Amazon closes US$8.4B MGM deal
Amazon.com Inc. said it closed the Us$8.5-billion acquisition of film studio Metro-goldwyn-mayer after regulators declined to challenge the deal, cementing the company’s biggest takeover in five years.
The closing, announced Thursday in a statement on the company’s website, marks the latest deal by a U.S. technology giant to win approval despite criticism that the companies have been able to gobble up smaller firms with little pushback from competition enforcers.
European Union regulators signed off on the MGM deal Tuesday after finding it posed no competition problems. In the U.S., the deadline for the Federal Trade Commission to challenge the deal before the deal closed passed without the agency taking action. The FTC still has the authority to sue to block the deal in the future if a majority of commissioners vote to file a lawsuit. The commission is currently split between two Republicans and two Democrats, including chair Lina Khan, while President Joe Biden’s nominee for the fifth seat awaits Senate confirmation.
“The FTC does not comment on any particular matters,” said agency spokesperson Lindsay Kryzak. “However, we reiterate that the commission does not approve transactions and may challenge a deal at any time if it determines that it violates the law.”
The company agreed in May to buy MGM to deepen its library of streaming content, one of the perks of membership in the company’s Prime delivery service. MGM, the studio behind the James Bond franchise, adds a back catalogue of 25,000 hours that Amazon could divvy up between its Prime Video offering, or its free-to-stream, ad-supported IMDB TV.
The takeover is Amazon’s biggest acquisition since it agreed to buy Whole Foods in 2017 for US$13.7 billion. In 2020 and 2021, alone, Amazon spent a combined US$24 billion on video and music for its streaming services.
Previously, Amazon has acquired smaller startups it perceived as a threat — footwear seller Zappos, for example, or Diapers.com parent Quidsi. Amazon also has snatched up-and-comers in new business lines, such as the game platform Twitch or Kiva, which makes warehouse robots.
About a month after the deal was announced, Biden named Khan to lead the FTC, putting a fierce critic of Amazon in charge of the agency. Khan rose to prominence in the antitrust world with a 2017 paper she wrote as a law student about Amazon’s dominance. Titled “Amazon’s Antitrust Paradox,” it traced how the online retailer came to control key infrastructure of the digital economy and how traditional antitrust analysis fails to consider the danger to competition posed by the company.