Friday, March 24, 2023

Labor Union Coalition Urges FTC to Reject Amazon’s $8.5 Billion MGM Deal

A coalition of four major labor unions representing almost 4 million workers is urging the Federal Trade Commission to block Amazon’s proposed acquisition of MGM.

In a 12-page letter sent Wednesday to the FTC, the Strategic Organizing Center (SOC) argued Amazon’s $8.45 billion takeover of MGM should be blocked to prevent Amazon from amassing more power in the entertainment industry and exploiting that through anticompetitive business 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,” SOC executive director Michael Zucker wrote in the letter.

The SOC represents four affiliated unions: the Service Employees International Union (SEIU), the International Brotherhood of Teamsters, the Communications Workers of America (CWA) and the United Farmworkers.

The labor coalition alleges that Amazon currently engages in anticompetitive practices in subscription VOD and related markets — for example, by using its ecommerce market power to build SVOD market share and by bundling Prime Video with the Prime program to offer the service “at below market prices.”

A copy of the letter is available at this link. It was addressed to FTC Competition Bureau acting director Holly Vedova. Reps for Amazon and the FTC did not immediately respond to a request for comment.

The FTC is heading up the antitrust review of Amazon’s deal to acquire MGM, and it is also conducting a broader antitrust probe into Amazon’s business practices. Amazon has formally requested that FTC chair Lina Khan, an outspoken critic of Amazon and other tech giants, recuse herself from antitrust reviews involving the company.

In May, Amazon announced a definitive agreement to acquire MGM and its well-stocked library of 4,000 movies and 17,000 TV shows, including the storied James Bond film franchise. “We’re looking forward to reimagining and developing the deep catalog of MGM,” Amazon founder Jeff Bezos said at the company’s May 26 annual shareholders meeting.

In the letter, the SOC argues that Amazon has a well-documented history of leveraging its dominance in ecommerce to gain share in vertically adjacent markets using a range of unfair and anticompetitive practices. Allowing Amazon to acquire MGM would give Amazon expanded power to “impose onerous contract terms such as all-rights provisions, which 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,” SOC’s Zucker wrote in the letter. “And it would give the company even more creative control over content, with troubling implications for content diversity and freedom of expression, the SOC argues in its letter.”

The SOC said the FTC should place significant conditions on the merger, if it does allow it to proceed — but that the “best course would be to prevent Amazon from gaining an additional foothold in the SVOD market from which to expand its power and reach into this important area of economic and cultural significance for our country,” Zucker’s letter concludes.


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