In an unsurprising but make-or-break development for Amazon’s proposed MGM acquisition, the Federal Trade Commission on Friday opened an “in-depth” investigation of the deal, knowledgeable sources told The Information.
The investigation, which could last six months or more, “signals that the FTC, under the new leadership of Amazon critic Lina Khan, will take a hard line on even relatively small acquisitions by the e-commerce giant in industries where it does not have a strong position.”
Amazon, which announced the $8.45-billion deal in late May, seems to have made a rare miscalculation in timing amid the equally rare bipartisan pushes by Congress, and moves by state legislators, to reign in Amazon and other tech giants with antitrust investigations and lawsuits.
Case in point: The day before the MGM agreement was announced, Amazon was hit with an antitrust lawsuit by Washington D.C.’s attorney general.
Late last month, Amazon filed a petition with the FTC to try to force just-named FTC chair Khan to recuse herself from investigating or prosecuting antitrust actions against Amazon.
“Chair Khan has built her academic and professional career in large measure by pronouncing Amazon liable for violating the antitrust laws,” Amazon wrote in a 25-page petition filed with the FTC. “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.”
The FTC declined to comment on Amazon's petition, and the outcome remains to be seen.
Kahn is indeed known as a proponent of aggressive enforcement of antitrust laws. She was among the counsel to the House Judiciary Committee’s antitrust subcommittee, which criticized large tech companies in a report issued last year. She also served as legal director at Open Markets Institute, which advocates for enforcing anti-monopoly laws.
Khan first became widely known in antitrust circles in 2017, when she authored the Yale Law Journal article “Amazon’s Antitrust Antitrust Paradox,” which argued that antitrust policies should aim to preserve a “competitive process and market structure,” as opposed to focusing solely on whether a company's practices harm consumers in the short term.
Amazon is engaged in a pitched battle for content for its Prime Video and IMDb TV streaming services, competing with Netflix and major streamers from Disney, AT&T, Comcast and others for consumers’ time and dollars.
As one of the benefits of the Amazon Prime program, Prime Video is one key to helping the company pull in and retain lucrative Prime memberships. Free-access IMDb TV is an ad revenue source, as well as another brand-strengthening Amazon extension.
The importance of content in Amazon’s strategy was underscored again last week, when Amazon announced a licensing deal with Comcast’s Universal Filmed Entertainment Group that will significantly pump up content for both of its streaming services.