US senator Elizabeth Warren has said that the Federal Trade Commission (FTC) should carry out a thorough review of Amazon’s takeover of MGM.
Amazon announced a US$8.5 billion deal to acquire the James Bond studio in late May, and has said that it will focus on its ‘reimagining and developing’ IP from MGM’s library.
Warren however has called on the FTC to look into the deal, reports The Verge. The outlet shared a letter sent from Warren to new FTC chair Lina Khan in which the senator highlights the impact that the deal could have on the media landscape in the US.
In the letter, the former law professor Warren wrote: “A typical antitrust analysis of a vertical deal would assess whether the acquisition could grant Amazon the incentive and ability to disadvantage Prime Video’s streaming service competitors or MGM’s production-company competitors. While the FTC should investigate the possible anticompetitive effects under this framework, I urge the FTC to also consider how Amazon and its expansive operations may already have the ability to harm competition in these markets, even without acquiring MGM, and how the MGM acquisition may exacerbate this concern.”
She also raised the issue of the value of the acquisition. Warren added: “MGM is reportedly valued at US$6.5 billion in equity, yet its acquisition by Amazon is valued at US$8.45 billion – the second largest acquisition in Amazon’s history. This acquisition presents an important opportunity to ensure that the FTC approaches vertical transactions involving tech platforms with the proper dosage of antitrust scrutiny.”
Amazon paying over-the-odds for MGM – a company which filed for bankruptcy 11 years ago – is, Warren argues, part of an ongoing “tactic to operate at a financial loss,” and that “ the FTC must determine whether this vertical acquisition is truly an entertainment strategy or merely another step towards unfettered monopolisation.”
This appeal to the FTC comes days after the regulatory body saw an antitrust complaint that it and 48 states filed against Facebook rejected. In a major setback for bipartisan efforts to curb big tech in the US, the judge ruled that the FTC’s argument was not clear enough, and that “It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist.”
The FTC will now consider its next steps.