Lina Khan’s Gift to Netflix

By The Editorial Board Close The Editorial Board July...


Federal Trade Commission Chair Lina Khan



Photo:

graeme jennings/Agence France-Presse/Getty Images

Federal Trade Commission Chair

Lina Khan

didn’t need President Biden’s order on Friday to give more scrutiny to Big Tech acquisitions. She was already on it.

Several media outlets reported Friday that the FTC has begun an extended review of Amazon’s proposed $8.5 billion purchase of MGM Studios. Amazon had to file premerger notifications for the deal with the FTC due to its size, but some 95% of mergers are waived through because they pose no threat to competition.

Neither does the Amazon-MGM deal, but the FTC has issued Amazon what’s known as a “second request” for information. This signals that the agency is closely scrutinizing an acquisition. What’s there to scrutinize? Competition in media content and streaming is vast. The average U.S. household subscribes to four streaming services.

Amazon’s streaming competitors include

Disney

+, Netflix, Hulu,

Apple,

NBC and WarnerMedia (now merging with Discovery). The MGM acquisition will benefit Amazon’s 140 some million U.S. Prime subscribers who will get access to a larger library of content, and it could force other streaming services to improve their own catalogs.

As for MGM, production studios have been struggling as people avoid public theaters for their big screens at home. Disney in 2019 acquired 21st Century Fox in part for its giant catalog including the Simpsons and several Marvel franchise films. Amazon has prioritized original programming with niche appeal, but it lags in classics. It also wants to create more value for Prime members since other retailers now offer online deliveries that are as fast and free.

The FTC ought to clear the deal based on the century-old “rule of reason” and consumer-welfare standard, but Democratic commissioners are moving away from both. Ms. Khan should recuse herself from the Amazon-MGM review since she wrote an article in the Yale Law Journal in 2017, “Amazon’s Antitrust Paradox,” arguing that Amazon’s ability to “cross-leverage market advantages across distinct lines of business” was anti-competitive. This may be a theory the FTC is exploring in its MGM review, and there’s doubt she can fairly judge the facts.

Blocking the deal would merely benefit other streaming giants, especially Netflix and Disney. The Justice Department’s years-long antitrust crusade against Apple’s deals with book publishers last decade helped cement Amazon’s dominance in e-books. Antitrust interventions based on the rule of politics often hurt consumers and make markets less competitive.

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the July 13, 2021, print edition.

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