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Meta delays acquisition of VR startup Within

Yahoo Finance's Allie Garfinkle joins the Live show to discuss reports that Meta has delayed the acquisition of VR startup Within.

Video Transcript

RACHELLE AKUFFO: Meta is delaying its acquisition of virtual reality fitness app Within, an agreement that CEO Mark Zuckerberg made as the FTC alleges that Meta has a, quote, "campaign to conquer VR." Yahoo Finance's Allie Garfinkle is here with the details. So Allie, what's the latest here?

ALLIE GARFINKLE: Rachelle, the Within deal has been moved to January 31, which may not sound like a huge problem, but actually, this deal was originally announced in October 2021, right after Meta announced its name change from Facebook to Meta. And the fact of the matter is, the deal has been pushed now a couple of times. It's also notable that this is happening in the middle of this ongoing court battle. It's part of that deal. And it's a court battle in which Mark Zuckerberg actually testified this week.

I think it's worth saying also that this is part of the FTC's multi-part attack on Meta. The FTC, remember, is separately trying to force Meta to unwind two previous acquisitions-- Instagram and WhatsApp-- in a lawsuit filed in 2020. The FCC also didn't stop then Facebook's acquisition of Oculus a few years ago. So ultimately, what does this all mean, Rachelle, right? I'd say it's possible the FTC wins this round. If not in court, they've simply made it too hard for Meta to continue with this transaction. Again, we'll see, but Meta has been indicating it's possible it could walk away from this deal.

The reality, though, is still that the FTC has missed opportunities in the past and I can't help but wonder if they're trying to make up for it now. It's-- for me, bottom line as an M&A reporter, I wonder if they've come down so hard on this deal because of those missed opportunities. And Instagram, WhatsApp, Oculus, those are bigger, more important. And they're also going to prove to be far more difficult to unravel.

AKIKO FUJITA: Now, Allie, it's worth noting that Meta's growth has really been reliant on acquisitions in the past. You pointed to Instagram. You pointed to WhatsApp. I mean, if they're unable to go through with this and potentially future deals, what does that mean for their growth?

ALLIE GARFINKLE: I think it is a huge problem for them, Akiko. I think it cannot be overstated how much of Meta is a Renegade acquire. They're really, really good at finding deals, getting those deals done. And those deals have been key to innovation for them. And the truth is, their Reality Labs innovation hasn't been going well by a lot of accounts.

So it's the constant tug of war between trying to acquire new ideas, new technology, and trying to build it themselves. And for Meta, they have been great acquirers, and it's going to be really hard if they can't do that anymore, if it simply gets too difficult. It could hinder their growth in the future, Akiko, I think.

AKIKO FUJITA: Yeah, certainly going to raise questions about internal innovation there. Allie Garfinkle, thanks so much for that.