Amazon charges ahead with acquisitions, daring FTC to act
Amazon is going on another acquisition shopping spree in the shadow cast by Federal Trade Commission chair Lina Khan's high-profile critique of the company's size and power.
Driving the news: Amazon announced its intention to acquire concierge health care service OneMedical in July and Roomba producer iRobot in August. Last week, it said it would acquire Belgian warehouse robotics maker Cloostermans.
- In what is known as a "second request," the FTC has asked for more information from Amazon and OneMedical, stalling the deal’s closing until issues are resolved.
- The agency is also expected to closely examine Amazon's attempt to buy iRobot, per a Politico report, and anti-monopoly groups pushed for an investigation into the deal in a letter to the FTC last week.
Why it matters: Challenging Amazon's acquisitions will be a major test for the resource-strapped FTC and for Khan's effort to transform tech regulation.
- The agency has the power to make these deals difficult for Amazon and signal to other companies to think twice before buying smaller ones.
Flashback: Khan rose to prominence for arguing that Amazon's position as both a seller of its own goods and platform for sellers was anti-competitive.
- In June 2021, the company unsuccessfully requested she recuse herself from Amazon-related matters.
- Khan previously told Axios she would rather litigate over alleged anticompetitive mergers than negotiate with companies, meaning high scrutiny over the iRobot deal seems likely.
- Earlier this year, the FTC allowed Amazon's purchase of MGM to close, but it has continued to scrutinize the deal as part of a wider antitrust probe of Amazon.
What they're saying: "When you get a second request, it's a huge event. Suddenly your transaction goes from closing in five weeks to closing in a year," Bruce Hoffman, former head of the bureau of competition at the FTC, told Axios. "Suddenly you go from spending a little bit of money to spending $10 million" to close your deal.
- Khan and Justice Department antitrust chief Jonathan Kanter have both been vocal with concerns about large platforms acquiring smaller ones, Alden Abbott, former general counsel at the FTC, now a fellow at the free-market leaning Mercatus Center at George Mason University, told Axios.
- Big Tech should assume its deals will face second requests from the FTC, said Abbott, a shift from previous administrations: "The current view is, 'We don't trust any acquisitions by the big platforms, because they may use them to entrench their dominant position to get additional information about consumers, which they might misuse.''"
Details: Groups and lawmakers opposed to Amazon's iRobot and OneMedical deals say they pose consumer privacy and competition concerns. iRobot, OneMedical and Amazon have all said consumer privacy would be protected in any transactions.
- "By purchasing an already popular smart home device, they will be able to extend the device’s prevalence through anti-competitive pricing while using personal consumer data to further entrench their monopoly power in the digital economy," the advocacy groups' letter to the FTC, led by Public Citizen, reads.
- For OneMedical, an acquisition would "allow Amazon to get their hands into the health care sector, where there are billions of dollars," Carri Chan, a professor at Columbia Business School, told Axios. "There have already been concerns about consumer data and Amazon's reach, and patient health data is much more sensitive, so it is natural there are concerns around that."
Yes, but: Such data and insights in the hands of a giant like Amazon could be useful and create health care efficiencies, since the health care information ecosystem is so siloed, Chan said.
- "In the short term, there's a lot of benefits across the board. But once you eventually close that gap, it could start creating competition and privacy issues."
The other side: The rapidfire announcements of the OneMedical and iRobot deals were a case of coincidental timing, a source close to Amazon told Axios.
- Every potential acquisition is unique, and it's unusual for two to land as closely as these did, the source added.
What's next: Amazon and OneMedical will have to supply the FTC with all of its requested information before the deal is able to close. Amazon may also send iRobot an official second request following the current review.
- The two sides may go back and forth over document requests before any decisions are made, and the agency can choose to challenge the acquisition altogether, like it did with Meta's plan to acquire VR fitness company Within.
- The FTC, iRobot and OneMedical declined to comment.