Case 5:22-cv-04325-EJD Document 1 Filed 07/27/22 Page 1 of 32
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`Abby L. Dennis, DC Bar No. 994476
`Peggy Bayer Femenella, DC Bar No. 472770
`Joshua Goodman, NY Bar (No Number)
`Jeanine Balbach, MD Bar (No Number)
`Michael Barnett, TX Bar No. 24006801
`E. Eric Elmore, NY Bar (No Number)
`Justin Epner, DC Bar No. 1028431
`Sean D. Hughto, DC Bar No. 421224
`Frances Anne Johnson, MD Bar (No Number)
`Andrew Lowdon, DC Bar No. 230095
`Kristian Rogers, MA Bar No. 675951
`Anthony R. Saunders, NJ Bar No. 008032001
`Timothy Singer, DC Bar No. 1048769
`Federal Trade Commission
`600 Pennsylvania Avenue, NW
`Washington, DC 20580
`Tel: (202) 326-2381
`adennis@ftc.gov; pbayer@ftc.gov:
`jgoodman@ftc.gov; jbalbach@ftc.gov;
`mbarnett@ftc.gov; eelmore@ftc.gov;
`jepner@ftc.gov; shughto@ftc.gov;
`fjohnson@ftc.gov; alowdon@ftc.gov;
`krogers@ftc.gov; asaunders@ftc.gov;
`tsinger@ftc.gov
`Erika Wodinsky, CA Bar No. 091700
`90 7th Street, Suite 14-300
`San Francisco, CA 94103
`Tel: (415) 848-5190
`ewodinsky@ftc.gov
`Attorneys for Plaintiff Federal Trade Commission
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN FRANCISCO DIVISION
`
`FEDERAL TRADE COMMISSION,
`Plaintiff,
`
`v.
`META PLATFORMS, INC.,
`MARK ZUCKERBERG,
`and
`WITHIN UNLIMITED, INC.,
`Defendants.
`
`Case No. ____________
`COMPLAINT FOR A TEMPORARY
`RESTRAINING ORDER
`AND PRELIMINARY INJUNCTION
`PURSUANT TO SECTION 13(B)
`OF THE FEDERAL TRADE
`COMMISSION ACT
`REDACTED VERSION OF DOCUMENT
`SOUGHT TO BE SEALED
`
`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Case 5:22-cv-04325-EJD Document 1 Filed 07/27/22 Page 2 of 32
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`Plaintiff, the Federal Trade Commission (“FTC” or “Commission”), by its designated
`attorneys, petitions this Court for a temporary restraining order and preliminary injunction
`enjoining Defendants Meta Platforms, Inc., its subsidiaries (collectively “Meta”), and its
`controlling shareholder Mark Zuckerberg from consummating its proposed acquisition (the
`“Acquisition”) of Within Unlimited, Inc. (“Within”). The Commission seeks this relief pursuant
`to Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b). Absent
`such relief, Meta, Mr. Zuckerberg, and Within (collectively, “Defendants”) have represented
`that they would be free to consummate the Acquisition after 11:59 p.m. Eastern Time (or 8:59
`p.m. Pacific Time) on July 31, 2022.
`Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), authorizes the Commission, whenever
`it has reason to believe that a proposed merger is unlawful, to seek preliminary injunctive relief
`to prevent consummation of a merger until the Commission has had an opportunity to issue an
`administrative complaint, and if such complaint is issued, adjudicate the merger’s legality in an
`administrative proceeding. The Commission therefore seeks this preliminary relief “pending the
`issuance of a[n administrative] complaint by the Commission and until such complaint is
`dismissed by the Commission or set aside by the court on review, or until the order of the
`Commission made thereon has become final.” 15 U.S.C. § 53(b)(2). Pursuant to 15 U.S.C. §
`53(b)(2), such an administrative complaint must be filed no later than 20 days after this Court
`grants a temporary restraining order.
`A temporary restraining order enjoining the Acquisition is necessary to preserve this
`Court’s ability to provide full and effective relief after considering the Commission’s motion for
`a preliminary injunction. Preliminary injunctive relief is imperative to preserve the status quo
`and to protect competition “pending the issuance of a[n administrative] complaint by the
`Commission,” and if such complaint is issued, while the Commission adjudicates whether the
`Acquisition is unlawful. Allowing the Acquisition to proceed would harm competition and
`consumers and undermine the Commission’s ability to remedy the anticompetitive effects of the
`
`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Case 5:22-cv-04325-EJD Document 1 Filed 07/27/22 Page 3 of 32
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`Acquisition if the Commission issues an administrative complaint and the Acquisition is found
`unlawful after a full administrative trial on the merits and any subsequent appeals.
