• by Wendy Davis  @wendyndavis, February 1, 2023

A federal judge has rejected the Federal Trade Commission's request to block Meta from purchasing Within Unlimited, developer of the virtual fitness app Supernatural, according to published reports.

Late Tuesday, U.S. District Court Judge Edward Davila in the Northern District of California issued two written orders in the case, both under seal. One of the orders reportedly rejects the FTC's request for a preliminary injunction that would have prevented Meta from proceeding with the estimated $400 million acquisition. The second order reportedly stays the decision for seven days, effectively maintaining the status quo while the FTC decides whether to ask the 9th Circuit Court of Appeals to intervene.

As of Wednesday afternoon Davila's orders remained sealed, and his reasons for siding with Meta remain unclear.

The rulings come in an antitrust lawsuit brought by the FTC in July, when the agency alleged that Meta's proposed acquisition of Within would bring Meta “one step closer to its ultimate goal of owning the entire 'Metaverse.'”

The agency alleged in its complaint that the estimated $400 million acquisition would lead to reduced competition in the market for virtual reality fitness apps.

The FTC initially claimed that Meta's Beat Saber competes with Supernatural in the market for virtual reality fitness apps -- meaning the acquisition would eliminate one of Meta's rivals.

But in October, the agency scaled back its claims, alleging in an amended complaint that the merger could diminish “potential competition” in the market for dedicated virtual reality fitness apps.

More than two dozen attorneys general sided with the FTC, arguing in a friend-of-the-court brief that he should issue a preliminary injunction blocking the deal.

“If the preliminary injunction is not granted, the acquisition will proceed, and Meta will be able to access Within’s confidential strategic information and to begin integrating the firms,” the attorneys general wrote. “Immediate harms to competition and innovation may result.”