A Coalition of Labor Unions Is Asking the FTC to Block the Amazon-MGM Merger

On Wednesday, a federation of four major labor unions representing over four million workers called on the Federal Trade Commission to block Amazon’s attempt to acquire Hollywood studio Metro-Goldwyn-Mayer.

The Strategic Organizing Center—which represents the Service Employees International Union (SEIU), the International Brotherhood of Teamsters, the Communications Workers of America (CWA) and the United Farmworkers—warns in a 12-page letter that the deal would pose a number of threats to the film industry, largely because it would bolster Amazon’s power in streaming video on demand (SVOD) markets. The company, SOC points out, has a long history of leveraging market power in one area to pursue anti-competitive practices in another.  

“Amazon has a well-documented history of leveraging its dominance in e-commerce to gain market share in vertically-adjacent markets using a range of unfair and anticompetitive practices,” writes SOC executive director Michael Zucker in the letter. “Amazon’s current practices in SVOD and related markets–including leveraging e-commerce power to build SVOD market share, 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.”

The $8.45 billion Amazon-MGM deal, which was announced in May—one day after D.C.'s attorney general filed a lawsuit against Amazon for anti-competitive business practices—came under immediate scrutiny. Senator Amy Klobuchar told Motherboard shortly after the announcement that the DOJ needed to conduct "a thorough investigation to ensure that this deal won't risk harming competition."

The letter also argues that an Amazon-MGM merger would accelerate consolidation trends that have already hurt the film industry so far. Vertical integration of the production and distribution of video content has given larger firms an advantage over smaller ones, Zucker writes, and created incentives to limit where SVOD content is available and more tightly control who has access to those limited spaces. 

"The dangers of vertical integration are particularly acute with respect to dominant digital platforms such as Amazon because of their ability to leverage gatekeeper power in one market into multiple other lines of business," the letter adds. "This merger presents an opportunity for the FTC to curb Amazon's expansion of power in yet another line of business and place reasonable limits on how one of the country's largest and most dominant companies is permitted to compete."

If the merger is allowed to go through, the SOC maintains that strict conditions should be placed on Amazon. The company should be required to unbundle Prime Video and expedited e-commerce delivery, and price Prime Video at market rates. Second, it should let competitors access its Fire TV and cloud computing services, which they are currently excluded from unless they limit their availability of their content or otherwise advantage Amazon. The SOC also wants to see the end of contracts that grant Amazon exclusive intellectual property rights, as well as a requirement that viewership data be made available to content makers. 

This isn't the first time the SOC has petitioned the FTC to curb Amazon's power, nor is it the first group to do so. In July 2020, the SOC asked the FTC to look into how the company exploited the Covid-19 pandemic to "engage in new or intensified conduct that further entrenches its market power" that included undermining competitors, squeezing suppliers, and exploiting workers without fear of consequence. Last week, Athena organized 48 advocacy groups to call on the FTC to ban corporate facial surveillance technology and used Amazon’s expansive surveillance empire as a case study into the serious harms caused to the public, consumers, and competitors.

Facing a review of the proposed Amazon-MGM merger and an ongoing antitrust probe into the company’s anti-competitive practices, Amazon has begged the FTC to recuse Chairwoman Lina Khan from any antitrust investigations into the company for fear that her expertise would prevent her from having “an open mind.”

Amazon did not immediately respond to Motherboard’s request for comment. SOC pointed Motherboard to its press release excerpting the letter.