In a midterm election year, could there be a more obvious target for politicians and their ambitious regulatory flunkies than Facebook/Meta? Talk about low-hanging fruit -- picking on the techies is always good for a cheap shot by the know-nothings in D.C. Meta (formerly Facebook) is quite a tasty morsel, especially since everyone already hates co-founder and CEO Mark Zuckerberg as well as the other billionaire bros, and for a million good reasons. Zuck, of course, seems to go out of his anhedonic way to make himself as insufferable and unpalatable as possible. What a morale booster to tell everyone in your company (and the world) at all-hands meetings that "there are probably a bunch of people at the company who shouldn't be here." And to advise them further that his feelings, if he had any, wouldn't be hurt if they left.
So, as much as Mark and his minions sorely deserve their comeuppances, it's still sad and disappointing, but not surprising, to see the Federal Trade Commission sue to prevent Meta's latest minor acquisition. Meta is trying to buy a tiny company and its video fitness app, which is built to work with Meta's own products. This bogus action relates to a miniscule segment of two broad markets -- fitness and training -- with hundreds of competitors already producing similar video-augmented and enabled fitness apps.
Lina Khan, the new wunderkind and chair at the FTC, has invented and defined this imaginary and hyper-narrow market while carefully and stupidly ignoring the presence of any number of other major players in these spaces. Do the names Sony, Microsoft, and Nintendo ring any bells at all for these bozos, who apparently believe that no one in the real world will notice their curious omissions? Saying something's a market doesn't make it so unless you're doing it for self-serving reasons, which pretty much defines this FTC.
Meta's plan is to acquire Within Unlimited, a small virtual-reality company that produces a fitness app called Supernatural, which is specifically designed to work with Meta's own Oculus Quest headset. The FTC objects. Or, perhaps more accurately, as Bloomberg has reported, Khan alone objects and has ignored her own staff's recommendations against pursuing such a fatally flawed and publicity-motivated action.
I guess in a do-nothing D.C. enforcement world, we should in theory be grateful for anyone willing to act on behalf of the citizenry, but this action is rank stupidity. With the Supreme Court blowtorching regulatory overreach, now seems like a terrible moment to be trying to make new law, invent bizarre market definitions and limitations, and expand the reach of any government agency. But there's nothing better or easier for an "aggressive" regulator to do to generate noise and headlines than to launch a useless and time-wasting lawsuit against a giant tech company.
This action is wrongheaded for so many reasons. It actively encourages reinventing the wheel rather than building off existing tech. It ignores the tremendous boost in distribution, exposure, and access the deal will provide for the current and future offerings of Within, which would take years for any startup to build on its own. And, most of all, the FTC ignores the best interests of Within itself, which built a product expressly for Meta's new VR universe.
This whole process couldn't be worse news for entrepreneurs and startups. No self-respecting entrepreneur wants anything to do with helpful government regulators inserting themselves into the complex and rapidly changing marketplaces for new technologies. Thanks, but no thanks -- you've never run anything or worried about making a payroll as funds disappear.
The real problem and the underlying truth come from an earlier tech era when an aggressive startup never knew whether Microsoft was going to buy them or bury them. That is exactly the sweepstakes and the lottery ticket life that every entrepreneur signs up for and dreams about. The odds are long, the journey is even longer, but the rainbow at the end in the rarest of cases is real and unbelievably rewarding. Going it alone rather than going for the gold is a bad bet in 99 percent of the cases, and everyone out there in the real startup world knows that.
Having the FTC trying to prevent selected market-driven transactions and "level the playing field" in emerging spaces that its own technical personnel barely understand is every developer's worst nightmare. Sure, the odds are harsh and the risks of being rolled over or left behind are high, but they're no worse or more imposing than the everyday ups and downs and challenges of building any successful business.
Bureaucrats barging in to block deals and whisk away the brass ring at the last minute for the few young companies on the cusp of actually winning the brutal battle to build something better than the big guys -- something so attractive that Meta would rather buy it than try to build it itself -- is exactly what we want to encourage, not preclude. That's what creates the external pressures on the bigger and more complacent companies and ultimately drives the growth and continued innovations we see all around us.
Protecting startups from themselves and the big bad tech companies and removing the pot of gold that an acquisition represents after years of risk, pain, and hard work is a foolish and uninformed approach that is far more likely to discourage and diminish competition and innovation than promote it. The smartest and best thing the FTC can do these days is to look the other way and not try to make up for past oversights and inaction by initiating ill-considered and damaging enforcements that will ultimately come to nothing.