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Is the SEC and FTC ever going to do their job? They have failed us in the 21st century. Shareholder value over everything else. It would be nice for some regula

Is the SEC and FTC ever going to do their job? They have failed us in the 21st century. Shareholder value over everything else. It would be nice for some regulation to attack all this rent seeking.

throwaway_kufu 5y ago
For a little background on the movie industry and antitrust law, the Hollywood studios once upon owned everything from the way movies were produced, distributed and exhibited. The monopoly held by the studios was effectively broken up following WWII. Yes, there were multiple studios competing but individually they were engaging in antitrust behavior. This acquisition is essentially a waiving of the white flag and passing the torch. It will be allowed because big tech/Hollywood own politicians. However, and I think to your point, it is impossible to reconcile that Netflix is engaging in the same behavior (producing, distributing and exhibiting) as the Hollywood studios when the courts broke up the industry to allow fair competition.
- dageshi 5y ago
  Distribution was physical back in the day, your choice of cinema was dictated by location. Locking specific movies to specific cinemas was a detriment to the public for that reason. Does that matter when the alternative is via distribution by internet? Honestly, you can sub to netflix for one month, watch everything you want and then unsub, same with all the other services. Has there ever been a point in history where there's more content available for cheaper than right now?
  - treis 5y ago
    No, but we are solidly in the consolidate and undercut competition phase. The issues arise in the use monopoly power to extract large profit phase.
    - dageshi 5y ago
      How? So long as there are multiple competitors after the same customers I don't really see how this happens. Hell, we only really have 3 major cloud computing platforms (along with some minor ones), but consistently the prices of everything they offer goes down.
      - treis 5y ago
        Because Netflix, Hulu, Prime Video et Al don't make money. At some point they're going to have to and that's when we see if you're right or not.
        CyberDildonics 5y ago
        https://www.washingtonpost.com/business/2021/04/20/netflix-new-subscriber-numbers/ https://www.washingtonpost.com/business/2021/04/20/netflix-n... Netflix has over 208 Million subscribers each paying a monthly fee. They are taking in multiple BILLIONS every month in revenue. They are also in complete control of their expenditures. They don't rely on commodities or regulations. If that isn't making money then I don't know what is.
        treis 5y ago
        Making money is when your revenues are higher than your costs.
        CyberDildonics 5y ago
        Do you think that only companies that pay dividends are "making money"? What about stock buybacks? Netflix's stock price is 480x what it was 20 years ago. It has a market cap of 280 Billion dollars. Are you one of the people that said "amazon doesn't make money" because they used their revenue to expand for multiple decades?
  - throwaway_kufu 5y ago
    Location isn’t the legal standard…it would essentially be like saying customers can watch all Studio A movies at Theater A and then watch all Studio B movies at Theater B. Sure it’s more convenient online, competition being 1 click away, but antitrust still applies to online content creators/distribution businesses. So it’s more important to ask if you wanted to watch Netflix created content can you watch it outside Netflix? It’s not a simple yes or no, black/white kind of analysis though. You also have to look at the whole of the industry and when you do you will begin to see how the sausage is made and the antitrust nastiness. Say you want to create a movie/show you contact film company A, Director B, actor C. Turns out you can’t hire any of them because they have contracts with Netflix. New content creators can no longer compete or even enter the market to compete and new distributors will not have any content to distribute so they won’t be able to compete or enter the market. Even if it results in more/cheaper content, which may or may not be something to brag about, ultimately a competition is harmed and lack of competition is what harms the consumer.
ghaff 5y ago
Amazon already is a studio, i.e. someone who makes bets and writes checks (and owns the rights to content--personally I don't mind that not being as fragmented as it is). Acquiring another studio given the way things operate in the film/TV industry today seems fairly uninteresting from a monopoly perspective.
- Server6 5y ago
  Its for MGM's IP and back catalog so Amazon can literally rent it for a monthly price.
  - JohnJamesRambo 5y ago
