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(Reuters) – Twenty-three states, including New York and California, on Monday said they supported a U.S. Federal Trade Commission bid to stop Facebook parent company Meta Platforms Inc from buying virtual content creators. Inside Unlimited Inc, saying the deal would reduce competition in the industry and harm consumers.
The U.S. filed a lawsuit in San Jose, California, a federal court where the FTC in July asked a federal judge to suspend Meta’s acquisition of Inside in Los Angeles last year, which Facebook agreed to buy. Company Inside, developer of the popular virtual fitness app Supernatural.
“Meta’s acquisition of Inside could significantly reduce competition and is likely to create a monopoly by eliminating potential competition, both perceived and actual,” the state said in its amicus summary. Pending court approval on Tuesday, states joined by the District of Columbia and Guam said the deal was threatening. “Dangerous to competing in the emerging virtual space”
A Meta spokesperson on Tuesday called the FTC’s antitrust complaint “bad thinking” and said the amicus conclusion from the state “did not change the fact that there was intense competition in the VR space.”
Meta objected to the amicus filing as inappropriate. But state attorneys say there is no deadline for filing a lawsuit.
The New York Attorney General’s office did not immediately respond to a message requesting comment. And neither did the FTC spokesperson.
Meta has denied the FTC’s allegations and called on U.S. District Judge Edward Davila to reject the agency’s bid for a preliminary injunction and to dismiss the complaint.
New York leads an antitrust lawsuit against Meta over its purchase of Instagram in 2012 for $1 billion and the purchase of WhatsApp for $19 billion in 2014.
New York attorneys in September asked the U.S. Court of Appeals for the DC Circuit to revive the state’s claim after a U.S. District Court judge dismissed the lawsuit.
Utah, which also signed the amicus brief, is leading a group of states in an antitrust lawsuit challenging the way Google runs its app store.
Google has rejected the state’s claim, saying that Google Play offers openness and options that other platforms do not.”
The case is Federal Trade Commission v. Meta Platforms Inc, U.S. District Court for the Northern District of California, No. 5:22-cv-04325.
For the Federal Trade Commission: Abby Dennis of the FTC
For Meta: Eric Hochstadt of Weil, Gotshal & Manges; and Mark Hansen from Kellogg, Hansen, Todd, Figel & Frederick.
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