Mark Zuckerberg, the chief executive of Meta, was asked a series of questions in federal court on Tuesday about his aspirations for the immersive online world of the metaverse.
Was his company interested in virtual reality? Was it investing in augmented reality? Mr. Zuckerberg responded with clipped yes and no answers until a lawyer asked whether Meta, which owns Facebook, Instagram and WhatsApp, was “trying to shape the future of technology.”
Mr. Zuckerberg hesitated, moved in his seat and replied, “Yes, that’s a fairly broad statement, but yes.”
The exchange came on the seventh day of a hearing in San Jose, Calif., that has the potential to reshape how tech behemoths buy start-ups and to stretch the boundaries of antitrust law. The case involves the Federal Trade Commission seeking to block Meta’s $400 million acquisition of Within, a small company that makes a popular virtual reality fitness game. The hearing is set to determine whether the F.T.C. will be granted an injunction to stop the deal.
The F.T.C.’s challenge of the acquisition is highly unusual. While antitrust law has traditionally focused on preventing deals in established markets and mature areas, the F.T.C. is arguing that Meta’s acquisition of Within could snuff out competition in a nascent market — virtual reality — before it’s even clear if that market will thrive. If the F.T.C. blocks the deal, it could set a precedent for antitrust law.
The stakes are high for both sides. Lina Khan, the F.T.C. chair and prominent critic of Silicon Valley, has pledged to check the tech giants’ power and take them to court more often. She has signaled that she is willing to sustain courtroom losses if they help expand the uses of antitrust law to curtail corporate power.
And Meta, which has been spending billions of dollars to develop virtual reality products and has bought many start-ups over time, is trying to use the deal for Within and other small companies to become a power in the emerging field of the metaverse.
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On Tuesday, Mr. Zuckerberg was the star witness. While he has made plenty of public appearances and spoken before Congress, the 38-year-old billionaire has rarely testified in court. In one other instance, he testified in 2017 in federal court in a case involving Oculus, a virtual reality company that Facebook bought for more than $2 billion, over accusations from a video game publisher that Oculus stole its intellectual property. Facebook lost that case.
At the San Jose federal courthouse, Mr. Zuckerberg — wearing a blue suit similar to the color of Facebook’s logo, a bright blue tie and a mask — took the stand just after 9 a.m. The courtroom was packed with lawyers, journalists and spectators, unlike on Monday when the room was half empty.
During his testimony, a F.T.C. lawyer sought to establish Mr. Zuckerberg’s excitement over fitness apps, implying that he wanted to corner the market on virtual-reality fitness apps. Fitness, the lawyer said, would bring more women and older users to the metaverse and would establish Meta’s virtual reality products within the general population.
Mr. Zuckerberg pushed back, saying that while he has discussed fitness apps and how they can work well in virtual reality, it wasn’t his focus.
“We talk about games, but also we talk about social being the most important to us,” he said, referring to his company’s roots as a social network. Meta was working on creating apps devoted to productivity and work, he said, as well as “general use cases.”
Meta announced it would buy Within in October 2021. At the time, Mr. Zuckerberg had just declared that his social networking company was transitioning into a metaverse company. In a blog post about the Within deal, Meta was effusive.
“We believe fitness will be a massive success in VR,” Jason Rubin, a Meta vice president, wrote at the time.
Then in July, the F.T.C. sued to block the deal. It asked the U.S. District Court for the Northern District of California to stop the deal from closing and filed a complaint challenging it in the agency’s in-house court.
On Dec. 8, Judge Edward J. Davila of the district court began hearing arguments over the injunction. In an opening statement, Abby Dennis, a lawyer from the F.T.C., said that Meta could have built a competitor to Within’s popular virtual reality fitness game, Supernatural, on its own without acquiring the company.
Hal Singer, an economist who is one of the F.T.C.’s witnesses, later testified that the deal harmed competition. Aaron Koblin, the founder of Within, also appeared as a witness, as did Mark Rabkin, a Meta executive. Mr. Rabkin said Meta had considered adding a fitness element to a virtual reality game it owns, Beat Saber, but didn’t pursue the idea.
On Monday, Andrew Bosworth, Meta’s chief technology officer, took the stand. Mr. Bosworth, who oversees the company’s virtual reality work and was involved in the Within acquisition, testified that Meta saw itself as “a platform, and the idea of a platform is that there is so much software that no one company could possibly create all of that software.”
Meta preferred to acquire companies that had created viral games, he said, as it was not easy to imitate that type of success. He added that Meta would not favor games or programs it bought over those from other parties.
Hours before his testimony, Mr. Bosworth also published a 2,000-word blog post defending Meta’s commitment to artificial and virtual reality, and stressing that the company saw it as a competitive space.
“As new devices hit the market, we believe our industry will enter a new era of growth and competition that will bring enormous benefits to users and the developer community,” he wrote.
No further sessions are scheduled for the hearing after Tuesday, though more could be added. Judge Davila is expected to rule after arguments are completed.
Ryan Mac contributed reporting.
This is a developing news story and will be updated.