The Federal Trade Commission’s expected announcement that it will scrutinize the proposed purchase by Amazon of the famed MGM studio and its 4,000 film library assets raises fundamental questions about the future of our antitrust laws and how they will be applied.

While some 200 million Amazon Prime users have access to Amazon’s streaming video service, surveys show that it trails YouTube and Netflix in terms of monthly viewership, with rivals Hulu and Disney Plus nipping at its heels. New market entrants HBO Max, Peacock and Paramount promise more fierce competition for viewing eyeballs.  

Normally, the FTC would focus on a proposed combination within the same industry, yet some at the Department of Justice apparently feel that Amazon’s purchase of a content library and film studio would threaten competition and be bad for consumers. MGM owns the venerable James Bond and Rocky franchises but can hardly be called a market-share leader in video content, making the FTC’s decision to investigate the $8.5 billion purchase puzzling. While newly appointed FTC chair Lina Khan has been a vocal critic of Amazon’s business practices, federal intervention would be warranted only if this proposed combination harms consumers or the video streaming landscape.  

Traditional antitrust law focused on price fixing and harm to consumers by monopolies, such as railroads and large industrial concerns. In 1911, the Supreme Court determined that Standard Oil had misused its monopoly power by strategically lowering prices and driving competitors out of business. In 1948, Paramount and Warner Bros., accused of taking advantage of movie theaters, entered into a consent decree requiring them to shed their exhibition arms. At the time, it was felt that such vertical integration within an industry led to anti-competitive business practices.  

Yet the gig economy that has emerged over the past 25 years has made some long standing antitrust principles irrelevant. For example, in the “Freemium” business model where a platform offers search, email or a social-media network that is free to consumers, changes in pricing cannot be used as a yardstick to detect consumer harm. Further, we know that digital companies “monetize” consumers by collecting, mining and selling user data, creating a lucrative revenue stream. In the absence of a national privacy data protection law, federal regulators must scramble to find the tools to curb behaviors that harm either consumers, competition or both.

The federal government and several states have announced probes of Amazon’s business practices, because vendors on its marketplace claim that the company unfairly uses data to favor either Amazon’s partners or the company’s own line of products. This would constitute unfair competition and an abuse of market power, if these claims are proven. We don’t need new laws or new interpretations of statutes to punish such corporate behavior.

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The Amazon-MGM deal occurs against a backdrop of widespread vertical integration between content producers and streamers. Both Amazon and Netflix produce and distribute their own programs, which has helped fuel a boom across Hollywood, benefiting writers, actors and production staff. Their streaming media success has been copied both by traditional studios and new market players. In this evolving marketplace, it’s difficult to pinpoint how an MGM-Amazon combination would result in less competition or hurt viewers of streaming services.

When Amazon purchased Whole Foods in 2017 for $13.7 billion, antitrust regulators did not deem it necessary to intervene. Amazon implemented more in-store technology and brought a focus on building a national supply chain for Whole Foods. The new entity offers more discounts and promotes its Amazon Fresh delivery service. One might argue that such innovation and experimentation is critical for the health of free markets.

We don’t prosecute companies in America simply because they are successful, big or have “market power.” To adopt that standard would leave antitrust enforcement largely to the political winds and damage marketplaces that would not benefit from government intervention. This is not to say that we should be blind to the possibility that a firm can use its market power in one sphere to unfairly influence another, but it makes little sense to outlaw new combinations in markets that are growing, thriving and offering more and more consumer choices.