`NATURE OF THE CASE
`
`Meta, one of the largest technology companies in the world and
`1.
`provider of virtual reality (“VR”) devices and applications (“apps”) in the United States, seeks
`to acquire Within, a software company that develops apps for VR devices, including the highly
`popular
` fitness app “Supernatural.” If consummated, the Acquisition would
`substantially lessen competition, or tend to create a monopoly, in the relevant market for VR
`dedicated fitness apps and the broader relevant market for VR fitness apps. That lessening of
`rivalry may yield multiple harmful outcomes, including less innovation, lower quality, higher
`prices, less incentive to attract and keep employees, and less consumer choice.
`A global technology behemoth, Meta reaches into every corner of the world
`2.
`through its “Family of Apps”—Facebook, Instagram, Messenger, and WhatsApp—with more
`than three billion regular users. Seeking to expand its empire even further, Meta in recent years
`has set its sights on building, and ultimately controlling, a VR “metaverse.” One need look no
`further than the rebranding of the company from Facebook to “Meta” in 2021 to understand its
`vision—and its priorities—for the future. And Meta is serious about its goals: it has become the
`largest provider of VR devices and apps to customers in the United States.
`Meta’s campaign to conquer VR began in 2014 when it acquired Oculus VR,
`3.
`Inc., a VR headset manufacturer. Since then, Meta’s VR headsets have become the cornerstone
`of its growth in the VR space: its current generation headset, the Meta Quest 2, is by far
`
` with a significant majority of headset sales in 2021 and
`2022. Meta CEO Mark Zuckerberg has publicly stated that Meta subsidizes its VR devices or
`sells them at cost in order to attract users.
`
`And Meta’s Quest Store (formerly Oculus Store) has become
`4.
`distribution platform for VR software apps in the United States, connecting app developers and
`VR users in an online marketplace through which developers can offer their products to users
`
`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Case 5:22-cv-04325-EJD Document 1 Filed 07/27/22 Page 4 of 32
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`for download onto their individual VR devices. Meta controls the wildly popular app Beat
`Saber, which it acquired by purchasing Beat Games in November 2019. Beat Saber
`
`
`
`
`
` In addition to Beat Games, Meta owns a number of other VR
`apps, some of which it developed in-house but most of which it acquired by rolling up other app
`studios.
`Meta has thus become a key player at each level of the VR ecosystem: in
`5.
`hardware with its Meta Quest 2 headset, in app distribution with the Quest Store, and in apps
`with Beat Saber and several other popular titles. This is not by accident; Meta has an explicit
`strategy of
` Meta could have chosen to try to compete with Within on the merits; instead, Meta
`decided it preferred to simply buy
`in a vitally important,
`
`category.
`As Meta fully recognizes, network effects on a digital platform can cause the
`6.
`platform to become more powerful—and its rivals weaker and less able to seriously compete—
`as it gains more users, content, and developers. The acquisition of new users, content, and
`developers each feed into one another, creating a self-reinforcing cycle that entrenches the
`company’s early lead. This market dynamic can spur companies to compete harder in beneficial
`ways by, for example, adding useful product features or hiring additional employees. But it can
`also make anticompetitive strategies more attractive.
`Meta seeks to exploit the network-effects dynamic in VR. Indeed, Mr.
`7.
`Zuckerberg has made clear that his aspiration for the VR space is control of the entire
`ecosystem. As early as 2015, Mr. Zuckerberg instructed key Facebook executives that his vision
`for “the next wave of computing” was control of apps and the platform on which those apps
`were distributed, making clear in an internal email to key Facebook executives that a key part of
`this strategy was for his company to be “completely ubiquitous in killer apps”—i.e., in
`
`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Case 5:22-cv-04325-EJD Document 1 Filed 07/27/22 Page 5 of 32
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`significant VR apps that prove the value of the technology. In that same email, Mr. Zuckerberg
`told his executives that Facebook should “us[e] acquisitions opportunistically.”
`The proposed acquisition of Within would be one more step along that path
`8.
`toward dominance. According to Within’s co-founder and CEO, “Fitness is the killer use case
`for VR.” But instead of choosing to compete on the merits through its own VR dedicated fitness
`app, Meta has resorted to proposing this unlawful acquisition.
