Antitrust watchdogs go big on drama, light on plot

Penguin books are seen in a used bookshop in central London October 29, 2012. Britain’s Pearson has agreed to merge its Penguin book division with Bertelsmann’s Random House to create the world’s leading consumer publisher, in an apparent snub to Rupert Murdoch’s News Corp. REUTERS/Stefan Wermuth

Register now for FREE unlimited access to Reuters.com

NEW YORK, Aug 2 (Reuters Breakingviews) – Competition watchdogs are throwing the book at some some odd targets. The Department of Justice went to court read more on Monday with book publisher Penguin Random House over its $2.2 billion acquisition of smaller rival Simon & Schuster, a case whose witnesses include horror author Stephen King. Separately, the Federal Trade Commission is wrestling with Facebook owner Meta Platforms over its purchase of Within Unlimited, the maker of a virtual-reality fitness app. Both cases test new and important ideas. Meanwhile trustbusters risk missing out on the bigger picture.

Penguin Random House, owned by the German media conglomerate Bertelsmann (BTGGg.F), is the biggest book publisher in the United States so it’s not unusual that its merger with a rival would attract regulatory attention. What’s odd is that chief US antitrust litigator Jonathan Kanter and his team are chiefly concerned that the deal would reduce writers’ payments read more , rather than that it will raise the price of books. And FTC head Lina Khan has complained that Meta’s purchase of Within, for an undisclosed price, is an attempt to “buy its way to the top” – even though the FTC didn’t gatecrash Mark Zuckerberg’s firm’s earlier acquisition of customer-service software maker Costomer for $1 billion.

True, it makes sense for antitrust guardians to spend more time sweating the small stuff. Facebook was allowed to buy Instagram in 2012, a deal that presented no threat of consumers being saddled with rising prices since both companies’ products are free. Yet that merger helped what’s now Meta balloon to its present $430 billion in market value, with a dominant position in online advertising. The Department of Justice argues that Penguin Random House’s deal will lessen quality, choice and innovation, reflecting the reality that consumers can be harmed without being directly hit in the pocketbook.

Register now for FREE unlimited access to Reuters.com

Yet there are bigger deals to scrutinize, for more conventional reasons. Amazon.com (AMZN.O) closed its $8.5 billion purchase of movie studio MGM even though Khan has been a vocal read more of Jeff Bezos’ e-commerce empire and what she argues is its effect on competition. Microsoft (MSFT.O) too is pursuing its biggest acquisition to date, shelling out $69 billion for “Call of Duty” video-game maker Activision Blizzard (ATVI.O) even though the software giant is home to one of the world’s most prominent gaming consoles, the Xbox. Since regulators have only finite resources, the search for a new plot creates the risk that the real story gets missed.

Follow @jennifersaba on Twitter

CONTEXT NEWS

The US Department of Justice is asking a judge to stop book publisher Penguin Random House, owned by German media conglomerate Bertelsmann, from buying smaller rival Simon & Schuster from Paramount for $2.2 billion.

Horror author Stephen King is expected to testify on behalf of the United States on Aug. 2.

The Federal Trade Commission on July 27 sued to stop Meta Platforms from acquiring Within Unlimited, the maker of a virtual reality fitness app.

Register now for FREE unlimited access to Reuters.com

Editing by John Foley and Thomas Shum

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Leave a Comment

Your email address will not be published.