• by Wendy Davis  @wendyndavis, February 6, 2023

The Federal Trade Commission won't ask a federal appellate court to block Meta Platforms from purchasing Within Unlimited, developer of the virtual fitness app Supernatural, an agency spokesperson said Monday.

The FTC's decision paves the way for Meta to complete the estimated $400 million purchase on Tuesday, when a temporary restraining order that blocked the deal is set to expire.

Last week, U.S. District Court Judge Edward Davila in the Northern District of California rejected the FTC's request for a preliminary injunction that would have prevented the purchase. At the time, Davila extended the temporary restraining order until February 7, giving the FTC one week to decide whether to appeal to the 9th Circuit.

Davila said in the ruling -- which was unsealed late Friday -- that the FTC failed to prove that Meta likely would have created its own virtual-reality dedicated fitness app, if it had not agreed to purchase Within Unlimited.

Instead, he wrote, the evidence indicated that Meta would only have entered that market by acquisition, or a Beat Saber collaboration with a fitness content creator.

“The court is unaware of any evidence that Meta considered building a [virtual reality] fitness app on its own,” he wrote.

“Meta’s undisputed financial resources and engineering manpower are counterbalanced by its necessary reliance on external fitness companies or experts to provide the actual workout content and a production studio for filming and post-production,” Davila wrote. “Furthermore, the record is inconclusive as to Meta’s incentives to enter the relevant market.”

The ruling came 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 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.

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.

A Meta spokesperson stated that the company look forward “to closing the transaction soon,” and that the deal “will bring pro-competitive benefits to the ecosystem and spur innovation that will benefit people, developers, and the [virtual reality] space more broadly.”

In addition to the lawsuit in federal court, the FTC brought an administrative complaint against Meta over the proposed deal. That complaint, which is pending in front of an internal FTC judge, was still active as of Monday. It's not yet clear whether the FTC will continue to pursue that complaint.