Amazon Merger with MGM Could Face Greater Scrutiny From Federal Trade Commission

Last month came word that yet another major merger was on the horizon in Hollywood as Amazon [...]

By Spencer Perry

Last month came word that yet another major merger was on the horizon in Hollywood as Amazon announced their intention to acquire MGM and its library for just over $8 billion. Like every other major merger and acquisition in the country however it will face scrutiny from the Federal Trade Commission, but unlike Disney and 20th Century Fox or AT&T and Warner Bros. Amazon has already been in the crosshairs for the recently appointed chair of the FTC. According to a report from The Wall Street Journal, the FTC "pushed for jurisdiction over the merger review" from the Department of Justice (the two share duties on this) in part because there are reportedly already antitrust investigation into Amazon that are ongoing at the FTC.

It's required by law for companies to submit their mergers to the federal government, so in that regard this is nothing out of the ordinary. What is different however is that newly appointed FTC Chairwoman Lina Khan has previously been very vocal in their criticisms of Amazon. Back in 2017 they pennedan article for the Yale Law Review titled "Amazon's Antitrust Paradox" where they wrote: "As Amazon continues both to deepen its existing control over key infrastructure and to reach into new lines of business, its dominance demands the same scrutiny." Now she'll have the opportunity to do just that.

"I'm glad the FTC will be investigating this deal," Senator Elizabeth Warren said in a tweet about WSJ's report. "Amazon is no typical studio buyer, and the FTC should look into how this behemoth's purchase may affect not just streaming and entertainment, but also workers, small businesses, and competition overall.

It's worth noting that the last time the FTC tried to block a Hollywood merger with AT&T's purchase of Time Warner, they were unsuccessful in their attempts. At the time the FTC, lead by President Trump appointee Joseph Simons, argued against the "anticompetitive effects of the proposed merger on the video programming and distribution industry." That argument was largely shot down with the court writing "evidence also indicated that the industry had become dynamic in recent years with the emergence, for example, of Netflix and Hulu."

With that precedent, Amazon might be able to skirt past this FTC inquiry as MGM itself isn't a major studio in the grand scheme of Hollywood, unlike when Disney swallowed 20th Century Fox whole and reduced the number of major studios from six to five. In recent years MGM has released as few as two movies in one year (2011) and as many as nine (2018) while Amazon Studios has averaged well over ten releasesome of those acquisitions from studios unable to release new theatrical films due to the COVID-19 pandemics per year, premiering twenty three in 2020 ().

It was previously reported that if Amazon's purchase of MGM went through it would give the streamer access to more than 4,000 movies and 17,000 TV shows; plus the rights to multiple franchises like Rocky, Robocop, Stargate, Tomb Raider, The Pink Panther, Legally Blonde, Poltergeist, Fargo, The Handmaid's Tale, and Vikings.

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