    What sort of good stuff does MGM have? I use Prime Video a lot since it is basically free with my Prime and would love some new quality content. Edit: Posting this I found because my question was dumb. https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_films https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_fi...
    - bryanrasmussen 5y ago
      https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_films https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_fi...
      - ghaff 5y ago
        Yeah, a lot of it's older but it's a huge high-quality film back catalog which Amazon doesn't really have today.
        hellbannedguy 5y ago
        I found Amazon Prime movie section (good movies) better than Netflix. This buyout makes sence.
lotsofpulp 5y ago
Are there high barriers to creating content? The internet has lowered the barrier to distributing content to basically zero, compared to before the internet. I do not see how keeping a middleman around between distributor and creator would help consumers.
JohnHaugeland 5y ago
this means that amazon will have about 4% of the industry this isn't even slightly a monopoly by the legal definition
- afavour 5y ago
  OP didn't even use the word monopoly. You don't have to view it through that narrow a lens. I think it's fair to ask if it is in consumers interest to have to buy an Apple TV to watch Apple produced shows, an Amazon Fire stick to watch Amazon/MGM content, etc. etc. I know that isn't the world we're in right now but the spats you see between e.g. Google and Roku (and Amazon and Google) feel indicative of a likely future to me: consolidate, then bring down the hammer.
  - lotsofpulp 5y ago
    The world I used to live in required paying a third party to watch media, from their proprietary devices, and I did not get to watch it whenever, and however I wanted.
    - afavour 5y ago
      Does that mean we shouldn't ever strive for better? > from their proprietary devices, and I did not get to watch it whenever, and however I wanted. That's still quite possible in the future. If providers lock down the hardware you can use to watch then maybe you won't be able to watch on your phone if they don't feel like letting you.
      - lotsofpulp 5y ago
        My point was that we did strive for better, and I can now watch whatever I want whenever I want however I want, for 90% of things. For the rest, like sports and some other live stuff that is stuck in the past, I simply ignore. I would not go after legislation to prevent mergers to prevent locked down devices or restrictions on how you can watch. We already had that without the mergers, so why would that address the situation? If the point is to keep the content flowing far and wide, then that should be addressed directly.
nojito 5y ago
The SEC and FTC has had their funding cut several times over these past 10 years. It's hard to bring cases when you simply don't have the people anymore.
huitzitziltzin 5y ago
what job do you want the FTC to do here? I assume you think there is an antitrust angle on this potential acquisition? I am an economist and that is my field. I disagree with your take, if that is what you mean. This is a vertical merger. Vertical mergers are quite different in their welfare effects to consumers than horizontal mergers. Vertical mergers can frequently be welfare-improving to consumers. Indeed, this is why vertical mergers are harder to regulate than horizontal mergers. The welfare effects are not obvious ex ante. This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. Most of the hate Amazon gets on this site for being a “monopoly” is extremely wide of the mark. If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence.
- kingsuper20 5y ago
  >Vertical mergers can frequently be welfare-improving to consumers. As can be horizontal mergers given economies of scale and/or network effects. It's an interesting area of the law (anti-trust) as it strikes me as one of the few really excellent uses for the heavy hand of the government. Lots of cooks in the kitchen of legislation. It does grate my ears to hear the word 'consumer' rather than 'citizen' but I suppose it's a natural side effect of a country that is made up of decreasingly self-sufficient individuals.
  - charwalker 5y ago
    > given economies of scale and/or network effects. Other than competition, easily bought out when you're working with a $600 billion valuation of Amazon, or loss of consumer interest, what incentive does a for profit company have to shift any gains from economies of scale/etc to consumers? Why not make your product for 10% less, charge the same, and pass on the difference to shareholders? Apple is a great example. If they buy out the group making the M1 to reduce cost and improve supply chain efficiency, what incentive is there to lower prices especially for a company whose marketed image is all about premium? That money is going right into ongoing costs or to recoup the initial merger costs. Any improvement to consumers are either hypothetical, relate directly to fending off competition, listed as bullets on a PowerPoint slide between VPs, or carefully constructed to pass regulatory questions, not to help their customers save money.
