The FTC this week reaffirmed its vendetta against Big Tech with a move to block Meta (Facebook) from acquiring Within Unlimited. Within produces the leading virtual reality (VR) fitness app “Supernatural” — a subscription service designed for Meta’s Oculus Quest headset that offers trainer-led workout sessions. Lina Khan’s agency claims the purchase would “tend to create a monopoly” in the market for “virtual reality dedicated fitness apps.” This, it contends, would harm consumers, innovation, and competition.

As with previous attempts to dub Meta a monopolist, the FTC begins by setting an extremely narrow market definition to judge the acquisition. The “virtual reality dedicated fitness apps” contour claims, in effect, that Supernatural only competes with other VR fitness apps designed specifically to deliver structured physical workouts to users in their own homes, ignoring fitness programs on other consoles or web-connected machines.

This starting point is farcical. When someone wants to workout, they have the option to use Pelotons, Mirrors, or Tonals, or programs on their Nintendo, Microsoft’s Xbox, or Sony’s Playstation. They can opt for treadmills, gym memberships, individual classes, high intensity workout groups, weight machines, a personal trainer, and mobile apps, or even join a sports team or go for a run. The idea that the only thing meaningfully substitutable for Supernatural are other VR dedicated fitness apps is laughable. This is a technological assessment of a market, not an economic one.

Perhaps more bizarrely, Meta doesn’t even produce its own dedicated fitness app. So there’s no worry here that the acquisition will flush out existing competition through the buyout. Instead, the FTC argues that because Meta produces VR headsets, runs an app store, and produces its own successful apps, it desperately wants to own a “killer” fitness app, whether the company has to build or buy it. Banning the acquisition would therefore supposedly result in more active competition, because Meta would surely enter this narrow market subsection anyway. Indeed, the FTC assuredly claims that the mere threat of Meta’s entry into this space drives today’s innovation in the fitness app sector, pressure that would be lost with a buyout.

The speculative argument the FTC presents is not that Meta buying Within would significantly increase concentration in the VR dedicated fitness market, but that banning the acquisition would deconcentrate it over time. Perhaps recognizing that this is a stretch, the federal agency also gives itself a second, broader market definition as insurance — that of “VR fitness apps” — which also includes games with incidental fitness benefits. This allows them to claim that Meta buying Within risks dampening competition between Supernatural and apps like Meta’s Beat Saber — a “rhythm game where you slash the beats of adrenaline-pumping music.” The idea that these fun-time gaming apps compete with Supernatural but Peloton doesn’t is baffling.

The FTC, of course, discounts entirely the idea that integrating Supernatural into Meta’s VR ecosystem could enhance functionality for consumers. They ignore that given the relatively small VR market, Meta faces strong incentives to allow and promote any future best-in-class alternatives to Supernatural on its app store to boost overall user numbers. And they see only downsides from the acquisition in terms of innovation, ignoring that one incentive for venture capitalists investing in new tech startups is the possibility of selling out like this.

Yet these are the blinkers at the agency right now. The new trustbusters in DC describe Meta as a “behemoth” and an “empire” that must be restrained. They are convinced that they were in error to green-light Facebook’s acquisitions of WhatsApp and Instagram, a hindsight bias that ignores the possibility that Facebook’s ownership helped improve those products, and which suggests entry barriers in the social media sector are relatively low anyway. The Meta-Within move looks like an overcorrection to try to block even small purchases that might aid Meta as a company. Yet banning these sorts of acquisitions not only deters integration in the burgeoning VR ecosystem that might benefit consumers, but risks reducing incentives for startups to produce innovative new products in future.