Lina Khan’s Antitrust Crusade Vindicated
▼ Summary
– In 2021, Meta heavily invested in the metaverse and VR, acquiring studios like Within, the maker of the popular fitness game Supernatural.
– The FTC, under Lina Khan, sued to block Meta’s acquisition of Within, arguing it would illegally reduce future competition in the VR market, but ultimately lost the case.
– Meta later shifted its focus away from the metaverse toward AI and smart glasses, shutting down Supernatural and leaving its dedicated user community feeling abandoned.
– Khan’s FTC approach sought to update antitrust enforcement for digital markets, highlighting how unchecked acquisitions can entrench monopoly power and harm innovation.
– The case illustrates the human cost and market risks when dominant tech companies acquire and later discontinue services that are vital to specific communities.
The rapid evolution of the tech landscape often leaves communities and products vulnerable to the shifting priorities of industry giants. The story of the VR fitness game Supernatural and its acquisition by Meta serves as a stark case study in the real-world consequences of unchecked market consolidation. What began as a promising virtual community was ultimately shuttered, leaving dedicated users feeling abandoned. This outcome highlights the ongoing debate about antitrust enforcement in digital markets, where the potential for future harm can be as critical as present-day competition.
When the Federal Trade Commission, under then-Chair Lina Khan, moved to block Meta’s acquisition of Within, the studio behind Supernatural, the lawsuit was met with skepticism. Critics argued it was an overreach, focusing on a nascent market with unclear competitive boundaries. The legal challenge centered on a novel argument: that Meta was attempting to “buy its way to the top” in virtual reality by systematically acquiring studios, thereby stifling future innovation and choice. The court ultimately ruled against the FTC, finding insufficient evidence that the deal would harm the VR fitness market. Meta completed the purchase in 2023.
Less than two years later, Meta announced it would cease creating new content for Supernatural as part of broader cuts to its Reality Labs division. For the game’s passionate user base, this confirmed their worst fears. Many viewed the initial acquisition as a “kiss of death,” believing the studio’s fate became tied to Meta’s corporate strategy rather than the community’s needs. The shutdown demonstrated a tangible human cost, transforming an abstract legal debate into a personal loss for players who relied on the game for fitness, social connection, and routine.
Reflecting on the case, Khan notes that it was part of a necessary effort to update antitrust thinking for the digital age. For decades, a hands-off approach prevailed under the assumption that fast-moving tech markets would self-correct. Experience has shown, however, that network effects and data advantages can entrench monopoly power rapidly, making proactive scrutiny essential. Khan points to the hundreds of acquisitions by major tech firms that went unchallenged in the past, some of which,like Instagram and WhatsApp,fundamentally shaped their markets.
The core principle, she argues, is that genuine competition drives innovation. When dominant companies face credible threats from smaller rivals, they are pushed to improve their own offerings. Allowing a giant to simply purchase potential competitors removes that pressure. While it is impossible to know if an independent Supernatural would have thrived, remaining separate from Meta would have insulated it from the conglomerate’s sudden pivot toward artificial intelligence and smart glasses.
This pattern of corporate capriciousness is familiar to anyone who follows technology. Companies like Google and Amazon have long histories of launching and then abandoning products, regardless of user loyalty. Meta itself has shuttered multiple acquired VR studios since 2019. This behavior creates a climate of uncertainty that chills investment and development. If the dominant platform holder signals inconsistent commitment, independent developers have little incentive to build for its ecosystem, potentially stalling the entire sector’s growth.
The situation raises difficult policy questions. Relying on large corporations to nurture and sustain the products they acquire has repeatedly proven unreliable. The shuttering of Supernatural illustrates how communities can be collateral damage in the pursuit of broader corporate strategy. As the VR industry seeks a path forward beyond Meta’s current ambivalence, the need for a diverse and competitive marketplace,supported by vigilant antitrust oversight,becomes ever more apparent. The goal is not to predict the future perfectly, but to foster an environment where innovation and community investment can flourish outside the shadow of a single company’s whims.
(Source: The Verge)