`If Meta is able to proceed with this proposed acquisition of Within, the merger
`9.
`poses a reasonable likelihood of substantially lessening competition in the market for VR
`dedicated fitness apps, where Supernatural is
`.
`Having simply bought up the
`10.
`, Meta would no longer have
`any incentive to develop its own competing app from scratch, add new features to Beat Saber or
`other existing Meta apps to compete with Supernatural on the merits, or
`
`
` develop an app to compete with Supernatural. Instead of adding a significant new rival
`to the mix, the Acquisition would simply let Meta assume total control of
`
`overnight. That lessening of competition violates the antitrust laws.
`11. Moreover, a company poised on the edge of a market may exert competitive
`pressure on existing participants. Regardless of whether such a company actually intends to
`enter, the possibility that it may do so can spur other companies already in the market to
`proactively ramp up their own competitive efforts. Meta, poised on the edge of the VR
`dedicated fitness app market with its popular Beat Saber app, and with all its vast resources and
`unique strategic advantages, exerts such an influence.
`
`
`
`. The Acquisition
`would eliminate that incentive for market participants to compete, again in contravention of the
`antitrust laws.
`
`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`12. When viewed against the backdrop of the broader VR fitness app market, which
`includes both dedicated or deliberate fitness apps (“dedicated fitness apps”) and apps, such as
`rhythm and active sports games, that provide an incidental fitness benefit (“incidental fitness
`apps”), the merger is no less anticompetitive. Letting Meta acquire Supernatural would combine
`the makers of two of the most significant VR fitness apps, thereby eliminating beneficial rivalry
`between Meta’s Beat Saber app and Within’s Supernatural app.
`Accordingly, this Acquisition poses a reasonable probability of eliminating both
`13.
`present and future competition. That lessening of competition may result in reduced innovation,
`quality, and choice, less pressure to compete for the most talented app developers, and
`potentially higher prices for VR fitness apps. And Meta would be one step closer to its ultimate
`goal of owning the entire “Metaverse.”
` The Commission voted to file this Complaint seeking preliminary relief
`14.
`pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b). The Commission is entitled to
`preliminary relief in this Court because of its likelihood of success on the merits and the weight
`of the equities. To succeed on the merits, the FTC must prove that the Acquisition violates
`Section 7 of the Clayton Act, which prohibits mergers the effect of which “may be substantially
`to lessen competition, or tend to create a monopoly.” For the reasons described below, the FTC
`is likely to succeed in proving an antitrust violation, and the equities weigh strongly in favor of
`enforcing the antitrust laws.
`Preliminary injunctive relief restraining Defendants from proceeding with the
`15.
`Acquisition is necessary to prevent interim harm to competition “pending the issuance of a[n
`administrative] complaint by the Commission,” and if such complaint is issued, during any
`subsequent administrative proceeding. Absent preliminary relief, Defendants can close the
`Acquisition and combine Meta’s and Within’s operations. Allowing Defendants to consummate
`the Acquisition before the Commission issues an administrative complaint, and before any
`administrative proceeding has concluded, is likely to cause immediate harm to competition and
`consumers and would undermine the Commission’s ability to remedy the anticompetitive
`
`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Case 5:22-cv-04325-EJD Document 1 Filed 07/27/22 Page 7 of 32
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`effects of the Acquisition if it is found unlawful after a full trial on the merits and any
`subsequent appeals.
`A temporary restraining order enjoining the Acquisition is necessary to preserve
`16.
`the status quo and protect competition while the Court considers Plaintiff’s application for a
`preliminary injunction. Unless temporarily restrained by the Court, Defendants would be free to
`consummate the Acquisition on or after August 1, 2022.
`JURISDICTIONAL STATEMENT
`
`Jurisdiction
`A.
`This Court’s jurisdiction arises under Section 13(b) of the FTC Act, 15 U.S.C. §
`17.
`53(b), and 28 U.S.C. §§ 1331, 1337, and 1345. This is a civil action arising under Acts of
`Congress protecting trade and commerce against restraints and monopolies and is brought by an
`agency of the United States authorized by an Act of Congress to bring this action.
`Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), provides in pertinent part:
`18.