JohnWhigham 5y ago
The Rockefellers and Vanderbilts of yester-century would be red with envy at the size and power of today's tech companies.
- hindsightbias 5y ago
  Rockefeller became vastly more wealthy when Standard Oil was broken up. Same will happen to Bezos, and he'll be the largest share holder of whatever pieces there are.
  - rckclmbr 5y ago
    Rockefeller became more wealthy because he bought a ton of real estate in Manhatten during the Great Depression, not because of Standard Oil being broken up (although yes it was after, so technically you are right)
- fastball 5y ago
  Yes, but at least in the case of Standard Oil, that was a monopoly which was definitively anti-consumer, because it was actually monopolizing an entire specific industry.
  - JohnWhigham 5y ago
    Right. But today when most people say "monopoly", they don't mean the Standard Oil kind. They mean the Google kind that has ~90% of the search market. That much market share is still pretty anti-consumer. With Standard Oil, there were no competitors. Today, you can start a Google competitor, but they will bully you every inch of the way, and probably end up buying you anyway. It's not as clear-cut as a Standard Oil/AT&T, but it's still highly predatory and monopolistic behavior.
    - fastball 5y ago
      Having market share does not automatically make you anti-consumer. Google has 90% of the search market because they have the best product. This is the same reason Amazon is doing well – people just love what they're offering. It's not that you need oil and Amazon is the only player in town – it's that Amazon and Google offer the best gas station experience by a large margin.
kingsuper20 5y ago
As I understand it, the test for monopoly is detrimental effect for consumers, not control of a market. Making your company more vertically integrated (by buying a back catalog in this case I guess) probably doesn't trip any alarms. I'm surprised that they don't buy Penguin. Maybe Bertelsmann has no interest in selling. If you think about it, publishers of print/music/movies are essentially built on monopoly given the single sourcing of a title. It's not as simple as cornering the market on wheat or oil.
- ghaff 5y ago
  Book publishing is a rather fragmented market and a lot of the growth is in self-publishing, which Amazon already own a big chunk of in various ways. I'm not sure why Amazon would have any interest in an old school publisher.
  - kingsuper20 5y ago
    You can make the same argument about buying MGM. Looking at Publishers Weekly, I see this: "An important driver of print book sales last year was the continuing increase in backlist sales, McLean said. Backlist titles accounted for 67% of all print units purchased in 2020, up from 63% the year before. In 2010, backlist accounted for only 54% of all unit sales. " https://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/85453-a-year-for-the-record-books.html https://www.publishersweekly.com/pw/by-topic/industry-news/b... I think you could make a strong argument for buying a large publisher (or anything really) given a good ROI.
woeIsPG 5y ago
Not while economic power and politics are controlled by the same generation and social networks. Those who were raised on censored television and waving “the correct flag” went too many times around the sun like that to be able to reconsider themselves as anything but completely appropriate. Wfh offered a perfect opportunity to exert political pressure; don’t open them laptops! But the masses identity is game-fied jobs and consumerism. We must not upset the natural order. Don’t mind me; I quit my job, sold all my gadgets (except an old iPhone) and got into learning music last year, to ride out the pandemic. I’ve gone bonkers.
nothis 5y ago
Thank god this is the top comment. I came in here thinking, "that can't possibly be legal". I understand there's advantages to larger acquisitions but the past decades have been ridiculous. The fact that "AOL Time Warner" was ever allowed to exist is ridiculous.
- xkjkls 5y ago
  AOL Time Warner was the worst merger of all time. I don't know if it shouldn't have existed, but Time Warner shareholders basically got completely screwed.
xwdv 5y ago
What is wrong with shareholder value over everything else? What is the else? Shareholders sink a ton of capital into companies and take on significant risk of loss, why can't they be compensated for it?
- omgwtfbbq 5y ago
  >What is the else? Happiness, human flourishing, societal improvement, literally all of life. Is this a real question? >significant risk of loss Lol?
- TheCoelacanth 5y ago
  How about the people of the country that those agencies are supposed to be serving?
sokoloff 5y ago
What is the SEC failing to do with respect to Amazon potentially buying MGM? With respect to Amazon in general?

