Four unions call on FTC to block Amazon’s purchase of MGM
The Center for Strategic Organization (SOC) wrote to the Federal Trade Commission, asking the agency to block Amazon’s purchase of MGM.
SOC represents four unions: the Service Employees International Union, the International Brotherhood of Teamsters, the Communications Workers of America and the United Farmworkers. Together, the four unions represent some 4 million workers.
SOC wrote an open letter to Ms. Holly Vedova, Acting Director of the FTC, Competition Bureau, expressing concerns about Amazon’s proposed purchase of MGM Studios, valued at $ 8.45 billion.
The letter highlights the current state of the video-on-demand streaming (SVOD) market, a market in which Amazon is uniquely positioned to gain an unfair advantage.
The SVOD market is experiencing both massive expansion and increasing vertical integration. The market is currently dominated by an oligopoly of five companies. In 2020, Netflix (20%), Amazon Prime Video (16%), Hulu (13%), HBO Max (12%) and Disney + (11%) collectively accounted for 72% of the entire U.S. SVOD market. 1 Each of these companies operate their own studios as well as a streaming platform that serves as a distribution channel for the content they choose to acquire or, increasingly, that they produce themselves.
The letter goes on to point out that Amazon’s dominance in other markets, particularly e-commerce, allows the company to offer its SVOD services for free, putting it in a position to abuse its market power.
Amazon’s Prime subscription – which bundles free and expedited shipping with streaming video at no additional cost to consumers – is dramatically different from the monthly fee model implemented by SVOD competitors. This model, which has already caught the attention of competition authorities in Europe, involves an aggressive pricing strategy that unfairly takes advantage of Amazon’s e-commerce dominance in the SVOD market by offering streaming content. at no cost to consumers.
The letter cites former studio manager Barry Diller’s assessment of the deal to sum up SOC’s objections.
“[When I ran studios] the key point of the films was to appeal to consumers ”, but for a service like Amazon Prime“ the incentives have changed… The system is not necessarily to please anyone. It’s to buy more Amazon stuff.
SOC’s opposition to Amazon’s MGM deal is just the latest challenge the company faces amid growing antitrust surveillance.