In an era of increasing corporate concentration, e-commerce behemoth Amazon has become the defining monopolist in 21st century American life. Amazon’s involvement in critical industries—from books to diapers to the food supply chain—has given the company unparalleled economic power.
While all of us have grown accustomed to Amazon’s ubiquity, the size and scale of Amazon’s business empire remains difficult to fully grasp. The company’s enormous market cap of around $1 trillion makes it the fifth most valuable in the world by one estimate. Despite this, some analysts expect Amazon’s cloud computing division to reach $3 trillion in value in the future. In other words, we’re looking at a future where the Amazon Web Services (AWS) division is worth not just three times what Amazon as a whole is currently worth, but more than any corporation in 2022.
Despite this, Amazon seeks even more unfettered dominance. While executive chair Jeff Bezos is focused on his personal space odyssey, the empire he built has its eyes on a different kind of “star power.” Look no further than Hollywood, an industry ripe for a hostile takeover by Amazon and fellow “Big Tech” monopolist Apple. Last year, Amazon announced it would acquire MGM Studios (if you don’t know the name, you certainly recognize Leo the Lion). The deal was finalized in March 2022. Standing at a whopping $8.45 billion, Amazon’s purchase of MGM makes it the second-largest acquisition in the company’s history, second only to its Whole Foods deal in 2017.
Amazon’s move is not an effort to improve MGM Studios’ artistic output. After all, Amazon Studios has existed for a decade as the company’s in-house film producer and distributor. Nor is it an effort, as stated in its press release, to “help preserve MGM’s heritage and catalog of films, and provide customers with greater access to these existing works,” words that almost make Andy Jassy, the CEO of Amazon, sound like a well-meaning librarian or archivist. In reality, the acquisition of MGM is an effort to entrench the power of Amazon Prime Video—and thus Amazon Prime, which some 150 million Americans belong to—as well as to leverage control of the new intellectual property (IP) and advertising rights it stands to acquire.
While preventing Amazon from getting the rights to Rocky, The Pink Panther, and RoboCop may not seem like a pressing societal issue, the deal has deeply concerning implications for the future of the entertainment industry. More broadly, stopping the merger is important to preventing Amazon from swallowing up yet another sector of the economy at the expense of creatives and industry workers.
The Federal Trade Commission (FTC) is currently led by Amazon’s “No. 1 Antitrust Critic” Lina Khan. Khan knows better than anyone that monopoly power is a bad deal for consumers. As a law student in 2017, Khan rose to stardom by challenging the right-wing antitrust consensus that has protected and entrenched corporate power for decades. Antitrust laws were created during the Gilded Age to fight back against the monopolists of the period. Unfortunately, judicial conservatives like Robert Bork were able to defang antitrust law in the latter decades of the 20th century, leading to the dominance of the likes of Amazon.
In layman’s terms, the still-dominant “consumer welfare standard” stipulates that Monopolies Are Good, Actually, as long as mergers don’t directly lead to higher prices. Courts have put the right-wing shibboleths of “efficiency” over the need to actually enforce existing antitrust law. The result? The gutting of the U.S. economy by unrestrained predatory corporations.
Khan’s understanding of monopoly power has been predictably derided as “hipster antitrust” by the right-wing legal establishment. But Khan’s assessment—that monopoly power is harmful, even if mergers don’t lead to higher consumer prices—is evidently the correct one. While consumers may be spared the pain of price hikes as a result of mergers, workers are often forced to bear the brunt of monopolization, either as a result of merger-driven layoffs or a decline in bargaining power. As noted by the Open Markets Institute, a situation in which a local economy is dependent on a single place of employment means that workers have even less bargaining power than normal.
In addition to screwing over workers, 21st century monopoly capitalism has come at a grave expense to human ingenuity. This can be plainly seen in the impact Amazon has had on the book industry. By monopolizing the literary industry, Amazon has helped facilitate an environment in which publishers are less willing to take risks on less popular, “heavier” books out of fear of losing out financially.
In 2018, The Atlantic characterized Khan as a proponent of the belief that, when a company possesses monopoly power, they “will almost inevitably wield that power far and wide, distorting not just the market itself, but the whole of American life.” And make no mistake: Amazon’s behavior in the years prior and following this profile has fully vindicated Khan’s worldview. In 2014, Amazon effectively extorted publishers through price increases and deliberate holdups on book shipments amid an “economic war” with publishing companies critical of Amazon. During this saga, the New York Times declared, “No firm in American history has exerted the control over the American book market—physical, digital and secondhand—that Amazon does.”
