contributed reporting.

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