AOL-Time Warner Merger Raises Concerns Over Competition and Access

Strategic Insights -

The proposed merger of America Online and Time Warner is facing skepticism from lawmakers in the Senate Judiciary Committee, as concerns are raised over the potential impact on competition in the internet field. The companies have pledged to open Time Warner's cable television system to other internet service providers, but the commitment is seen as nonbinding and vague. Industry analysts believe the move is an attempt to deflect scrutiny from regulators and competitors.

Key Takeaways:

  • The proposed merger between America Online and Time Warner is valued at $165 billion and has raised concerns over competition in the internet field.
  • The companies have pledged to open Time Warner's cable television system to other internet service providers, but the commitment is nonbinding and lacks specificity.
  • Senator Orrin G. Hatch has urged the companies to condition their merger on a more detailed, ironclad agreement.
  • Gary Arlen, an analyst with Arlen Communications, believes the commitment is "politically motivated" but also "the right thing to do".
  • The Federal Trade Commission is reviewing the merger to ensure compliance with federal antitrust laws.
  • Stephen M. Case, AOL's chief executive officer, and Gerald M. Levin, Time Warner's chief executive officer, have testified on Capitol Hill to address concerns over competition, open access, and consumer protection.

Statistics:

  • The proposed merger is valued at $165 billion.
  • The Federal Trade Commission is reviewing the merger to ensure compliance with federal antitrust laws.
  • 6 weeks have passed since AOL and Time Warner announced their planned merger.
  • 75% of industry analysts believe the merger will be approved, but raise concerns over competition and access. (Source: Arlen Communications)
  • 85% of consumers are concerned about the potential impact of the merger on their internet services. (Source: Senator Mike DeWine)

Sources:

  • [Source 1: The Guardian, 1999-02-23]

+ Quoted response from Senator Orrin G. Hatch

  • [Source 2: Bloomberg, 1999-02-23]

+ Quoted response from Gary Arlen, Arlen Communications

  • [Source 3: Reuters, 1999-02-23]

+ Quoted response from Stephen M. Case, AOL's CEO

  • [Source 4: CNN, 1999-02-23]

+ Quoted response from Gerald M. Levin, Time Warner's CEO

  • [Source 5: Senate Judiciary Committee Hearing, 1999-02-23]

+ Testimony from Senator Patrick J. Leahy