Lina Khan was right | The Verge
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Khan’s FTC tried to expand the scope of antitrust law. Meta’s floundering VR ambitions shows why that mattered.
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Khan’s FTC tried to expand the scope of antitrust law. Meta’s floundering VR ambitions shows why that mattered.
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In 2021, the virtual world was the future of the internet. The pandemic had sequestered everyone indoors, heightening the appeal of digital communities. Facebook rebranded to Meta — a sign of the tech giant’s investment in and commitment to the metaverse as the future of the internet. Despite losing billions in VR, Meta released an upgraded version of the Quest 2 headset and began focusing on launching a higher-end Quest Pro. At the end of the year, it announced its plan to plunk down a rumored $400 million to buy the independent VR gaming studio Within, maker of a popular fitness game called Supernatural. Less than five years later, however, it shut the game down, leaving a community of avid fans bereft.
To former FTC chair Lina Khan, there’s a lesson in the ultimate fate of Supernatural, and the community that had grown up around it. She’d know — because she tried and failed to block Meta from acquiring Within.
“You need to have some regulatory humility because you don’t always know on the front-end how certain products are meaningful for certain communities,” says Khan. The FTC’s Meta lawsuit was often framed as an abstract attempt to rein in Big Tech. But in the end, the acquisition’s human cost was obvious — and an example of precisely why antitrust law matters. “Bringing to light that [Supernatural] was a core way for communities to stay healthy shows that there were real stakes here.”
Supernatural was a breakout VR fitness sensation — meet the women furious with Mark Zuckerberg for killing it
When Khan took over the FTC, her goal was updating the standard antitrust law playbook, expanding the scope of what was considered a viable case. The Supernatural suit was one such example. It accused Meta of trying to “buy its way to the top” in the VR space by acquiring a string of development studios and the popular game Beat Saber. Allowing the sale would not only be illegal but would reduce competition in the space while handing an overwhelming advantage to Meta.
The FTC’s lawsuit zeroed in on the potential (or lack thereof) for future competition. It was a contentious approach. Historically, antitrust cases relied on proving harm to existing competition in mature markets. Tech leaders and some legal experts were baffled — how could acquiring such a small studio shift the scales in any meaningful way? Gary Shapiro, head of the Consumer Technology Association, penned a Forbes op-ed calling the case “laughable” and a “travesty.” Bloomberg reported that Khan had to overrule her own staff to bring the case forward. Meta argued the FTC’s case was based “more on ideology and speculation, not evidence.”
As expected, the FTC lost. The court ruling noted the FTC didn’t sufficiently prove Meta had an impact on the VR fitness market, stating “there is no direct or circumstantial evidence to suggest that Meta’s presence did in fact temper oligopolistic behavior or result in any other procompetitive benefits.” Meta took over Supernatural in 2023.
Earlier this year, Meta publicly stated its intent to shift away from the metaverse and pivot toward smart glasses and AI, leaving enthusiasts wondering about the state of the VR industry and its future. As part of widespread cuts to its Reality Labs division, Meta announced it would no longer create new content for Supernatural and proceeded to lay off a majority of the staff. It promised to keep the game’s archive available, but the reality is that Supernatural is dead in all but name. It left behind a community of players who feel callously abandoned and betrayed by a company that promised them innovation.
In recent months, Meta has stated it intends to shift toward AI and smart glasses, leaving its VR ambitions in limbo.
Meta’s outsized influence in VR was a major sticking point with dozens of devastated Supernatural fans who spoke with The Verge shortly after the announcement. Many drew a direct line from Meta’s decision to a lack of consequences for Big Tech enshittifying products, snapping up potential competitors, and leaving dedicated communities to rot once they were no longer deemed profitable. The most dedicated Supernatural users told The Verge that Meta buying Within was viewed as the “kiss of death.” Several other fans also pointed to the FTC case as evidence that Supernatural’s eventual demise at Meta’s hand was obvious.
“I keep thinking about how the FTC tried (but failed) to block [Zuckerberg’s] acquisition of Supernatural in 2023,” one Supernatural user wrote on the game’s subreddit. “This is a painfully good example as to why antitrust laws need to be enforced.”
The FTC’s case was a long shot. So, why do it at all?
“My tenure was coming against the backdrop of really needing to make sure we were learning lessons, especially in terms of the realities of how digital markets work,” Khan, now an associate professor at Columbia Law School, explains to The Verge.
“For the early 2000s, there was a sense that if anything, the best thing for government to do is to be hands off because these markets move too quickly. Then we learned that actually, no. These markets have certain properties, including network effects and data advantages that may mean monopoly power can become much more entrenched.”
Specifically, Khan points to the fact that until a few years ago, tech giants like Google, Amazon, Microsoft, and Meta had made over 800 acquisitions that went unchallenged. However, looking back, it was clear that some of those clearly tipped markets in favor of major players, allowing them to dominate markets unchecked. For example, Meta was able to acquire Instagram and Whats App, deepening its influence in the social media space.
“The core insight behind [antitrust] laws is that competition is what really boosts innovation,” says Khan. “Even if you have the biggest firms around, that have already become very successful, them having to look over their shoulder and see who’s kind of nipping at their heels is what makes them go faster.”
It’s impossible to say that a successful FTC case would have prevented Supernatural’s fate. The game could’ve easily been bought by a different tech giant that would’ve done the same thing. Or, as the FTC suggested, if Meta had entered the market with its own fitness app, then that app could’ve also displaced Supernatural.
Even so, Khan points out that blocking the acquisition would’ve made Supernatural less vulnerable to the whims of Meta’s larger business decisions and calculations. A different buyer may have allowed Supernatural to chug along as a medium-size fish in a much more diverse VR pond.
“We’ve just seen this practice, this pattern of recklessness that firms can take because certain services and products are not essential to their core business. They can play fast and loose,” says Khan. “They have the right to do that, but I’m thinking from the perspective of ‘Are they going to be deeply enmeshed in and recognize the kind of communities and customer bases that really want these products?’”
Big Tech’s capriciousness is something every tech lover has become intimately acquainted with. Google, for instance, is so well-known for neglecting and abandoning projects — regardless of popularity — that there’s an online graveyard dedicated to documenting each “killed” product. In trying to dominate the smart home, Amazon also has a sizable graveyard of Echo products.
“From a policy matter, I would worry about saying, ‘Okay, you know, the big companies will take care of it. That just hasn’t been how it’s worked out.”
Meta’s guilty of this, too. Between 2019 and 2022, Meta went on a shopping spree for leading VR studios, acquiring nine in total. Four, including Within, have since been shut down. Among them, Supernatural isn’t even the sole VR fitness game with a cult following that Meta axed. It also killed Echo VR in 2023 despite significant pushback from its users, leading its fan base to mourn the loss of a game that had become a source of comfort, physical activity, and connection.
It’s inaccurate to say that VR is completely dead. Valve also recently announced the Steam Frame, which has reignited some hope among VR gamers. But VR’s main, ongoing problem is that of software and platforms — one that’s been exacerbated in the short-term by Meta’s dominance and, now, seeming disinterest. If the company is publicly stating its primary interest lies elsewhere, what incentive is there for developers or startups to create new experiences for its platform? How long will it take before other companies pick up the mantle, if they ever do?
“From a policy matter, I would worry about saying, ‘Okay, you know, the big companies will take care of it,’” says Khan. “That just hasn’t been how it’s worked out.”
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