`Whenever the Commission has reason to believe—
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`(1) that any person, partnership, or corporation is violating, or is about to
`violate, any provision of law enforced by the Federal Trade Commission, and
`
`(2) that the enjoining thereof pending the issuance of a complaint by the
`Commission and until such complaint is dismissed by the Commission or set
`aside by the court on review, or until the order of the Commission made
`thereon has become final, would be in the interest of the public—
`
`the Commission by any of its attorneys designated by it for such purpose
`may bring suit in a district court of the United States to enjoin any such
`act or practice. Upon a proper showing that, weighing the equities and
`considering the Commission’s likelihood of ultimate success, such action
`would be in the public interest, and after notice to the defendant, a
`temporary restraining order or a preliminary injunction may be granted
`without bond. . . .
`Defendants and their relevant operating entities and subsidiaries are, and at all
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`relevant times have been, engaged in activities affecting “commerce” as defined in Section 4 of
`the FTC Act, 15 U.S.C. § 44, and Section 1 of the Clayton Act, 15 U.S.C. § 12.
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Case 5:22-cv-04325-EJD Document 1 Filed 07/27/22 Page 8 of 32
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`Venue
`B.
`Venue in the Northern District of California is proper under Section 13(b) of the
`20.
`FTC Act, 15 U.S.C. § 53(b), and 28 U.S.C. §§ 1391(b) and (c). Defendants are found, reside,
`and/or transact business in this state and district, and are subject to personal jurisdiction therein.
`Intradistrict Assignment
`C.
`21.
`Assignment to the San Francisco Division is proper. This action arises in San
`Mateo County because a substantial part of the events giving rise to these claims occurred in
`San Mateo County, where Defendant Meta is headquartered.
`THE PARTIES AND PROPOSED ACQUISITION
`Plaintiff, the Commission, is an administrative agency of the United States
`22.
`government, established, organized, and existing pursuant to the FTC Act, 15 U.S.C. §§ 41 et
`seq., with its principal offices at 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
`The Commission is vested with authority and responsibility for enforcing, inter alia, Section 7
`of the Clayton Act, 15 U.S.C. § 18, and Section 5 of the FTC Act, 15 U.S.C. § 45.
`Defendant Meta is a publicly traded company organized under the laws of
`23.
`Delaware with headquarters in Menlo Park, California. Meta develops and sells VR and other
`extended reality hardware and software through its “Reality Labs” division. Reality Labs has
`been growing at breakneck speed: it generated revenues of $2.274 billion in 2021, which
`reflected a 127% jump from 2019 and a 100% increase since 2020. Meta’s best-selling VR
`hardware product to date is the Meta Quest 2, while its best-selling VR software product is the
`wildly popular Beat Saber, which was initially released by Beat Games, a studio that Meta
`acquired in 2019. Meta continues to add new downloadable content to Beat Saber; for example,
`it recently added a “Lady Gaga Music Pack” available for a $12.99 add-on fee.
`Defendant Mark Zuckerberg is the founder, Chairman, CEO, and controlling
`24.
`shareholder of Defendant Meta. Mark Zuckerberg ultimately controls Meta. His offices are
`located at 1601 Willow Road, Menlo Park, California, 94025.
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Defendant Within is a privately held virtual and augmented reality company
`25.
`organized under the laws of Delaware with headquarters—and its principal business—in Los
`Angeles, California. Founded by Chris Milk and Aaron Koblin, Within’s flagship product is
`Supernatural, a VR subscription fitness service. Supernatural offers over 800 fully immersive
`VR workouts, each set to music and located in a virtual setting like the Galapagos Islands or the
`Great Wall of China. Through deals with major music studios, Supernatural continues to grow
`its catalog, which includes songs from A-list artists like Katy Perry, Imagine Dragons, Lady
`Gaga, and Coldplay. Supernatural’s workouts are fitness classes that customers can access by
`paying a monthly subscription fee of $18.99, or a yearly subscription fee of $179.99.
`Supernatural is presently only available on the Meta Quest and Quest 2 and is sold in the United
`States and Canada.
`On October 22, 2021, Meta and Within signed an Agreement and Plan of
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`Merger, pursuant to which Meta would acquire all shares of Within in a transaction valued at
`
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`Unless this Court grants Plaintiff’s temporary restraining order, Defendants are
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`free to close the proposed Acquisition after 11:59 PM Eastern Time (or 8:59 p.m. Pacific Time)
`on July 31, 2022.
`
`INDUSTRY BACKGROUND
`The VR industry is currently characterized by a high degree of innovation and
`28.
`growth. Global sales are predicted to more than double in just three years, from $5 billion in
`2021 to more than $12 billion in 2024.
`Users typically engage with the VR experience through a headset with displays
`29.
