Overriding the advice of her professional staff at the Federal Trade Commission, Chairman Lina Khan last week filed suit against Facebook owner Meta to prevent it from acquiring Within, maker of the Supernatural fitness app. This is more than an ordinary antitrust business story. It is a bold attempt to extend the purview of Washington regulators to limit and control the future economy.
The Supernatural app, made for virtual reality, is certainly vivid and cutting edge. Wearing VR goggles, one can stand on the top of a mountain or raise one’s heartbeat by batting baseballs or slugging incoming meteors with one’s fists. The FTC’s objections to the proposed Meta acquisition of Within is also cutting edge, a dangerous break with the current practice of law in two ways.
First, the FTC is bringing an antitrust action to a nascent market that already has strong competitive offerings. To see the competitive future of VR workouts, one need only look at the capabilities of other major and well-funded workout players, such as Peloton, not to mention the galaxy of workout videos on YouTube.
Defining a market narrowly, however, is a hallmark of Lina Khan. In a previous antitrust action against Facebook, Khan’s FTC defined its target as a “personal social network service,” excluding TikTok, Twitter, and other potent competitors.
This lawsuit breaks precedent in another way as well. Khan is donning the legal equivalent of VR goggles, seeing a future monopoly that currently is as real as Hogwarts and may never materialize. Radical, self-styled “neo-Brandeisians” praise Khan for trying to prevent this monopoly—a future she can’t possibly know and can’t possibly predict. She seems intent on bringing to life the premise of the Steven Spielberg movie, “Minority Report,” crashing through windows like Tom Cruise and his team of rogue police to prevent crimes before they happen. This “precrime” approach, derived from the writings of Philip K. Dick, went haywire in fiction and promises to do the same in the real world.
The FTC filing defends this action because Meta CEO Mark Zuckerberg “has made clear that his aspiration for the VR space is control of the entire ecosystem.” This echoes a perhaps unwise PR campaign by Meta to present the world with a vision of an alternate universe brought to you by a distinctly cartoonish Zuckerberg.
But Meta’s dominance is an ambition, not a reality—VR and the metaverse are embryonic add-ons to the current internet. And it is far from certain that Facebook will be the dominant player when and if this technology blossoms. In the meantime, Facebook has become a Boomer bulletin board while Gen Z flocks to TikTok and other platforms.
In a foundational science-fiction novel, Snow Crash, author Neal Stephenson first brought the idea of a metaverse to popular attention in the 1990s. Stephenson also painted an alarming picture of this alternative universe controlled by one company. In it, he writes: “When you are wrestling for possession of a sword, the man with the handle always wins.”
But what if the sword is wielded by the monopoly power of government? If Khan gets the handle with a court victory, we will have set a dangerous precedent that government can stop business and innovation on the premise that it might be bad someday. The dream of a startup is to one day be purchased by a big tech company, which now act as massive venture capitalists. If these sources are choked off, Aaron Levie, CEO of cloud company Box tweeted: “all that will happen is there will be fewer startups over time because investors can’t underwrite the risk.”
When innovation is stymied, future prosperity, jobs, and even lives are lost. An FTC “precrime” lawsuit coordinated with the EU has already stopped cold the acquisition of Grail, maker of a breakthrough blood test to detect up to 50 cancers, by Illumina, which has the capital and expertise to commercialize this technology. The FTC is now reviewing Microsoft’s acquisition of gaming maker Activision, as well as Amazon’s merger with One Medical. If the latter is targeted, the FTC would be curbing a “monopoly” that currently serves only 700,000 healthcare customers.
A better policy would be to let the future find its own shape. “You can’t connect the dots looking forward,” Steve Jobs said, “you can only connect them looking backwards.” And if the dots connect the wrong way, and a monopoly that stymies competition is created, current antitrust law gives regulators sufficient tools to undo the monopoly. But trying to divine the future and base policies on such visions is a sure way to make the future smaller, cramped, and sometimes deadly.