US FTC investigating Amazon’s MGM acquisition
Tech giant Amazon seems to have taken over just about every industry in the world. Recently, Jeff Bezos, Amazon’s founder, took a trip to the edge of outer space, so it seems like he might start taking over other planets as well. However, that scenario might still be decades into the future, so let’s focus on one thing that Amazon recently took over: the entertainment giant MGM. A few weeks back, Amazon bid to acquire MGM studios for a whopping $8.5 billion, but this wasn’t without question. The Federal Trade Commission has officially launched a probe into Amazon’s bid for the studio.
The FTC investigating Amazon probably comes as no surprise as Amazon’s business practices have been subject to much questioning from various entities. Lina Khan, the chairperson of the Federal Trade Commission, will be investigating how Amazon’s acquisition of the studio will help cement the tech giant’s power as a market leader and how it will boost Amazon’s business.
Khan is a vocal critic of Big Tech, and she had published a paperback in 2017 titled: “Amazon’s Antitrust Paradox.” In the paper, she slammed Amazon’s business practice of “predatory pricing,” which has helped the company grow exponentially while evading scrutiny from the government. In an interview with Time in 2019, this is what Khan had to say: “I think there is a very coherent story to be told about how market power is harming us as a whole in all these bizarre ways that are not readily apparent.”
Khan and her colleagues worry about how Amazon’s acquisition of MGM Studios would “illegally boost Amazon’s ability to offer a wide array of goods and services”. They may even go out of the scope of content production and further monopolize other industries. As mentioned, Amazon has already received many complaints related to antitrust. Investigation at the federal level seems to be fitting.
If the deal with MGM pushes through, Amazon will own the rights to all of the films and TV series under the studio. If you’re an avid movie or TV watcher, you’ll know that that’s a pretty big deal. There are over 4,000 movies and 17,000 TV shows in the studio’s library. As such, MGM Studios one of Amazon’s most expensive acquisitions– runner-up only to Whole Foods, which Amazon had acquired for $13.7 billion back in 2017. The acquisition of Whole Foods had significantly boosted Amazon’s position in the market, and the acquisition of MGM Studios may just lead to the same result.
This may sound like an upside, but it’s only an upside for Amazon. In the world of business, competition is healthy. Amazon’s dominance threatens the health of the business world as it has the world eating out of its figurative hands. Biden had signed an executive order pushing forth competition in the American economy, targeting anti-competitive practices that have become more prevalent over the years. The FTC investigating Amazon is part of the effort to break up Big Tech companies to restore healthy competition in the market and limit the power and influence that these companies have over the average consumer.
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