(Bloomberg) -- Meta Platforms Inc., the owner of Facebook, has agreed to pause its acquisition of the virtual reality company Within Unlimited Inc., which makes the fitness app Supernatural.

The Federal Trade Commission sued to block the purchase, saying it would help Meta on a path to a monopoly in virtual reality. Now, lawyers for the government and the company have told a federal judge in California they’ve agreed that the Within acquisition will not close until Jan. 1, or until the court rules on the FTC’s injunction to block the transaction, whichever comes first.

“We are prepared to vigorously defend this deal in court and are confident the evidence will show that it will be good for people, developers and the VR space more broadly,” Meta said in a statement Friday.

The acquisition was small, compared with Meta’s more controversial purchases of WhatsApp and Instagram. But FTC Chair Lina Khan, who was appointed by President Joe Biden to invigorate antitrust enforcement, is taking a more aggressive approach than her predecessors to scrutinize tech giants’ growth. While the efforts are aimed at preventing the large platforms from eliminating nascent rivals and consolidating their market dominance, the Biden administration’s tougher approach has raised concerns that it could cause a chilling effect on the startup industry -- if smaller companies can’t get purchased by bigger ones, it may become riskier to invest in their ideas in the first place.

Read more: How FTC’s Khan overruled staff to sue Meta over its VR deal

FTC alleged the deal would give the social networking company a leg up in dominating the burgeoning virtual reality market. The suit represents the first time the agency has preemptively challenged an acquisition by the social media giant, which has bought more than 100 smaller companies over the past decade, according to a 2020 congressional report.

“The FTC’s case is based on ideology and speculation, not evidence,” Meta lawyer Nikhil Shanbhag said in a blog post about the case.




(Updates with Meta statement in third paragraph)

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