Mark Zuckerberg has just taken the witness stand in a trial on the future of virtual reality

The question is whether Meta’s acquisition of the small company that makes a VR fitness app called Supernatural will hurt competition in the emerging VR market. If the deal goes through, the Federal Trade Commission argues, it would violate antitrust laws and dampen innovation, hurting consumers who may face higher prices and fewer options outside of Meta Platforms Inc.’s controlled platforms.

Meta, meanwhile, wants to make headway in the FTC’s argument that there’s even a distinct market for what the FTC calls “dedicated virtual reality fitness apps.”

Throughout his testimony, Zuckerberg appeared to play down the idea that fitness is a distinct and superior category in virtual reality. He said, while fitness is one “use case” for VR, other uses—namely gaming, communication, socializing and work—were the primary ones Meta focused on.

“While we focused on a number of use cases,” Zuckerberg said, there was a common order of popularity: gaming, social, and work as the top three, and “kind of a longer tail” of other uses for virtual reality including fitness.

Whether or not VR fitness apps are a distinct market is critical to the case because the FTC argues that Meta’s entry into this space through the Within acquisition would stifle competition. If there is no defined market, it becomes more difficult to prove that case.

The FTC, however, argues that not only is Meta a potential competitor in this market, but that it had the resources and ability to create its own VR fitness app instead of acquiring the leading independent player in the market.

FTC attorney Abby Dennis pointed out that in the early days of Facebook, the company founded by Zuckerberg in his Harvard dorm room rejected takeover offers from a number of big tech companies, including Google, yahoo and Microsoft.

“You would agree with me on that Facebook continued to innovate successfully even though it was never acquired? he asked Zuckerberg, who replied in the affirmative.

And “is the reason Facebook has been successful for 20 years because it keeps innovating even though it was never acquired?” he continued, and Zuckerberg replied, “Yes.”

But Meta’s CEO later testified that even though his company was “looking” at developing its own VR fitness app before deciding to acquire Within Unlimited in 2021, the business environment has changed and “there’s almost no no chance” of starting such a project. today.

Meta, like other companies that rely on online advertising for revenue, has seen a big uptick in business during the pandemic lockdown, when people stayed at home glued to their phones and computers. But it didn’t last. Online ad spend is down, competition, especially from rival TikTok, is growing and Meta recently fired 13% of its workforce.

Given the current economic and business environment, Zuckerberg said that if Meta had started a project to create a VR fitness app and it “didn’t get any traction,” he probably would have canceled it.

The case, which is expected to close on Tuesday, was heard by US District Judge Edward Davila, who also oversaw the trial of disgraced Theranos founder Elizabeth Holmes and his partner Ramesh “Sunny” Balwani. Both were sentenced to over a decade in prison for their roles in the company’s blood test hoax.