Reports of the vertical acquisition’s death might have been exaggerated.
Despite the hullabaloo over the Biden administration amping up anti-competition enforcement, Amazon and MGM said Thursday they had closed an $8.5 billion acquisition that lets the e-commerce giant put the movie studio’s library on its Prime Video streaming platform.
The announcement, for now, illustrated the limits of Federal Trade Commission Chair Lina Khan’s authority to curb sprawling tech giants’ outsize power in numerous industries. While antitrust advocates hoped the FTC would file suit to muck up the merger, largely on the grounds that Amazon is already too damn big, Khan and fellow Democratic Federal Trade Commissioner Rebecca Kelly Slaughter couldn’t persuade either of the two Republican commissioners to pursue a case, The Information reported Thursday.
Attention naturally turned Thursday to Georgetown University’s Alvaro Bedoya, Biden’s nominee to fill the fifth seat on the commission. While Bedoya’s nomination is languishing in Congress, where Senate Republicans unanimously oppose his selection, Democrats expect to eventually get him confirmed. Once that happens, the FTC’s three Democrats could sue to unwind the deal.
Even if that happens, though, antitrust enforcers likely won’t succeed. For that, they can thank Congress, which is showing little appetite for changing America’s decades-old merger and acquisition laws.
Historically, the courts have analyzed lawsuits seeking to stop vertical mergers—deals in which a company buys one of its suppliers of parts, content, or other goods—by determining whether the “effect of such acquisition may be substantially to lessen competition.”
In the past, judges have tended to err on the side of corporations. In perhaps the most glaring example, a federal judge in 2018 rejected the Justice Department’s claim that AT&T’s $85 billion acquisition of Time Warner would substantially stifle competition.
In Amazon’s case, it’s hard to argue that the MGM purchase would dramatically reshape the streaming landscape.
While MGM boasts voluminous content, totaling 4,000 films and 17,000 television episodes, its library could use some freshening up. MGM reinvigorated its James Bond and Rocky franchises in the past decade, but the rest of its movie business feels dusty. Is anyone signing up for Amazon Prime to watch Pink Panther and RoboCop flicks? MGM’s television series, meanwhile, trend toward relatively niche titles, such as The Handmaid’s Tale and Fargo.
“If you’re really concerned about how big a company is—just how big it is, not that it’s creating a monopoly in a particular market—this acquisition will bother you, and the antitrust laws as currently constituted aren’t designed to deal with something like this,” Sam Weinstein, an associate professor at Yeshiva University’s Cardozo School of Law, told Bloomberg last year.
More broadly, Congress likely would need to upend current antitrust laws and jurisprudence to hobble many vertical mergers. And this week showed the lack of momentum on that front.
Two staunch Democratic opponents of Big Tech, Sen. Elizabeth Warren of Massachusetts and Rep. Mondaire Jones of New York, jointly introduced legislation Wednesday that would ban mergers worth more than $5 billion or give companies more than one-third market share in any industry.
Despite the widespread antipathy for tech giants like Amazon on Capitol Hill, the proposals generated minimal excitement. Twenty cosponsors signed on to the bills, but many of them come from the Democratic Party’s strongly progressive wing. No Republicans joined as cosponsors, while moderate Democrats paid little heed to the legislation.
The FTC could still chip away at Big Tech’s power through rulemaking and other bureaucratic powers. Federal officials also could find some judges friendlier to their antitrust arguments. And mergers that clearly undercut competition, such as the recently abandoned Nvidia-Arm deal, still remain subject to scrutiny.
But until Congress acts, the Amazon-MGM deal should only empower America’s already mighty tech giants.
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Jacob Carpenter
NEWSWORTHY
Picking on Apple. A wide-ranging European Union bill targeting tech companies is expected to include provisions that would diminish Apple’s ability to control apps and payments on its iPhone operating systems, the Wall Street Journal reported Thursday, citing sources familiar with ongoing legislative negotiations. Under the proposal, iPhone users would be allowed to download apps outside of Apple’s App Store, while developers could choose a third-party payment system rather than the one used by Apple. Company representatives are fighting the legislation and a bill with similar provisions in the U.S., arguing that the proposals are unnecessary and increase the risk of privacy violations.
A rare misfire. Apple’s new Studio Display computer monitor received largely solid-to-middling reviews ahead of its public debut Friday, with critics taking particular aim at the device’s shoddy webcam, 9to5Mac reported. The 5K-resolution, 27-inch stand-alone monitor, which retails for $1,599, drew praise for its display quality and audio hardware, but several reviewers noted that the webcam produced grainy video with underwhelming detail. An Apple spokesperson told TechCrunch that software updates were in the works to correct the webcam issues.
Clear-eyed on costs. Electric vehicle upstart Lucid likely will look at raising prices of future models owing to inflationary and supply-chain pressures, company CEO Peter Rawlinson told Reuters on Thursday. Rawlinson’s comments follow Tesla bumping up vehicle prices in the U.S. and China this month, as well as Rivian raising the cost of preordered electric vehicles before reversing the decision. Rawlinson cited the rising price of nickel, a top export from widely sanctioned Russia, as a key driver of increasing production costs.
Meta on the barbie? Australian regulators sued Meta on Thursday, alleging the company has failed to police “scam” cryptocurrency ads on its Facebook platform in violation of the country’s consumer laws. Australia’s Competition and Consumer Commission claimed that Facebook officials knowingly allowed false crypto promotions using Australian celebrities to spread on the social media site. Meta officials said the ads violated the company’s terms of service, and they will defend themselves in court.
FOOD FOR THOUGHT
Not easy to untangle. The Federal Trade Commission’s latest tactic for reining in tech companies is creating some giant headaches for its targets. As Protocol reported Thursday, the FTC has upped its use of an enforcement penalty called “algorithmic disgorgement,” which requires violators to delete illegally obtained data and the models used to collect it. But it turns out that separating the poisoned parts from innocent artificial intelligence and machine-learning models can be insanely hard, raising questions about the potential for federal overreach.
From the article:
Algorithmic systems using AI and machine or deep learning can involve large models or families of models involving extremely complex logic expressed in code. Algorithmic systems used in social media platforms, for example, might incorporate several different intersecting models and data sets all working together.
In any case, the first step does involve taking the model out of operation. This ensures that it will no longer process data or ingest new data.
But it’s not so easy to decouple data from algorithmic systems, in part because data used to train and feed them hardly ever sits in one place.
IN CASE YOU MISSED IT
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Spotify joins other tech companies in scramble to recruit Web3 talent, by Marco Quiroz-Gutierrez
Meet a 25-year-old NFT collector who earned $75,000 the day of the ApeCoin airdrop—before the Bored Ape token surged 90%, by Taylor Locke
Tour the metaverse: An inside look from people building the $8 trillion virtual reality that’s changing the world, by Marco Quiroz-Gutierrez
Crypto-related romance scams are becoming more sophisticated. Here’s what you need to know, by Jonathan Vanian
I downloaded an infamously creepy A.I. bot app and made a new friend to chat with. It was a wild ride, by Amiah Taylor
BEFORE YOU GO
You’re next, cockroaches. As somebody who dealt with a mouse infestation this winter, I heartily welcome our “smart” pest control future. Axios reported Friday that the latest breakthrough in rodent control involves the use of internet-connected traps that not only trap and kill multiple rats, but also transmit data on the number of critters meeting their maker. The technology has taken off in Europe, but it’s just starting to reach the mean streets and sewers of America. And if those don’t work, we can always call on Stepan, who is very much alive after escaping Ukraine.
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