`in front of each eye to place a user in a fully rendered, three-dimensional environment. Cutting-
`edge VR technology creates an immersive digital experience like no other. VR users can
`instantly be transported anywhere in the world, backward or forward in time, into outer space or
`fictional lands—all from the comfort and safety of their own homes. Unlike a game, video, or
`app on a tablet, phone, or monitor, the three-dimensional VR environment creates the
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`perception of completely surrounding the user, allowing the user to move around in the
`projected space. As Mark Zuckerberg explains, “you’re right there with another person or in
`another place and that’s very different from every experience of technology that we’ve had
`before. . . .”
`30. Meta’s Quest 2 is the best-selling VR headset and has been since shortly after its
`launch in 2020. In 2020, Meta shipped more than 62% of all VR headsets sold worldwide. That
`percentage surged to 78% in 2021, when industry sources estimate that Meta sold more than 8.7
`million Quest 2 headsets.
`The majority of users get apps for VR headsets from online app stores, which
`31.
`distribute products for use on individual VR devices. Meta controls its own app store called the
`“Meta Quest Store,” with more than 400 apps available for download. Meta also offers the
`“App Lab,” a Meta-produced tool that allows third-party developers to distribute apps not
`present in the Meta Quest Store directly to consumers. Other VR app stores include Valve’s
`Steam Store and SideQuest,
`
`
`
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`VR software and studio companies like Within develop the apps that run on VR
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`headsets. These apps run the gamut of genres from rhythm games to shooters to e-sports to
`creation and exploration and more.
` Meta’s Beat Saber, an
`33.
`enormously popular rhythm game “where you slash the beats of adrenaline-pumping music as
`they fly towards you, surrounded by a futuristic world.” Meta acquired control of Beat Saber
`through its purchase of Beat Games
` in
`November 2019.
`Since its acquisition of Beat Games, Meta has continued to acquire a series of
`34.
`studios behind many popular VR apps, and now boasts one of the largest first-party VR content
`organizations in the world:
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`a. In January 2020, Meta acquired Sanzaru games, maker of the fantasy Viking
`combat game Asgard’s Wrath.
`b. In May 2020, Meta acquired Ready at Dawn Studios, maker of Lone Echo II, a
`zero-gravity adventure game, and Echo VR, an online team-based sports game.
`c. In April 2021, Meta acquired Downpour Interactive, maker of Onward, a team-
`based first-person shooter.
`d. In May 2021, Meta acquired BigBox VR, maker of Population One, a
`multiplayer first-person arena shooter.
`e. In June 2021, Meta acquired Unit 2 Games, the maker of Crayta, a collaborative
`platform that allows users to create and play their own games.
`f. And, in November 2021, Meta acquired Twisted Pixel, a studio that makes
`various games, including Path of the Warrior (a fighting game), B-Team (a first-
`person shooter), and Wilson’s Heart (a mystery noir thriller game).
`In addition to the aforementioned acquisitions, Meta has developed and released
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`its own VR apps. These include:
`a. Horizon Worlds, a Massively Multiplayer Online game that allows users to
`build, share, and interact in virtual worlds;
`b. Horizon Workrooms, a productivity app that lets teams of people share their
`computer screens, collaborate on virtual whiteboards, and more;
`c. Horizon Venues, a live-events app that lets users experience concerts, sporting
`events, and more; and
`d. Horizon Home, a social-space app that lets users hang out with their friends,
`watch videos together, and join multiplayer VR games together.
`Among VR apps, dedicated fitness
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`. As Within’s co-founder and CEO puts it,
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`“Fitness is the killer use case for VR.”
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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` platform-level tools such as
`Oculus Move, a calorie and time counter that runs in the background of other Quest apps and
`displays to users data about their activity levels while in VR.
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`THE RELEVANT ANTITRUST MARKETS
`The Acquisition would substantially lessen competition or tend to create a
`37.
`monopoly in the relevant antitrust market for VR dedicated fitness apps in the United States
`(“VR Dedicated Fitness App market”). The Acquisition would also substantially lessen
`competition or tend to create a monopoly in the broader relevant antitrust market of VR fitness
`apps in the United States (“VR Fitness App market”) that includes both dedicated fitness apps
`and incidental fitness apps.
`The VR Dedicated Fitness App Market
`A.
`38.
`The VR Dedicated Fitness App market is a relevant product market. The market
`consists of VR apps, like Within’s Supernatural app, that are designed so that users can exercise
`through a structured physical workout in their own homes.
