• Meta wants to buy VR fitness app Supernatural and its developer, a company called Within.
  • The Federal Trade Commission announced it’s suing to block the acquisition.
  • The FTC said by acquiring Within Meta would be illegally eliminating competition.

Meta’s plans to push into the metaverse have received a setback in the form of a Federal Trade Commission lawsuit.

The FTC announced Wednesday it is seeking to block Meta from acquiring a virtual-reality company called Within. Three out of five commissioners voted in favor of the lawsuit, the FTC said in a press statement.

Specifically Meta is interested in a VR fitness app made by Within called Supernatural. Meta announced its deal to buy Within in October 2021, the same month CEO Mark Zuckerberg announced a rebranding of the company — then called Facebook — to focus on the metaverse.

In the FTC’s lawsuit — filed against Meta, Zuckerberg, and Within — the agency says Meta would “substantially lessen competition or tend to create a monopoly” in the VR fitness market if allowed to buy Within.

The FTC said Meta’s proposition to buy Within was a way for the tech giant to eliminate competition.

“Instead of competing on the merits, Meta is trying to buy its way to the top,” FTC Bureau of Competition Deputy Director John Newman said in the agency’s press statement.

Meta did not immediately respond when contacted by Insider for comment.

The lawsuit comes at a sensitive moment for Meta. The company revealed its first-ever drop in revenue on Wednesday, and its Q2 earnings showed it spent $2.8 billion on its metaverse tech division Reality Labs.

Meta has already sunk billions into Reality Labs, and Zuckerberg told investors in May he believes the division will lose the company money for the next three to five years.

Zuckerberg told investors on Wednesday that he’s planning to tighten Meta’s purse-strings, saying the company will “steadily reduce head-count growth over the next year.”

“This is a period that demands more intensity, and I expect us to get more done with fewer resources,” Zuckerberg added.