The Strategic Organizing Center (SOC), a federation of labor unions repping close to 4 million workers, Wednesday called on the Federal Trade Commission to reject Amazon’s proposed $8.45 billion acquisition of MGM as a newly vigilant FTC is in the process of scrutinizing the deal that was announced in May.
In a letter sent to the acting director of the FTC’s Competition Bureau, Holly Vedova, SOC Executive Director Michael Zucker claims that Amazon has already employed anti-competitive practices in the streaming video-on-demand market and the proposed deal would let it further leverage its power to the detriment of consumers, competitors and the film industry. SOC (formerly Change to Win) includes the Teamsters, Communications Workers of American (CWA), United Farmworkers of America and Service Employees International Union.
WGA, Public Interest Groups Ask FTC To Block Amazon-MGM Deal; Slam "Clear Pattern Of Monopolistic Practices"
“Amazon’s proposed acquisition of MGM would further bolster Amazon’s ability to leverage power across multiple lines of business related to the SVOD market and create further harmful vertical integration in the film industry at large,” the SOC’s Zucker wrote. “Amazon’s current practices in SVOD and related markets – including leveraging e-commerce power to build SVOD market share, bundling Prime Video with delivery and offering Prime Video at below market prices, and exclusionary use of its dominance in the streaming device and cloud computing markets – already raise serious questions of anti-competitive conduct in the specific market that would be affected by the merger.”
Amazon offers Prime Video free to Amazon Prime members and the company has been upfront that it considers the streaming service valuable in driving signups to what may be the world’s biggest loyalty program — even though financially the MGM deal is small for a company that posted revenue of $386 billion in 2020,
In a post-merger call, Bezos touted MGM’s intellectual property, which includes the James Bond franchise. But Amazon Prime Video otherwise rarely merits a mention on earnings calls, including the latest one in July.
If not blocked, SOC asks the FTC for significant conditions to be placed on the merger.
The SOC says Amazon has a history of leveraging its dominance in e-commerce to gain share in vertically-adjacent markets using a range of unfair and anticompetitive practices.
“This is an opportunity for the Commission to put a red light in front of the type of transaction that has proven to be so anti-competitive in the past at Amazon,” Zucker said. “If the deal proceeds, it will only allow Amazon to intensify its abusive conduct, bringing harm to numerous participants in the streaming video on demand market.”
The letter said the merger would give Amazon expanded power to impose onerous contract terms such as “all-rights provisions that sap income from other distribution methods and can also curb the benefits of community engagement with content by, for example, restricting its availability in educational settings. It would give the company even more creative control over content, with troubling implications for content diversity and freedom of expression,” the SOC said.
Last year, the SOC and its affiliates submitted a petition requesting the Commission investigate a range of anti-competitive practices by Amazon, as well as a supplemental letter regarding the e-commerce giant’s practices during the COVID pandemic.
Amazon has been targeted by labor for working conditions and attacked on Capitol Hill and lawsuits around the world for anticompetitive behavior. Most recently, it faced an antitrust investigation in India for allegedly promoting select sellers on its e-commerce platform. It was recently sued by the Attorney General of the District of Columbia on the grounds that it stifles competition in the e-commerce space. Amazon, along with Facebook, Google and Apple have also been targeted by lawmakers in sprawling antitrust reform legislation.
Traditional antitrust law requires evidence that consumers are harmed, generally by higher prices, when two companies combine. Legally, that may present a high bar for opponents of the MGM transaction. However, some argue that antitrust law is outdated in the current landscape of digital giants – thus the push to reform it.
The FTC is said to be taking a close look at the MGM deal. Amazon has asked that newly appointed Commission chief Lina Khan, a leading proponent of expanding and redefining the scope of antitrust for the modern era, recuse herself from the review. In a 2017 article in the Yale Law Journal titled “Amazon’s Antitrust Paradox,” she wrote that, “Elements of the firm’s structure and conduct pose anticompetitive concerns—yet it has escaped antitrust scrutiny.”
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