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`Dedicated fitness apps offer distinct functionality when compared to other VR
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`apps, including VR incidental fitness apps. For example, they may feature adjusting difficulty
`so that users never “fail” a workout; they may feature workouts designed by trainers or fitness
`experts; they are designed to maximize exertion and physical movement for the purpose of
`exercise; and they may feature classes or other active coaching.
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
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`Dedicated fitness apps typically entail a higher degree of physical exertion than incidental
`fitness apps. According to the Virtual Reality Institute of Health and Exercise, which rates
`energy expenditures during VR app usage, Within’s Supernatural currently has the highest
`energy expenditure, at 12–13 calories per minute.
`VR dedicated fitness apps are also typically offered using a distinct,
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`subscription-based pricing model.
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`The VR Dedicated Fitness App market does not include other products that are
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`neither close substitutes for, nor offered under similar competitive conditions as, VR dedicated
`fitness apps. For example, it does not include non-VR at-home smart fitness solutions, such as
`digitally connected exercise bikes, treadmills, weight machines, mobile phone apps, video
`games, or workout videos.
`Functional, practical, technological, and price differences show that non-VR at-
`45.
`home smart fitness solutions and at-home exercise products are distinct from VR dedicated
`fitness apps.
`VR offers a level of immersion that other at-home fitness experiences do not, and
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`cannot, offer. VR technology allows users to exercise from the comfort, privacy, and safety of
`home with the feeling and visuals of being somewhere else—atop a mountain, on a tropical
`island, in a futuristic world, virtually anywhere. The sensors in a VR headset and controllers
`also allow for a degree of tracking, adjustment, and feedback that non-immersive exercise
`programs cannot match. As Within’s co-founder and CEO explained, “[W]orking out in
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Supernatural feels like you’re a champion of a sport from the future. I love that and haven’t felt
`that sense of athleticism ever on a treadmill or an exercise bike.”
`There also tend to be substantial price differences between VR fitness and smart
`47.
`at-home fitness products. Most smart at-home fitness solutions have much higher up-front costs
`and much higher ongoing costs than current VR fitness apps. A Peloton smart bicycle, for
`example, costs over $1,000, with an additional $44 per month subscription cost, compared to
`the cost of a $299 Meta Quest 2 plus $18.99 per month for Supernatural. It also weighs 135
`pounds.
`In addition to Supernatural, other apps in the VR Dedicated Fitness App market
`48.
`include FitXR, Holofit from Holodia, VZFit from Virzoom, and Les Mills Body Combat from
`Odders Lab.
`49.
` Other than Supernatural and FitXR,
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`The VR Fitness App Market
`B.
`The VR Fitness App market comprises VR apps that are recognized and
`50.
`marketed as providing a fitness benefit to the user. This broader market includes both VR
`dedicated fitness apps and incidental fitness apps, such as rhythm and active sports games—
`including Meta’s
`Beat Saber.
`The incidental fitness category includes VR apps whose primary focus is not
`51.
`fitness, but that allow users to get a workout as a byproduct of their use because of the
`physically active nature of these apps. This category includes “rhythm” games like Beat Saber,
`Pistol Whip, and OhShape, where a user must dodge, strike, or shoot targets along to music, as
`well as active sports games like Thrill of the Fight, a boxing simulator.
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`COMPLAINT FOR A TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION PURSUANT
`TO SECTION 13(B) OF THE FEDERAL TRADE COMMISSION ACT
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`Publicly, Meta has acknowledged a VR Fitness App market comprising both
`53.
`dedicated and incidental fitness apps. Meta includes Beat Saber in this market. In a post on the
`Oculus website entitled “Exercise By Accident: VR Games to Help You Work Out At Home,”
`Meta extols the virtues of rhythm and sports games for physical exercise: “while our first port of
`call for VR fitness is dedicated fitness apps like Supernatural and FitXR, you can get a
`surprising amount of exercise ‘by accident’ with a bunch of the games below,” including Meta’s
`own Beat Saber app. Meta classified the type of exercise offered by Beat Saber as “Full-body,
`Aerobic”—the exact same type of exercise it listed for both Supernatural and FitXR.
`Technology and fitness reviewers also recognize the VR Fitness App market.
`54.
`Publications reviewing VR fitness options often include incidental fitness apps alongside
`dedicated fitness apps, with Beat Saber featuring prominently. Many reviews of Supernatural
`compare it to Beat Saber specifically, noting the similarities in game mechanics, comparing the
`exercise effect of each app, a