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SAN JOSE, CA. Meta CEO Mark Zuckerberg said in federal court Tuesday that he doesn’t see fitness apps as central to his plan to build the Metaverse.

Asked by lawyers at the hearing whether the prospect of not having Meta’s own virtual reality fitness app kept him up at night, Zuckerberg said no.

“Fitness was probably the 4th or 5th use case I thought would be important,” he said of building the metaverse. Categories such as gaming, social communication and productivity will rank higher, he said, adding that Meta is likely to prioritize the creation of social apps.

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

The Federal Trade Commission sued in July to block Meta from buying Within, maker of the popular VR workout game Supernatural. The FTC argued that Meta would likely have created its own VR fitness app had it not been acquired. Buying in later meant consumers were deprived of that competition and choice, the agency said.

Zuckerberg, who was subpoenaed by the FTC as a witness, defended Meta’s reliance on acquisitions to build virtual and augmented reality services. He said that in the current economic climate, Meta is unlikely to take on the development of its own fitness app.

As Meta looked to expand into the VR fitness market in 2021, the company was trying to figure out how to capitalize on higher-than-expected revenue. Now that Meta is facing an economic downturn, the company is cutting costs and “not creating new projects.” The company recently laid off about 13,000 people.

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

Zuckerberg added that he’s still excited about the potential inside and “supernatural.” He testified that Meta’s funding could give them “a multi-year runway” to continue building their app.

Meta executives envision that in the future, people will want to work, play and spend time with their loved ones in the metaverse, with experiences powered by virtual and augmented reality. Meta has poured billions of dollars into making that vision a reality, helping to transform the VR app market from a niche audience of gamers to something of a mainstream audience.

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

Meta has also been hit hard by Apple’s new privacy restrictions, which have forced app makers like Facebook to openly ask users if they can collect data about their online activity.

Zuckerberg also said he overestimated the power of the pandemic e-commerce boom that boosted Meta’s revenue, a shift the CEO said he expected to be permanent but has not.

Meta’s chief technology officer, Andrew Bosworth, who also testified in the case, said in a recent blog post that about 80 percent of Meta’s total costs support its core business, with the remaining 20 percent going to Reality Labs, a division , which controls the metaversion of the company. ambitions.

“It’s a level of investment that we believe makes sense for a company committed to remaining at the forefront of one of the world’s most competitive and innovative industries,” he wrote.

VR developers accuse Facebook of hiding the keys to the metaverse’s success

Meanwhile, Meta experienced a leadership shake-up as the trial continued. John Carmack, Meta’s prominent VR developer and executive advisor, announced earlier this month that he was severing ties with the company due to disagreements over its direction.

“We have an absurd amount of people and resources, but we are constantly self-sabotaging and wasting effort,” he wrote in a Facebook message. “There is no way to sugar coat this. I think our organization is operating at half the efficiency that would make me happy.”

The FTC’s case comes as Commission Chairwoman Lina Khan and the Biden administration have promised tougher antitrust enforcement against major tech companies, including Meta, Google, Apple and Amazon. Earlier this month, the FTC sued to block Microsoft’s $69 billion purchase of video game publisher Activision Blizzard, charging that the deal would allow the Redmond, Wash., tech giant to squeeze its gaming rivals.

The twin complaints herald a new FTC strategy to rein in the tech industry

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

FTC lawyers trying to make the case that Meta is interested in the fitness app have pointed to testimony and internal correspondence showing employees discussing how to get into the fitness app business. There was even some discussion of a relationship with Peloton, an idea Zuckerberg championed at one point, according to Michael Verdu, the social media giant’s former vice president of augmented reality and virtual reality.

“I’m into fitness. “Partnering with Peloton for Beat Saber sounds great,” Zuckerberg wrote, according to court filings. “I would love to see that happen. Tell me how I can help.’

But Zuckerberg testified on Tuesday that he did not recall having any further conversations with Verdu about it.

In closing arguments, FTC attorney Abby Dennis argued that Meta has the resources, capability and interest to develop its own fitness app.

But Mark Hansen, a lawyer for Meta, argued that the FTC’s claims that the company would likely enter the fitness VR market with its own app are “nothing more than speculation and wishful thinking.”

Since buying small VR startup Oculus eight years ago, Meta has become the dominant player in the space, claiming 78 percent of VR headset sales by 2021, the FTC claims in its lawsuit.

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