FTC Poised to Probe Amazon’s MGM Acquisition
Following Amazon’s acquisition of MGM, the deal will be investigated by the Federal Trade Commission. The recently elected FTC chair, Lina Khan, a long-outspoken critic of Amazon, will have oversight over the deal. The proceedings could signal how she’ll handle antitrust cases against Amazon in the future.
Citing people familiar with the situation, The WSJ reported that the FTC requested oversight of the deal during negotiations between agencies specifically because it is currently overseeing the ongoing antitrust probe. According to the WSJ, the Justice Department and FTC have shared antitrust investigations of the tech giants but the FTC pushed for jurisdiction over Amazon-MGM.
Companies doing sizable mergers have to submit their deals for government antitrust review. The FTC shares antitrust authority with the Justice Department, and the two agencies split up the work of reviewing proposed deals. The department has recently reviewed transactions involving video content, including Disney’s acquisition of 21st Century Fox and AT&T Inc.’s acquisition of Time Warner, a deal the department unsuccessfully attempted to block in court.
Amazon acquired MGM in May in a deal valued at nearly $9 billion. The acquisition saw Amazon scoop up tens of thousands of hours of entertainment, most notably including much of the James Bond IP. At the time, Mike Hopkins, senior vice president of Prime Video and Amazon Studios, said in a statement that the “value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team.”
Either way, the deal would have likely received scrutiny. Large acquisitions and mergers that may or may not lead to antitrust issues are typically reviewed as a standard practice. Sworn in as chair last week, Khan said in a statement at the time that she looked “forward to working with my colleagues to protect the public from corporate abuse.”
Amazon does not charge an additional or separate fee for its streaming service. Like two-day shipping, free grocery delivery, and Amazon Music, Amazon’s marquee streaming service is offered as part of the overall experience. It does, however, lack the sheen of rivals like Disney+ and Netflix, and its originals haven’t quite resonated in the same way that WandaVision or Stranger Things have.
While the true value of the acquisition is still unclear, the deal saw Amazon win IP that is desperately needed. Amazon may not need subscribers to pay for Prime Video, but it does arguably need them to care about it to help continue making Prime memberships a competitive bundle of subscription-specific offers and services.