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FTC Mgmsisco Theinformation Opens Probe of Amazon’s Mgm Purchase, Signaling a Lengthy Inquiry

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FTC Mgmsisco Theinformation – The Federal Trade Commission has opened an investigation into Amazon.com’s acquisition of the MGM film company and possible anticompetitive practices in the digital media market. The deal, which closed in December 2016 and cost $1.3 billion, left some feel as if they were up against a “digital Goliath” with far more influence than they had bargaining power to resist.

Amazon will be the Goliath that faces off against the FTC. The antitrust enforcers, who in the past had focused on abuses in specific markets, such as pharmacies and travel agents, now find themselves scrutinizing the deals that are at the heart of Amazon’s business: its relationships with publishers and distributors.

It signaled how seriously it is taking these transactions by opening a formal investigation into Amazon’s deal for the video site Twitch Interactive last fall.

The FTC, which has been weighing the issue of competition and consumer welfare for decades, will be looking closely at how Amazon uses its power to drive competitors out of business. It will be examining how the company’s e-books, video and music-streaming efforts are coordinated. And it also wants to see whether Amazon is acting in ways that would allow consumers to easily switch services or suppliers.

“The resources Amazon is putting into competitive intelligence and eliminating threats may be a substantial barrier to entry,” said Donald Sull, a professor at the University of Maryland who studies the online video market. “Amazon has a strong incentive to use its market power.”

FTC Chairman Joseph Simons said that although the agency is wary of any monopoly power, it will be looking at Amazon’s practices for potential competitive harm.

“The FTC has a long history of saying it only wants to go in if there is strong evidence that something is anticompetitive,” Mr. Simons said at a conference in December. “But when you look back at the recent past, it’s not as if we haven’t gone after companies because they simply get big.”

The FTC also has oversight of mergers and acquisitions, including Amazon’s recent purchase of Whole Foods Market for $13.7 billion dollars.

The digital-media giant has become a dominant player in the media and technology industry by using its expanding retail, streaming and e-commerce operations to push aside rivals. The company, which sells everything from DVDs to sweaters, is transforming itself into a one-stop shop for consumers’ needs from groceries to digital media.

To do that, it has been gobbling up companies with deep pockets and healthy balance sheets. In a period of stagnation in the media business, Amazon has taken over companies such as IMDB.com and LoveFilm and built a content-production, streaming and distribution empire all while delivering goods to consumers with speed, efficiency and ease.

Amazon’s drive to acquire new businesses is nearly endless. It recently announced plans to buy upscale cabinet maker Whirlpool Corp., sending its stock up more than 6%.

In the case of MGM Studios Inc. and its collection of 4,000 films, Amazon paid $1.3 billion for the company before it had even released its first film under the new ownership. The deal was part of Amazon’s effort to shift from major studios such as Disney to produce its own content and challenge Netflix Inc.’s dominance in the market.

The FTC has a broad mandate that allows it to examine “unfair methods of competition” and is tasked with looking into areas where companies have a monopoly or are attempting to extend their reach.

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