Senator Elizabeth Warren is calling on the Federal Trade Commission for a thorough review of Amazon’s bid to acquire MGM, arguing that the deal could harm consumers and may have anticompetitive effects in the streaming space and beyond.
In a letter addressed to newly sworn-in FTC chair Lina Khan and shared exclusively with The Verge, Warren urged the FTC to specifically and closely examine “the possible anticompetitive effects this deal will have on streaming services and entertainment products in addition to the broader impacts that this transaction may have on workers, small businesses, and competition overall as Amazon—which already dominates numerous markets—accelerates its aggressive monopolistic behavior.”
The FTC is said to be reviewing the deal as part of a larger antitrust investigation of Amazon’s business. In her letter to Khan, Warren cited Section 7 of the Clayton Antitrust Act as barring mergers for which the outcome “may be substantially to lessen competition, or to tend to create a monopoly.” Warren argued that because Amazon’s economic impact is so far-reaching — including but not limited to its services business — a deal that benefits its streaming service Prime Video will only strengthen its position in the marketplace.
Amazon has a limited footprint in the film industry, but it will have a number of advantages as it enters the market.
The company’s deep pockets put the company in a virtually unmatched position to invest heavily to strengthen its position in the streaming wars. Moreover, Prime Video is offered as one of many services that are technically “perks” rather than individual paid subscriptions. New offerings like exclusive content serve to boost the appeal of Amazon’s paid Prime subscription service, which costs $119 per year.
Amazon announced in May that it had reached a deal to acquire the legacy film studio for $8.45 billion. At the time, SVP of Prime Video and Amazon Studios Mike Hopkins said that Amazon was drawn to MGM because of “the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team.”
In her letter, however, Warren wrote that the company’s “tactic to operate at a financial loss and use low prices to lure in customers and capture the market has worked before, and the FTC must determine whether this vertical acquisition is truly an entertainment strategy or merely another step towards unfettered monopolization.”