MENLO PARK, Calif.—Meta Platforms, a company formerly known as Facebook, received two blows this week as the Federal Trade Commission sued to block its acquisition of Within and the company's disappointing Q2 2022 earnings report pushed its stock down.
On July 28th, following the Q2 2022 earnings report on July 27, Meta’s stock was trading down 6.62% at 2:53 p.m. ET. So far this year, the stock is down 53%.
Meta reported that revenue fell about 1% to $28.8 billion in Q2 2022 from a year earlier. This is the first time that the company reported a revenue decline since it went public. Net income was also down 32% from a year earlier.
Daily active users were up 3%, however, from a year earlier to 1.97 billion in Q2 2022 and monthly active users saw a small increase of 1% to 2.93 billion.
The company also reported that it is continuing to lose huge amounts of money on its effort to build its metaverse business. Its Reality Labs division, which includes augmented and virtual reality related consumer hardware, software, and content, lost $2.8 billion in Q2 2022, and has lost $5.7 billion so far this year.
Meta also faces headwinds in its attempts to further expand that business with its proposed acquisition of Within.
This week the FTC filed a lawsuit suit seeking to block virtual reality giant Meta and its controlling shareholder and CEO Mark Zuckerberg from acquiring Within Unlimited and its popular virtual reality dedicated fitness app, Supernatural.
“Instead of competing on the merits, Meta is trying to buy its way to the top,” said FTC Bureau of Competition deputy director John Newman. “Meta already owns a best-selling virtual reality fitness app, and it had the capabilities to compete even more closely with Within’s popular Supernatural app. But Meta chose to buy market position instead of earning it on the merits. This is an illegal acquisition, and we will pursue all appropriate relief.”
The complaint noted that Meta is already a key player at each level of the virtual reality sector. The company’s virtual reality empire includes the top-selling device, a leading app store, seven of the most successful developers, and one of the best-selling apps of all time, the FTC said.
The complaint alleges that Meta is a potential entrant in the virtual reality dedicated fitness app market with the required resources and a reasonable probability of building its own virtual reality app to compete in the space. But instead of entering, it chose to try buying Supernatural. Meta’s independent entry would increase consumer choice, increase innovation, spur additional competition to attract the best employees, and yield other competitive benefits. Meta’s acquisition of Within, on the other hand, would eliminate the prospect of such entry, dampening future innovation and competitive rivalry, the FTC said.
The Commission voted to authorize staff to seek a temporary restraining order and preliminary injunction by 3-2. Commissioners Noah Joshua Phillips and Christine S. Wilson voted no.
A federal court complaint and request for preliminary relief has been filed in the U.S. District Court for the Northern District of California to halt the transaction.
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George Winslow is the senior content producer for TV Tech. He has written about the television, media and technology industries for nearly 30 years for such publications as Broadcasting & Cable, Multichannel News and TV Tech. Over the years, he has edited a number of magazines, including Multichannel News International and World Screen, and moderated panels at such major industry events as NAB and MIP TV. He has published two books and dozens of encyclopedia articles on such subjects as the media, New York City history and economics.