Beyond the literary industry, Amazon’s merger activity has made things worse for customers and workers at Whole Foods. Since being bought by Amazon, Whole Foods has seen an obvious decline in its quality of service and—to the surprise of no one but the army of Amazon “FC Ambassadors” on Twitter—working conditions for employees.
Since coming to the FTC, Khan has worked vigilantly to hold accountable the digital robber barons building a second Gilded Age, though an extended vacancy on the five-member commission hindered the agency’s activities for months. While Amazon announced it closed the deal with MGM back in March, the FTC reserves the right to challenge the acquisition at any time. In late May, it was reported that the FTC’s probe of Amazon had resumed, and that its investigation included “asking questions about the company’s recent acquisition of MGM Studios.”
To effectively challenge the deal, the FTC will have to prove that the acquisition is an example of anti-competitive conduct on the part of Amazon. To be clear, convincing a federal judge to side with the FTC over Amazon will be difficult given how entrenched right-wing “consumer welfare” dogma has impeded antitrust enforcement for decades. Nevertheless, it is still crucial that the FTC pursues a lawsuit to unwind the merger in order to stop Amazon’s further encroachment into Hollywood.
Amazon wants you to believe that controlling ownership of iconic franchises like the James Bond series will “provide customers with greater access” to these classics. It goes without saying, however, that Andy Jassy is not on a moral mission to bring GoldenEye to the masses. Amazon wants to control access to—and the ability to profit from—beloved movies. And the implications of this go well beyond the obvious possibility that consumers will have no choice but to subscribe to Amazon Prime in order to watch their favorite flicks.
Take the case of Amazon’s Fire TV service and the ruthless tactics used by the company to dominate would-be competitors. After tripling its market share from 2015 and leaving former competitors like Chromecast in the dust, Amazon has been left with one key rival: Roku. In 2020, it was reported that Amazon was leveraging the full force of its monopoly power to give Fire TV a boost by preventing Roku and other device makers from buying ads on Amazon’s main platform. With MGM under its belt, Amazon could easily deny Fire TV competitors access to MGM classics in order to further privilege the service.
This is to say nothing of what it means for Amazon’s advertising empire: Desperate competitors could find themselves having no choice but to agree to future demands by Amazon to give special preferences to Amazon commercial content in order to gain streaming rights to Bond or other classic films. As David Dayen noted in The American Prospect last year, it’s difficult to understand the merger as anything other than an effort to “make competing products more expensive, to push people away from them and back into the waiting arms of Amazon.com.”
As for the MGM deal’s impact on film, even the most casual of moviegoers have noticed that American cinema is increasingly dominated by uninspired big-budget sequels and remakes. Corporate consolidation in the film industry, exemplified best by Disney, has already had bad consequences for creativity in cinema. As Paris Marx noted last year in Jacobin, the Disney cinematic empire has built a model where films from established franchises receive top priority in order “to drive viewers into spin-off shows and miniseries” and to entice fans to subscribe to their in-house streaming services, where content is often made exclusive.
At a time when systemic abuse of film industry workers is more apparent than ever, it’s difficult to imagine that Amazon’s further encroachment into the film sector will be anything but bad for workers. The Strategic Organizing Center, a labor coalition representing some four million workers, wrote to the FTC to stop the deal, arguing it would further facilitate “harmful vertical integration in the film industry.” Similarly, the the Writers Guild of America West has sounded the alarm on what the deal means for TV writers’ welfare, arguing persuasively that Amazon’s takeover of MGM stands to reduce “writers’ leverage against their powerful employers.”
It’s worth considering immediate steps that policy-makers and regulators should take toward building a fairer film industry. The American Economic Liberties Project (AELP), a leading anti-monopoly group, provided a helpful blueprint for improving the entertainment and media sectors in 2021. The AELP’s prescription includes clamping down on the exploitative market power the film industry wields over workers, forcibly unwinding existing mega-mergers. It goes without saying that progressives must also stand in solidarity with exploited film crew workers and television and movie writers organizing to secure fairer working conditions.
As FTC Chair, Lina Khan has affirmed her willingness to take Facebook to task for its anti-competitive acquisitions of WhatsApp and Instagram. With Khan now firmly in control of the agency following the confirmation of a fifth commissioner, it’s imperative that the agency continues its scrutiny of the merger and files suit to have it unwinded. Doing so would be a crucial first step toward clamping down on Amazon’s monopolistic activity and preventing further consolidation in the entertainment industry.