Facebook Hit with Antitrust Lawsuits as Germany Opens Investigation into Their VR Practices

Let’s get the big stuff out of the way: Competition enforcers have brought a historic lawsuit against Facebook. The Federal Trade Commission and 48 state attorneys general allege it built a “personal social networking monopoly through...anticompetitive conduct.” The lawsuit calls for the spinoff of WhatsApp and Instagram.

FB will dispute how authorities define the relevant market. It will point to competitors like TikTok. The government has a steep legal battle ahead—and it could take years to litigate.

In the interim, let’s go back to our wheelhouse...

...where the tentacles of officialdom have reached the metaverse. At least two competition authorities have their ocular gaze trained on Facebook Reality Labs, FB’s newly rechristened mixed reality org.

• Yesterday, the Bundeskartellamt (Germany’s Federal Cartel Office) opened a new investigation into FB’s VR practices. Bloomberg recently got wind of a similar probe from the U.S. Justice Department.

Under investigation? Activity in broad daylight.This summer, FB controversially began phasing out Oculus log-ins for its eponymous VR headsets. A Facebook account is required to use the new Quest 2 released in October; Support for current Oculus accounts ends on Jan. 1, 2023.

Big Blue

Why did FB precondition access to its (great + growing) VR kingdom on an identity layer in Big Blue, the core app? Why did it merge the technical back-end of its messaging services or append “from Facebook” to the branding of Instagram and WhatsApp?

Integrating certain functions makes some technical and content moderation challenges easier. But a popular theory for the above is that it cuts regulators off at the pass by making FB more difficult to break up. Ironically, that theory can only be substantiated by regulators, who could pry necessary info from FB and publicly disseminate it.

Bottom line: FB may triumph in court, and other probes may not materially impact the company. But tightening scrutiny could preclude further integrations and M&A activity—Kustomer deal notwithstanding.