Zuckerberg testifies that fitness app is not key to Metaverse development

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SAN JOSE, Calif. — Meta CEO Mark Zuckerberg said in federal court Tuesday that he doesn’t see fitness apps as key to his plan to expand the Metaverse.

When asked by his attorneys during a court hearing whether the prospect of Meta not having its own virtual reality fitness app was keeping him up at night, Zuckerberg said no.

“Fitness was probably the fourth or fifth use case that I thought was important,” he said of how the metaverse was built. Categories like gaming, social communications and productivity would rank higher, he said, adding that Meta would most likely prioritize building the social apps.

“We’re going to try to build the core social experiences,” Zuckerberg said. “It’s our DNA.”

The Federal Trade Commission sued in July to prevent Meta from buying Within, who made the popular VR workout game Supernatural. The FTC argued that if Meta hadn’t made the acquisition, it likely would have developed its own VR fitness app. Buying Within meant consumers were deprived of that competition and choice, the agency said.

Zuckerberg, called as a witness by the FTC, defended Meta’s reliance on acquisitions to build virtual and augmented reality services. He said Meta probably wouldn’t develop its own fitness app in the current economic conditions.

As Meta explored expanding into the VR fitness market in 2021, the company was trying to figure out how to invest higher-than-anticipated revenues. Now that Meta is experiencing an economic downturn, the company is cutting spending and “not turning on new projects.” The company recently laid off around 13,000 employees.

The FTC case shows how badly Mark Zuckerberg wanted a VR fitness app

Zuckerberg added that he’s still excited about the potential for Within and Supernatural. He testified that Meta’s funding can give them “a multi-year runway” to continue developing their app.

Meta leaders envision future people wanting to work, play, and spend time with loved ones in the metaverse, experiences powered by virtual and augmented reality. Meta has invested billions of dollars to make this vision a reality, which has helped the VR app market grow from a niche audience of gamers to one with some mainstream recognition.

But the investment is unlikely to pay off in the short term, and Meta’s core social media businesses face a long list of challenges. The company’s shares have fallen more than 65 percent this year, and its social media business faces competition for users and ad dollars from new competitors like TikTok.

Meta has also been hit hard by new Apple privacy restrictions that have forced app makers like Facebook to explicitly ask users if they can collect data about their online activities.

Zuckerberg also said he overestimated the staying power of the pandemic’s e-commerce boom that boosted Meta’s revenue — a shift the CEO said would be permanent but didn’t turn out to be.

Andrew Bosworth, Meta’s chief technology officer, who also testified in the case, said in a recent blog post that about 80 percent of Meta’s total spend supports its core business, while the other 20 percent goes to Reality Labs, the division that runs it The company’s metaverse monitors ambitions.

“We believe this level of investment makes sense for a company committed to staying at the forefront of one of the most competitive and innovative industries in the world,” he wrote.

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Meanwhile, Meta has seen a leadership change during the process. John Carmack, a prominent developer and executive consultant for VR at Meta, announced earlier this month that he was cutting ties with the company over disagreements over its direction.

“We have a ridiculous amount of people and resources, but we constantly self-sabotage and waste our efforts,” he wrote in a Facebook message. “There is no way to sugarcoat this; I think our organization operates at half the effectiveness that would make me happy.”

The FTC’s case comes at a time when Commission Chair Lina Khan and the Biden administration have vowed to launch tougher antitrust enforcement against the big tech companies, including Meta, Google, Apple and Amazon. Earlier this month, the FTC filed a lawsuit to block Microsoft’s $69 billion acquisition of video game publisher Activision Blizzard, accusing it that the deal would allow the Redmond, Washington-based tech giant to stifle its gaming rivals.

Twin complaints signal new FTC strategy to contain tech industry

In testimony in the San Jose courtroom, Meta executives said the company — especially Zuckerberg — had been interested in investing in the fitness market for years to expand virtual reality’s audience, which was overwhelmingly young and male. Fitness apps also have the potential to make Metas Quest VR headsets a part of users’ routines.

FTC attorneys trying to argue that Meta was interested in a fitness app have pointed to testimonies and internal correspondence showing employees discussing how to get into the fitness app business. There was even some discussion about building a relationship with Peloton — an idea Zuckerberg once backed, according to Michael Verdu, the social media giant’s former vice president of augmented reality and virtual reality.

“I’m optimistic about fitness. Partnering with Peloton for Beat Saber sounds fantastic,” Zuckerberg wrote, according to the court statement. “I would like to see that. Let me know how I can help you.”

But on Tuesday, Zuckerberg testified that he didn’t recall speaking to Verdu about it.

In the closing remarks, FTC Attorney Abby Dennis argued that Meta had the resources, skills and interest to develop its own fitness app.

But Meta’s attorney, Mark Hansen, argued that the FTC’s claims that the company would likely have entered the fitness VR market with its own app were “nothing more than speculation and wishful thinking.”

Since acquiring tiny VR startup Oculus eight years ago, Meta has become the dominant player in the space, claiming 78 percent of all VR headset sales in 2021, the FTC claimed in its lawsuit.

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