Is the SEC and FTC ever going to do their job? They have failed us in the 21st century. Shareholder value over everything else. It would be nice for some regulation to attack all this rent seeking.

throwaway_kufu 5y ago

For a little background on the movie industry and antitrust law, the Hollywood studios once upon owned everything from the way movies were produced, distributed and exhibited. The monopoly held by the studios was effectively broken up following WWII. Yes, there were multiple studios competing but individually they were engaging in antitrust behavior. This acquisition is essentially a waiving of the white flag and passing the torch. It will be allowed because big tech/Hollywood own politicians. However, and I think to your point, it is impossible to reconcile that Netflix is engaging in the same behavior (producing, distributing and exhibiting) as the Hollywood studios when the courts broke up the industry to allow fair competition.

dageshi 5y ago
Distribution was physical back in the day, your choice of cinema was dictated by location. Locking specific movies to specific cinemas was a detriment to the public for that reason. Does that matter when the alternative is via distribution by internet? Honestly, you can sub to netflix for one month, watch everything you want and then unsub, same with all the other services. Has there ever been a point in history where there's more content available for cheaper than right now?
- treis 5y ago
  No, but we are solidly in the consolidate and undercut competition phase. The issues arise in the use monopoly power to extract large profit phase.
  - dageshi 5y ago
    How? So long as there are multiple competitors after the same customers I don't really see how this happens. Hell, we only really have 3 major cloud computing platforms (along with some minor ones), but consistently the prices of everything they offer goes down.
    - treis 5y ago
      Because Netflix, Hulu, Prime Video et Al don't make money. At some point they're going to have to and that's when we see if you're right or not.
      - CyberDildonics 5y ago
        https://www.washingtonpost.com/business/2021/04/20/netflix-new-subscriber-numbers/ https://www.washingtonpost.com/business/2021/04/20/netflix-n... Netflix has over 208 Million subscribers each paying a monthly fee. They are taking in multiple BILLIONS every month in revenue. They are also in complete control of their expenditures. They don't rely on commodities or regulations. If that isn't making money then I don't know what is.
        treis 5y ago
        Making money is when your revenues are higher than your costs.
        CyberDildonics 5y ago
        Do you think that only companies that pay dividends are "making money"? What about stock buybacks? Netflix's stock price is 480x what it was 20 years ago. It has a market cap of 280 Billion dollars. Are you one of the people that said "amazon doesn't make money" because they used their revenue to expand for multiple decades?
- throwaway_kufu 5y ago
  Location isn’t the legal standard…it would essentially be like saying customers can watch all Studio A movies at Theater A and then watch all Studio B movies at Theater B. Sure it’s more convenient online, competition being 1 click away, but antitrust still applies to online content creators/distribution businesses. So it’s more important to ask if you wanted to watch Netflix created content can you watch it outside Netflix? It’s not a simple yes or no, black/white kind of analysis though. You also have to look at the whole of the industry and when you do you will begin to see how the sausage is made and the antitrust nastiness. Say you want to create a movie/show you contact film company A, Director B, actor C. Turns out you can’t hire any of them because they have contracts with Netflix. New content creators can no longer compete or even enter the market to compete and new distributors will not have any content to distribute so they won’t be able to compete or enter the market. Even if it results in more/cheaper content, which may or may not be something to brag about, ultimately a competition is harmed and lack of competition is what harms the consumer.

ghaff 5y ago

Amazon already is a studio, i.e. someone who makes bets and writes checks (and owns the rights to content--personally I don't mind that not being as fragmented as it is). Acquiring another studio given the way things operate in the film/TV industry today seems fairly uninteresting from a monopoly perspective.

Server6 5y ago
Its for MGM's IP and back catalog so Amazon can literally rent it for a monthly price.
- JohnJamesRambo 5y ago
  What sort of good stuff does MGM have? I use Prime Video a lot since it is basically free with my Prime and would love some new quality content. Edit: Posting this I found because my question was dumb. https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_films https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_fi...
  - bryanrasmussen 5y ago
    https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_films https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-Mayer_fi...
    - ghaff 5y ago
      Yeah, a lot of it's older but it's a huge high-quality film back catalog which Amazon doesn't really have today.
      - hellbannedguy 5y ago
        I found Amazon Prime movie section (good movies) better than Netflix. This buyout makes sence.

lotsofpulp 5y ago

Are there high barriers to creating content? The internet has lowered the barrier to distributing content to basically zero, compared to before the internet. I do not see how keeping a middleman around between distributor and creator would help consumers.

