Los Angeles (tca/dpa) – Amazon’s 8.45 billion dollar purchase of MGM looked to be a straightforward merger without any regulatory hurdles.
But now the acquisition is getting high-level scrutiny.
On Tuesday, Sen. Elizabeth Warren, D-Mass., urged the Federal Trade Commission to do a “broad and meticulous review” of the proposed merger, raising concerns about Amazon’s reach in the marketplace and its competitive advantage.
Separately, Amazon questioned the motives of FTC Chair Lina Khan and asked that she be recused from the agency’s antitrust investigation of the company in a motion filed with the FTC.
Among the concerns cited by Amazon was a paper Khan wrote as a student for the Yale Law Journal discussing Amazon’s dominance called “Amazon’s Antitrust Paradox.”
“Given her long track record of detailed pronouncements about Amazon, and her repeated proclamations that Amazon has violated the antitrust laws, a reasonable observer would conclude that she no longer can consider the company’s antitrust defenses with an open mind,” Amazon said in its motion.
The FTC declined to comment. Amazon did not immediately return a request for comment.
The scrutiny raises questions over whether other large tech companies that are growing their presence in entertainment could face similar challenges.
Amazon faces significant competition in the streaming video space against rivals like Netflix, Apple TV+ and Disney+. By buying MGM, Amazon would snap up a library of more than 4,000 movies and franchises like “James Bond” and “Rocky.”
Legal experts have said they did not anticipate the acquisition would be blocked.
“This is not a transaction that Amazon would gain so much market share it would be anti-competitive, thus facing any significant antitrust scrutiny,” said Corey Martin, a managing partner at Granderson Des Rochers law firm last month.
But Warren said in a June 24 letter to FTC Chair Khan that the Amazon-MGM deal should have “meticulous antitrust scrutiny” by the FTC because Amazon’s streaming service is also tied to its Prime membership. The subscription gives consumers access to other perks like free shipping, as well as music streams and videos.
“I urge you to use the FTC’s broad authority under this law to assess the possible anticompetitive effects this deal will have on streaming services and entertainment products in addition to the broader impacts that this transaction may have on workers, small businesses, and competition overall as Amazon — which is already the dominant e-commerce firm — accelerates its aggressive monopolistic behavior,” Warren wrote in her letter.
The Writers Guild of America West also has praised legislative efforts to rein in the power of Big Tech.
“More recently, Amazon’s intention to add MGM studios to an empire that already dominates markets spanning the entire content value chain — from production via Amazon Studios, to distribution via Prime, to access to consumers via its Channels store and Fire devices — illustrates the imminent need for greater scrutiny and reform,” the WGA West said in a statement last week regarding antitrust bills that it believes can help address this issue.
Amazon has been criticized for its labor practices and its impact on small businesses. Earlier this year, Amazon said it would pay more than 61.7 million dollars in withheld tips to Flex drivers in a settlement with the FTC, following an L.A. Times investigation exposing the practice.
Khan became FTC chair earlier this month and was previously a Columbia Law School professor. She also had worked as counsel to the U.S. House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law and as legal director at the Open Markets Institute.
“I look forward to working with my colleagues to protect the public from corporate abuse,” Khan said in a statement at the time.
By Wendy Lee, Ryan Faughnder, Los Angeles Times