The Federal Trade Commission (FTC), a US federal agency responsible for controlling anti-competitive business practices, has until mid-March to deliver its verdict on the takeover of MGM Studios by Amazon. Beyond this deadline, the e-commerce giant will be free to conclude the agreement.
Expand the Amazon Prime Video catalog
Amazon announced the acquisition of the legendary MGM Studios last May for nearly 9 billion dollars. If validated, this acquisition would represent the second largest in the history of the firm since that of the organic specialist Whole Foods in 2017 (13 billion dollars).
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Created in 1924, the MGM studio (Metro Goldwyn Meyer) is the least important of the major Hollywood studios, but it would allow Amazon to greatly expand the catalog of its streaming service, Amazon Prime Video, including very popular franchises such as James Bond or Rocky, as well as cult films like the Wizard of OZ.
Because if Amazon is an undisputed leader in other markets such as cloud computing with Amazon Web Services (AWS) and e-commerce, the company is still ahead of Netflix and Disney+ in the streaming sector.
With the catalog of MGM Studios, Amazon could strengthen the offer of its Prime Video streaming service. Photography: Thibault Penin / Unsplash
The FTC has several options
A month after the announcement of the acquisition, in June 2021, we learned that the FTC would be responsible for overseeing the operation. A news not necessarily to the taste of Amazon, the American federal agency now being led by Lina Khan, a young democrat and fervent opponent of the monopolies exercised by the technological giants. In 2017 while still studying at the prestigious Yale University, she even published a paper explaining that antitrust laws had failed to restrain Amazon’s anti-competitive practices. In this context, the firm founded by Jeff Bezos opposed the appointment of Lina Khan as head of the FTC.
Amazon has therefore given the FTC until the middle of March to comment on its acquisition of MGM Studios, and says that all the documents the agency needs to review the transaction have been delivered to it. Still, Amazon wouldn’t necessarily be safe from a threat from the FTC if the deadline expired, as the latter has the ability to challenge mergers and acquisitions after they’ve been completed.
As explained by wall street journal, in recent months, the Commission has begun to warn certain merger partners that their transactions are still under investigation, even after the expiry of the legal waiting period. In addition, it is currently investigating upstream Amazon’s practices more broadly.
Europe can also get involved
The American regulator is not the only one who can meddle in the acquisition of MGM Studios. Antitrust authorities in the European Union are also reviewing the deal and could take action that would impact U.S. deadlines or give the FTC more time to make a decision. The EU also has until March 15 to give its verdict, but in this type of initial review, the European Commission can either approve the operation, with or without corrective measures, or decide to open a full investigation into the problems. of competition. In the latter case, Amazon might not be able to close the deal, which would buy the FTC time.
These different options demonstrate how the noose is tightening around Big Tech, which finds it less easy to act as it sees fit, since regulators around the world are increasingly trying to regulate their actions to avoid anti-competitive practices.