Meta CEO Mark Zuckerberg takes witness stand in FTC case

Dec 20, 2022, 10:26 AM | Updated: Dec 26, 2022, 8:23 am
FILE - Mark Zuckerberg speaks at Georgetown University, on Oct. 17, 2019, in Washington. Zuckerberg...

FILE - Mark Zuckerberg speaks at Georgetown University, on Oct. 17, 2019, in Washington. Zuckerberg, the CEO of Facebook parent company Meta Platforms Inc., took the witness stand Tuesday, Dec. 20, 2022, in the FTC's case trying to stop the tech giant from buying a virtual reality startup. (AP Photo/Nick Wass, File)

(AP Photo/Nick Wass, File)

SAN JOSE, California (AP) — Mark Zuckerberg, the CEO of Facebook’s parent company Meta, took the witness stand Tuesday in a trial over U.S. antitrust regulators’ effort to stop the tech giant from buying a virtual reality startup called Within Unlimited.

At issue is whether Meta’s acquisition of the small company that makes a VR fitness app called Supernatural will hurt competition in the emerging virtual reality market. If the deal is allowed to go through, the Federal Trade Commission argues, it would violate antitrust laws and dampen innovation, hurting consumers who may face higher prices and fewer options outside platforms controlled by Meta Platforms Inc.

Meta, meanwhile, wants to poke holes in the FTC’s argument that there even exists a distinct market for what the FTC calls “VR dedicated fitness apps.”

During his testimony at the trial in San Jose, California, Zuckerberg seemed to play down the notion that fitness is a distinct, top category in VR. He said, while fitness is one “use case” for virtual reality, other uses — namely games, communication and socializing and work — have been the primary ones that Meta has been focusing on.

“While we focused on a number of use cases,” Zuckerberg said, there was a common order of popularity — with games, social and work as the top three and “sort of a longer tail” of other uses for VR that includes fitness.

Whether or not VR fitness apps are a distinct market is key in the case because the FTC is arguing that Meta’s entry into this space through the Within acquisition would stifle competition. If there’s no defined market, it becomes more difficult to prove that case.

The FTC, however, argues that not only is Meta a potential entrant into this market, but that it had the resources and ability to create its own VR fitness app instead of acquiring the top independent player in the market.

FTC lawyer Abby Dennis pointed out that in Facebook’s early days, the company Zuckerberg founded in his Harvard dorm room rejected acquisition offers from a host of big tech companies — including Google, Yahoo and Microsoft.

“You would agree with me that Facebook continued to successfully innovate even though it never got acquired?” she asked Zuckerberg, who replied affirmatively.

And “the reason why Facebook has been able to succeed for 20 years is because it continues to innovate even though it never got acquired?” she continued, and Zuckerberg responded, “Yes.”

But the Meta CEO later testified that even though his company was “looking at” developing its own VR fitness app before deciding to acquire Within Unlimited in 2021, the business environment has changed and “there is almost no chance” it would start such a project today.

Meta, like other companies reliant on online advertising for revenue, saw a big business boost during the pandemic lockdown when people were staying home glued to their phones and computers. But that didn’t last. Online ad spending is on the decline, competition, notably from rival TikTok, is growing, and Meta recently laid off 13% of its workforce.

Given the current business and economic environment, Zuckerberg said that if Meta had started a project to build a VR fitness app and “it didn’t have any traction,” it would have likely canceled it.

The case, expected to wrap up Tuesday, is being heard by U.S. District Judge Edward Davila, who also oversaw the trial of disgraced Theranos founder Elizabeth Holmes and her partner Ramesh “Sunny” Balwani. Both were sentenced to over a decade in prison for their roles in the company’s blood-testing hoax.

Meta had originally planned to close the deal by Dec. 31, but this week it extended that date to Jan. 31, pending the outcome of the case. Meta’s Chief Technology Officer Andrew Bosworth said in Monday testimony that the company needs to get the deal done soon, and if the case isn’t resolved in a timely fashion, it will probably walk away.

“These things, the longer they are drawn out, the harder it is for both entities to operate,” Bosworth said.

AP Technology Writer Michael Liedtke contributed.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


Associated Press

Dutch electronics giant Philips to cut 6,000 jobs worldwide

THE HAGUE, Netherlands (AP) — Dutch consumer electronics and medical equipment maker Philips said Monday it is cutting 6,000 jobs worldwide over the next two years as it revealed a net loss of 1.6 billion euros ($1.7 billion) in 2022, down from a net profit of 3.3 billion euros last year. The job losses come […]
2 hours ago
The Diesel price for trucks is displayed at a gas station in Frankfurt, Germany, Friday, Jan. 27, 2...
Associated Press

Will Europe’s ban on Russian diesel hike global fuel prices?

FRANKFURT, Germany (AP) — Europe is taking another big step toward cutting its energy ties with Russia, banning imports of diesel fuel and other products made from crude oil in Russian refineries. The European Union ban takes effect Feb. 5 following its embargo on coal and most oil from Russia. The 27-nation bloc is trying […]
2 hours ago
FILE- Dried branches of a tree stand outside Adani Corporate House in Ahmedabad, India, Friday, Jan...
Associated Press

Adani accuses short-seller Hindenburg of attacking India

NEW DELHI, India (AP) — India’s Adani Group, run by Asia’s richest man, has hit back at a report from U.S.-based short-seller Hindenburg Research, calling it “malicious”, “baseless” and full of “selective misinformation.” Shares in the conglomerate have suffered massive losses since Hindenburg issued its report alleging fraud and other malfeasance. On Monday, shares in […]
2 hours ago
Garbage covers the base of a waterfall of the Nairobi River, which traverses informal settlements a...
Associated Press

Is there hope for a dying river in Kenya’s growing capital?

NAIROBI, Kenya (AP) — Vultures scavenge for dead animals along a river turned sewer conduit in Kenya’s capital Nairobi. Its waters turn from clear to black as it traverses informal settlements and industrial hubs. The river and its tributaries cross Kibera, known as Africa’s largest slum with close to 200,000 residents, and other informal settlements. […]
2 hours ago
FILE - A staff walking near a Nissan logo at Nissan headquarters is seen though a window on May 12,...
Associated Press

Automakers Renault, Nissan make cross-shareholdings equal

TOKYO (AP) — Nissan and Renault have changed their mutual cross-shareholdings equal at 15%, ironing out a source of conflict in the Japan-French auto alliance, both sides said Monday. Up to now, Renault Group has held a 43.4% stake in Nissan Motor Co., potentially giving it a larger say in how the company is run. […]
1 day ago
FILE - North Koreans visit and pay respect to the statues of late leaders Kim Il Sung and Kim Jong ...
Associated Press

Russian embassy says North Korea lifted lockdown in capital

SEOUL, South Korea (AP) — Russia’s embassy in North Korea says the country has eased stringent epidemic controls in capital Pyongyang that were placed during the past five days to slow the spread of respiratory illnesses. North Korea has not officially acknowledged a lockdown in Pyongyang or a re-emergence of COVID-19 after leader Kim Jong […]
1 day ago

Sponsored Articles

(Pexels Photo)...

Sports gambling can be fun for adults, but it’s a dangerous game for children

While adults may find that sports gambling is a way to enhance the experience with more than just fandom on the line, it can be a dangerous proposition if children get involved in the activity.
(Desert Institute for Spine Care photo)...

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
Quantum Fiber

How high-speed fiber internet can improve everyday life

Quantum Fiber supplies unlimited data with speeds up to 940 mbps, enough to share 4K videos with coworkers 20 times faster than a cable.
Meta CEO Mark Zuckerberg takes witness stand in FTC case