James Bond and grocery stores
David Pierce
Protocol
July 1, 2021
Buying MGM was never likely to be easy for Amazon. It's spending just shy of $8.5 billion to acquire the company, making MGM its second-largest acquisition ever. Amazon framed it as straightforwardly as possible — Jeff Bezos called it "really very simple" and pointed out that Amazon has a content platform and, well, MGM has content — but the reality is much messier.
This deal has had critics since the beginning. "Amazon's proposed purchase of MGM reinforces what we already know — they are laser-focused on expanding and entrenching their monopoly power," Rep. David Cicilline tweeted the day it was announced.MGM had been reportedly looking for a buyer for a while, and Amazon actually paid less than the company had been hoping for, so it's not like it godfathered its way into the acquisition. But it still rubbed some people the wrong way.
Now the deal is under even more scrutiny. The FTC will reportedly lead the investigation into the deal alongside its other antitrust investigations into Amazon, and Sen. Elizabeth Warren urged the agency to give it "meticulous antitrust scrutiny." And in a way, MGM is a perfect representation of why Big Tech antitrust questions are so complicated.
This is not a normal antitrust question. Antitrust analysis in the traditional sense would look at this deal and say: Does this give Amazon outsized power in movies and TV? The answer there is fairly clearly no. Thanks to Netflix/Disney/Paramount/HBO, it's as competitive a market as you'll find right now, and Amazon's actually a relatively small player. But does MGM make a big, powerful, horizontally- and vertically-integrated company more of all those things? Of course it does. When "big and powerful" turns into "monopoly" is still very much an open question.
Prime Video's value to Amazon isn't just about the videos. To get Prime Video, you subscribe to Prime, which also gets you free shipping, cheaper groceries and all sorts of other things. So you could argue — and Warren and others do argue — that buying the rights to James Bond movies actually contributes to Amazon's outsized power in selling you bananas. That's how weird this all gets.Warren's letter to the FTC went right to the heart of that issue. "Amazon's tactic to operate at a financial loss and use low prices to lure in customers and capture the market has worked before," she wrote, "and the FTC must determine whether this vertical acquisition is truly an entertainment strategy or merely another step towards unfettered monopolization."
Amazon is clearly nervous about the outcome. It filed a request with the FTC on Wednesday requesting that Lina Khan be recused from all Amazon-related investigations. (Bold strategy to make that request of the new chair!) Amazon's logic: Khan has a long history of making an antitrust case against Amazon and can't possibly be receptive to arguments to the contrary.
Amazon argued that her writing, including that 2017 paper everyone still talks about, "convey to any reasonable observer the clear impression that she has already made up her mind about many material facts relevant to Amazon's antitrust culpability as well as about the ultimate issue of culpability itself."Will it work? That's what I asked Protocol's Ben Brody. "Amazon's petition draws heavily from Paul Rand Dixon's record," he said. "His work as a lawyer for a Senate subcommittee's antitrust investigation prompted a court to invalidate an agency order that involved one of the companies from the lawmakers' probe. That being said, the FTC and its staff has more than its share of lawyers who worked for industry or consumers and made their views clear before going into the government."
So far, most experts seem to think the deal is likely to be approved … eventually. But along with Facebook's victory over the FTC this week, this is yet more evidence to Congressional antitrust hawks that the problem with antitrust is not the enforcement — it's the laws themselves.
— David Pierce ( email | twitter)
James Bond, bananas and the FTC - Protocol — The people, power and politics of tech |
