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The Federal Trade Commission and a group of states including New York, Tennessee and North Carolina have reportedly launched an investigation into Meta’s Oculus unit.
Sources told Bloomberg that the investigation is looking into whether Meta is using its market dominance in the virtual reality segment to suppress competition. The sources added that third-party developers have been questioned as part of the inquiry about the Oculus app store and sales strategy for the Oculus VR headset.
Representatives for the FTC and North Carolina attorney general declined to comment. Meta and the New York and Tennessee attorneys general did not immediately return FOX Business’ request for comment.
Meta, who bought Oculus in 2014 for $2 billion, sells the Oculus Quest 2 headset for $299. Oculus receives a 30% cut from developers on its app store, according to its developer agreement.
The unit is crucial to Meta’s business model as it shifts its focus to helping to develop the metaverse, a virtual reality space where users can interact with each other in a computer-generated environment. The new direction for the company was announced when the company rebranded itself in October.
On Feb. 2, Meta will report earnings for the fourth quarter and full year 2021. Meta’s Reality Labs segment, which covers virtual and augmented reality, will report separately from its family of apps. The company previously said it expects investment in the segment will reduce overall operating profit for 2021 by approximately $10 billion.
Reality Labs head Andrew Bosworth noted in an October Facebook post that the Oculus Quest and Oculus Quest App would be rebranded to the Meta Quest and Meta Quest App in early 2022.
The investigation comes as Meta is facing an antitrust lawsuit from the FTC which claims the company illegally acquired Instagram and WhatsApp to maintain a monopoly. Though Facebook pushed for the lawsuit to be thrown out in December, Judge James Boasberg ruled last week that the case can proceed as planned.