Meta Platforms sued by virtual reality fitness app developer after deal craters

Oct 11 (Reuters) – An interactive app and game-design collective has sued Meta Platforms (META.O) in U.S. court, accusing Facebook’s owner of unlawfully breaking a contract for a fitness program in an anticompetitive “campaign to conquer” virtual reality markets.

California-based Andre Elijah Immersive Inc filed its complaint in San Jose federal court against Meta and other defendants, including Alo Yoga, the clothing and fitness company.

The collective said it had developed a fitness app with Meta and Alo featuring the “best and most widely-recognized yoga instructors in the world.”

The lawsuit claimed Meta was prepared to launch the app at the company’s virtual reality conference Meta Connect 2023. But Meta, according to the complaint, terminated its contract with the collective after learning it was also working with rival platforms Apple (AAPL.O) and Pico to distribute its app.

A representative from Meta had no immediate comment on Wednesday. Los Angeles-founded Alo did not immediately respond to a request for comment. Attorneys for the defendants have not yet made appearances in the case.

Apple and Pico, a virtual reality headset manufacturer owned by TikTok’s Chinese developer ByteDance, did not immediately respond to requests for comment. Apple, Pico and ByteDance are not defendants in the case.

The collective’s attorney, Joseph Prencipe, told Reuters that “resolution of the lawsuit will determine what happens to the app.”

The lawsuit accused Meta and the co-defendants of “abusive and anticompetitive behavior” in violation of U.S. antitrust law.

The complaint demands more than $100 million in antitrust damages, before automatic trebling, as well as several million dollars for the defendants’ alleged breach of the app contract.

The collective described itself in the lawsuit as a “new entrant” in the virtual reality fitness market, which was the centerpiece of a U.S. Federal Trade Commission lawsuit against Meta last year in California federal court.

The FTC unsuccessfully sued to stop Meta’s purchase of Within Unlimited, maker of the Supernatural fitness workouts. Meta denied the agency’s claim that the acquisition would “dampen innovation” in markets for VR fitness apps.

The deal closed in February after a U.S. judge declined to order a preliminary injunction.

The collective’s lawsuit, featuring contract documents between it and Meta, said Meta had become a “key player” at various levels in the virtual reality marketplace, including hardware and app distribution.

The exclusion of the collective’s fitness app “eliminates both present and future competition,” the complaint alleged.

The case is Andre Elijah Immersive Inc v. Meta Platforms Technologies LLC et al, U.S. District Court, Northern District of California, No. 5:23-cv-05159-NC.

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