Amazon, MGM, and the Price of Entertainment

Amazon, MGM, and the Price of Entertainment

If all goes according to Amazon and Metro-Goldwyn-Mayer’s plans, the web service giant will soon acquire the legacy film studio in an $US8.45 ($11) billion deal that will add thousands of movies and television shows to the tech company’s portfolio of content available to stream to 200 million Prime subscribers. Taken at face value, Amazon’s move is part of the company’s attempt at giving its customers more options when it comes to choosing what to watch, and many will be fine to leave it at that. But gobbling up one of the oldest film studios in Hollywood is something worth considering from a few more angles.

Amazon and MGM’s proposed merger is just one of the many goings-on that the United States Justice Department would likely rather have an antitrust expert keeping a close eye on, but the reason it stands out in many people’s minds is because of the sheer scale of Amazon’s reach across a variety of industries. Though Amazon isn’t new to the content-creation game, it’s likely that the company will argue that buying a legacy film studio shouldn’t concern regulators because Amazon isn’t technically the name to beat when it comes to streaming, or producing movies and episodic series.

Amazon’s recent moves — like spending $US250 ($321) million for the rights to the Lord of the Ring franchise, and sinking $US465 ($596) million into the first season of the prequel series — have made it easier to see the company as merely following the example of other streamers like Netflix that produce original content as well as acquire completed projects. If the MGM deal is cleared, even more characters like the Addams Family, James Bond, and the Pink Panther will have new corporate ownership. But while Amazon looks, acts, and creates content like a traditional entertainment company, it’s much more than that. Unlike its streaming peers and the traditional film studios it’s recently shown an appetite for, the e-commerce giant’s foray into original programming has always been a means of drawing more customers in to buy Amazon Prime memberships, which include other services like cheaper, faster delivery for the countless products you can buy on its larger marketplace.

The idea of a singular corporate entity being in control of massive chunks of online commerce, the web services that other systems like Twitter and Slack use, and a noteworthy (but relatively small considering) chunk of the entertainment space alarms many regulators, because of the possibility of monopolies developing. Companies like Amazon are always quick to insist that they’re taking steps to prevent that from being the case, but Amazon’s growth and expansion-oriented actions like the MGM acquisition — its second-largest to date after its 2017 purchase of Whole Foods for $US13.7 ($18) billion — and reports that Amazon also attempted to buy Sony don’t exactly send that same message.

An exterior view shows an Amazon fulfillment centre on March 31, 2021 in North Las Vegas, Nevada.  (Photo: Ethan Miller, Getty Images)
An exterior view shows an Amazon fulfillment centre on March 31, 2021 in North Las Vegas, Nevada. (Photo: Ethan Miller, Getty Images)

From MGM’s perspective, the deal is probably a boon considering how long the studio’s been up for sale, but by entangling with Amazon, it’s now somewhat difficult to decouple its upcoming projects from some of the ugly realities about the company that now owns them. It’s odd to think that the James Bond films of the future might be brought to you by the same company that went to great lengths insisting that its delivery employees weren’t being forced to urinate in bottles in order to meet their productivity quotas. Hostile, abusive workplaces existed in Hollywood long before Amazon threw its hat into the ring, but Amazon’s well-documented history of union-busting, and more recently, accusations of endangering employees’ lives are now, at least tangentially, related to MGM’s existence as a brand.

Some of these things, along with claims of structural racism within the company and concerns about privacy violations, were the subject of discussion during Amazon’s shareholders’ meeting this week, where outgoing CEO Jeff Bezos — who’s shifting into an executive chairman role — expounded on the “acquisition thesis” behind buying MGM. “MGM has a vast, deep catalogue of much-beloved intellectual property,” Bezos said. “And with the talent at Amazon and the talent at MGM Studio, we can reimagine and develop that IP for the 21st century.”

Though much of the coverage about the still-pending acquisition has focused on what will become of MGM’s major movie franchises, the deal also has a number of advocates on Capitol Hill concerned about Amazon’s latest move to further cement itself as a foundational part of the internet’s infrastructure, and constant presence feverishly working to keep its customers consuming.

Soon after news of the acquisition first broke, Sen. Amy Klobuchar (D-MN.), who heads up the Senate Judiciary’s antitrust subcommittee, put out a public statement expressing a desire for more oversight over these kinds of large-scale mergers out of an abundance of caution. “This is also a reminder of why we need to fund our antitrust agencies so they can take on investigations of multi-billion dollar deals,” Klobuchar said. “Our government cannot ensure major corporations are playing by the rules if enforcement agencies are chronically underfunded.” Across the aisle, Sen. Josh Hawley (R-MO) — who was best known as an enemy of Big Tech before sullying his reputation by challenging President Joe Biden’s victory as MAGA rioters stormed the Capitol building — not only opposes Amazon’s MGM acquisition, he tweeted on Wednesday that Amazon “shouldn’t be permitted to buy anything else. Period.”

Over in the House of Representatives, Rep. Ken Buck (R-CO) — who contested the results of the 2020 election, and voted against the $US8.3 ($11) billion emergency funding package to combat covid-19 last March — shared similar worries and calls for heightened scrutiny of “mergers and acquisitions involving monopoly companies experiencing tremendous and exponential growth.”

Political figures like Klobucher and Buck’s response to the news of the acquisition have been in line with their past stances on the need for more strict regulations, but it remains to be seen how the Biden administration — which still has not appointed an assistant attorney general to head up the Justice Department’s investigations into antitrust — will respond. Though the White House has submitted multiple potential candidates for the role, the process has been hamstrung by objections raised by White House ethics watchdogs worried that nominees’ pasts both defending and critiquing tech giants like Google make them unqualified for the job.

Also looming over the acquisition is an antitrust lawsuit filed earlier this week by Washington, DC, Attorney General Karl Racine over Amazon’s “most-favoured-nation” clause, which prohibits third-party Amazon retailers from selling their goods at lower prices on other digital marketplaces. Racine’s lawsuit argues that Amazon’s tactics have the end result of artificially inflating prices across the internet as a whole while also making it difficult for other marketplaces to compete.

Though that lawsuit is ongoing, it’s important to note that the specific language of Amazon’s most-favoured-nation clause was introduced in direct response to earlier investigations into the company’s “price parity provision,” which led to similar concerns from European authorities who were ultimately able to force the company to stop the practice in 2013. It wasn’t until 2019 that Amazon axed the price parity provision here in the U.S., but the way that the company quickly rolled out the most-favoured-nation clause suggests that it very much intends to pursue the practice, or practices like it, in the future.

Amazon’s persistent pursuit of policies that seem designed to harm independent retailers every bit as much they accommodate the desires of consumers doesn’t exactly make it easy to imagine that it intends to play fair in the streaming wars. But as these megacorporations continue to consolidate IP and build out massive walled gardens audiences aren’t meant to ever fully leave, it’s up to those audiences to exercise their free will and think critically about the wider structures that own the entertainment they consume.

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