Bloomberg earlier reported Judge Davila’s decision.
The F.T.C. lawsuit to block the deal was the first of the cases developed entirely under Ms. Khan, a legal scholar who rose to prominence after she wrote a critique of Amazon that went viral, to be filed in court. Looking to prevent more “vertical” deals, in which the two companies don’t compete directly, the F.T.C. also challenged Microsoft’s $69 billion purchase of the video game publisher Activision Blizzard in December. This month, the Department of Justice accused Google of abusing a monopoly over the technology that places ads on websites.
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William E. Kovacic, a former F.T.C. chairman, said the ruling in the Meta case would be more problematic for the agency if the judge panned the legal theories underpinning the more novel challenge to the deal. But if Judge Davila saw the F.T.C.’s legal theories as plausible — even if the agency’s factual assertions were weak in this case — then “that’s a low-impact defeat” that is less likely to hurt its future efforts, Mr. Kovacic said.
The case was heard in federal court in San Jose, Calif., in December. During the seven-day hearing, Meta’s chief executive, Mark Zuckerberg, and its chief technology officer, Andrew Bosworth, testified. The F.T.C. argued that if Meta did not buy Supernatural, it would develop its own virtual reality fitness game.
Meta’s case rested on proving that developing or acquiring a fitness app was just a small part of a strategy that would eventually push virtual reality, and by extension the metaverse, into wide popularity.
During the December hearing, an F.T.C. lawyer asked Mr. Zuckerberg if it was true that acquiring or developing a fitness app kept him up at night. Fitness apps, Mr. Zuckerberg said, were just one type of app that the company was interested in.
“Fitness was probably the fourth or fifth use case that I thought would be important,” he said, ranking apps that focused on gaming, productivity and social interactions as higher priorities. Developing a fitness app, he told the lawyer, did not cost him any sleep.
Mr. Zuckerberg also told Judge Davila that if he blocked the deal, it would “have a chilling effect.”