Why the FTC Faces an Uphill Battle in Challenging Amazon-MGM Deal
The Federal Trade Commission’s scrutiny of Amazon’s alleged anticompetitive practices may soon crank up a notch.
That’s according to The Information, which reported earlier this week that the FTC expects to decide within weeks on whether it will bring forth an antitrust lawsuit against Amazon to challenge its planned purchase of MGM.
The Information’s report adds a crucial potential milestone date on the timeline of the FTC’s investigations into Amazon. Last June, it was reported that the FTC would be investigating Amazon’s proposed deal to acquire MGM.
The Amazon-MGM deal probe is being conducted by the FTC in addition to a broader investigation (which began under the Trump administration) that the agency had been conducting on the e-commerce giant’s business practices.
The broader FTC-Amazon investigation in December expanded to include the e-commerce company’s cloud business. That expansion may have only pushed any end to the FTC’s years-long Amazon investigation even further out than the government agency anticipated.
Still, it’s not like this latest report from The Information means that the Amazon-MGM deal is en route to being blocked.
While Amazon is a massive company with a video streaming service that’s been around for over a decade, it’s not like Amazon currently lacks fierce video streaming competition.
Yes, Amazon in February touted having over 200 million Prime members streaming content on Prime Video in 2021. But previous surveys suggest that many of those 200 million subs likely are accessing Prime Video as a perk of their Prime membership, rather than as a result of them signing up to the Amazon SVOD as a standalone service.
This suggests Amazon Prime Video does not have an influence on the video streaming landscape to the magnitude of video streaming leader Netflix’s, despite both SVODs both being technically able to claim that they have reaches of over 200 million (Netflix reported reaching roughly 222 million global subs in Q4 2021).
This discrepancy in influence was illustrated in part when Nielsen reported its lists of most-watched streaming titles of 2021. Per Nielsen’s estimates, Amazon didn’t account for any the top 15 most watched streaming original programs of 2021 (across the measured services of Netflix, Prime Video, Hulu, Disney+ and Apple TV+). Additionally, Amazon only accounted for 1 of the top 15 most watched movies of 2021 across the five SVOD platforms measured by Nielsen.
And it’s not like Amazon has been dominant in the prestige department either. Amazon won 2 Oscars compared with Netflix’s 7 in 2021; this year Amazon nabbed 4 Oscar nominations while Netflix nabbed 27. On the TV side, Netflix secured 44 Emmy wins in 2021, while Amazon didn’t receive any.
Of course, MGM’s library of 4,000 films and 17,000 TV shows would strengthen Amazon Prime Video, but it’s not like quantity alone is the answer to success in the streaming wars. If that were the case, you would expect Disney+ to be less successful in the U.S. than something like Peacock, which has a bigger catalog domestically, per Ampere Analysis.
Wells Fargo also doesn’t anticipate Amazon with MGM will be one of the biggest spenders on content even when factoring in sports rights by 2025.
It’s no mystery why then some, like Cardozo law professor Sam Weinstein, see the MGM-Amazon deal as unlikely to be blocked
Meanwhile, UCLA Internet law professor and former Washington State chief privacy officer Alex Alben said last July in regard to the Amazon-MGM deal that “federal intervention would be warranted only if this proposed combination harms consumers or the video streaming landscape.”
“In this evolving marketplace, it’s difficult to pinpoint how an MGM-Amazon combination would result in less competition or hurt viewers of streaming services,” Alben said.
This hints at why the New Yorker in early December reported that some FTC vets worry that FTC chair Lina Khan “is underestimating the risks of pushing ahead with aggressive cases that are likely to fail.”
Of course, the FTC isn’t only focused on entertainment in relation to the proposed Amazon-MGM merger. The FTC is also concerned about whether the Amazon-MGM deal will illegally boost the e-commerce company’s ability to sell a large group of products and services, The Information reported in July.
However, potentially delaying an Amazon antitrust lawsuit is that democrats and republicans on the FTC may not reach a majority vote on the case. And it’s unclear when Alvaro Bedoya, who was nominated as an FTC commissioner last fall and could serve as a tiebreaker to that split vote, will join the FTC, according to The Information.
Also potentially pushing back antitrust legislative efforts against Big Tech are the midterm elections, which could cause Democrats (which overwhelmingly supported a suite of bills partly aimed at strengthening antitrust agencies) to lose control of either house of Congress.
So even though some have signaled that 2022 could be a pivotal year in terms of reining in Big Tech, the year ahead could still end up not being the period of change that Big Tech antitrust crusaders hoped it would be.
