FTC Antitrust Lawsuit Adds to Meta Platforms’ META Stock Woes

  • The Federal Trade Commission (FTC) is suing Meta Platforms (META).
  • The regulator alleges that Meta is engaging in anti-competitive behavior with a recent acquisition.
  • This suit continues a long line of squabbles between the two parties.
FTC - FTC Antitrust Lawsuit Adds to Meta Platforms’ META Stock Woes

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Meta Platforms (NASDAQ:META) is downtrodden today. The META stock is suffering at the hands of a poor earnings season. But adding to the woes is some rough news regarding the company and the Federal Trade Commission (FTC). It seems as though the FTC is coming after the tech giant over its recent acquisition attempts; fears are building among regulators that the company is attempting a monopoly over the metaverse industry.

The news today isn’t the first time the two bodies have bumped heads. In late 2020, the FTC began a long-lasting court battle over the company’s alleged monopolization of the social media space. The catalyst for the suit was an acquisition the company — then still going by Facebook, Inc. — made in 2012. Of course, the event in question was that of Facebook’s Instagram purchase.

Back then, the FTC asserted that Facebook retained a monopolization over the social media industry through anticompetitive activities. Indeed, the company had made a great many acquisitions throughout the 2010s. Last year, the FTC made claims that these acquisitions were due to a “failure to innovate” within the space, resulting in its “buy or bury” scheme.

All the while, the FTC has been imposing increasingly large fines on the company for other misdoings. A 2019 fine levied at the company cost $5 billion. The fine charged Facebook for misleading users about how much of their private data they control. This would, two years later, open up a massive can of worms around Facebook’s abuse of private data.

In late 2021, the company saw its rebrand to Meta, anticipating a fresh start. Moving into the metaverse space, the company is a pioneer for a new wave of social tech. Yet, as today’s news shows, it’s still simply repeating past mistakes.

FTC Suit Accuses Meta Platforms of Monopolization

META stock holders are disappointed with a 6% downturn on the heels of the company’s first quarterly loss since going public. However, there’s more to be upset with as the FTC charges the company once again with anti-competitive behavior.

Releasing in December of 2021, Horizon Worlds is Meta Platforms’ new poster child. It’s the first metaverse space by one of the biggest tech companies, and it brings the company’s years-long push into the hardware space a boost; the company has sold nearly 15 million of its Quest 2 headsets, a piece of tech necessary for entering the Horizon Worlds metaverse.

But recently, regulators fear the company is getting too out of line with its acquisitions. Indeed, the company has made at least a dozen acquisitions pertaining to its metaverse and related technology since 2016. Now, the FTC is opening another antitrust lawsuit against Meta.

“Instead of competing on the merits, Meta is trying to buy its way to the top,” remarks John Newman, Deputy Director of Competition at the FTC. The regulator adds that Meta already has to its name the best selling device, a top virtual reality (VR) app store, seven top developers and some of the best-selling apps in the space.

Pushing the FTC to sue, though, is the company’s October 2021 acquisition of Within. The app developer is known for its flagship app Supernatural; the fitness app combines cardio workouts with VR, punctuated by a playlist of top-charting pop music. With this purchase, FTC says Meta is trying to “buy its way to the top” of the VR fitness space, rather than properly competing. Indeed, the company already has its own Beat Saber app, which closely mirrors the model of Within’s app. Were this acquisition to succeed, the FTC alleges it will stifle the competitive innovation of the space.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

Article printed from InvestorPlace Media, https://investorplace.com/2022/07/ftc-antitrust-lawsuit-adds-to-meta-platforms-meta-stock-woes/.

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