JohnHaugeland 5y ago

this means that amazon will have about 4% of the industry this isn't even slightly a monopoly by the legal definition

afavour 5y ago
OP didn't even use the word monopoly. You don't have to view it through that narrow a lens. I think it's fair to ask if it is in consumers interest to have to buy an Apple TV to watch Apple produced shows, an Amazon Fire stick to watch Amazon/MGM content, etc. etc. I know that isn't the world we're in right now but the spats you see between e.g. Google and Roku (and Amazon and Google) feel indicative of a likely future to me: consolidate, then bring down the hammer.
- lotsofpulp 5y ago
  The world I used to live in required paying a third party to watch media, from their proprietary devices, and I did not get to watch it whenever, and however I wanted.
  - afavour 5y ago
    Does that mean we shouldn't ever strive for better? > from their proprietary devices, and I did not get to watch it whenever, and however I wanted. That's still quite possible in the future. If providers lock down the hardware you can use to watch then maybe you won't be able to watch on your phone if they don't feel like letting you.
    - lotsofpulp 5y ago
      My point was that we did strive for better, and I can now watch whatever I want whenever I want however I want, for 90% of things. For the rest, like sports and some other live stuff that is stuck in the past, I simply ignore. I would not go after legislation to prevent mergers to prevent locked down devices or restrictions on how you can watch. We already had that without the mergers, so why would that address the situation? If the point is to keep the content flowing far and wide, then that should be addressed directly.

nojito 5y ago

The SEC and FTC has had their funding cut several times over these past 10 years. It's hard to bring cases when you simply don't have the people anymore.

huitzitziltzin 5y ago

what job do you want the FTC to do here? I assume you think there is an antitrust angle on this potential acquisition? I am an economist and that is my field. I disagree with your take, if that is what you mean. This is a vertical merger. Vertical mergers are quite different in their welfare effects to consumers than horizontal mergers. Vertical mergers can frequently be welfare-improving to consumers. Indeed, this is why vertical mergers are harder to regulate than horizontal mergers. The welfare effects are not obvious ex ante. This has a decent chance to be pro-consumer. I don’t see any reason for the FTC to object to this on antitrust grounds. Most of the hate Amazon gets on this site for being a “monopoly” is extremely wide of the mark. If your prediction is that this will result in a welfare loss to consumers I would ask that you offer some evidence.

kingsuper20 5y ago
>Vertical mergers can frequently be welfare-improving to consumers. As can be horizontal mergers given economies of scale and/or network effects. It's an interesting area of the law (anti-trust) as it strikes me as one of the few really excellent uses for the heavy hand of the government. Lots of cooks in the kitchen of legislation. It does grate my ears to hear the word 'consumer' rather than 'citizen' but I suppose it's a natural side effect of a country that is made up of decreasingly self-sufficient individuals.
- charwalker 5y ago
  > given economies of scale and/or network effects. Other than competition, easily bought out when you're working with a $600 billion valuation of Amazon, or loss of consumer interest, what incentive does a for profit company have to shift any gains from economies of scale/etc to consumers? Why not make your product for 10% less, charge the same, and pass on the difference to shareholders? Apple is a great example. If they buy out the group making the M1 to reduce cost and improve supply chain efficiency, what incentive is there to lower prices especially for a company whose marketed image is all about premium? That money is going right into ongoing costs or to recoup the initial merger costs. Any improvement to consumers are either hypothetical, relate directly to fending off competition, listed as bullets on a PowerPoint slide between VPs, or carefully constructed to pass regulatory questions, not to help their customers save money.

JohnWhigham 5y ago

The Rockefellers and Vanderbilts of yester-century would be red with envy at the size and power of today's tech companies.

hindsightbias 5y ago
Rockefeller became vastly more wealthy when Standard Oil was broken up. Same will happen to Bezos, and he'll be the largest share holder of whatever pieces there are.
- rckclmbr 5y ago
  Rockefeller became more wealthy because he bought a ton of real estate in Manhatten during the Great Depression, not because of Standard Oil being broken up (although yes it was after, so technically you are right)
fastball 5y ago
Yes, but at least in the case of Standard Oil, that was a monopoly which was definitively anti-consumer, because it was actually monopolizing an entire specific industry.
- JohnWhigham 5y ago
  Right. But today when most people say "monopoly", they don't mean the Standard Oil kind. They mean the Google kind that has ~90% of the search market. That much market share is still pretty anti-consumer. With Standard Oil, there were no competitors. Today, you can start a Google competitor, but they will bully you every inch of the way, and probably end up buying you anyway. It's not as clear-cut as a Standard Oil/AT&T, but it's still highly predatory and monopolistic behavior.
  - fastball 5y ago
    Having market share does not automatically make you anti-consumer. Google has 90% of the search market because they have the best product. This is the same reason Amazon is doing well – people just love what they're offering. It's not that you need oil and Amazon is the only player in town – it's that Amazon and Google offer the best gas station experience by a large margin.

kingsuper20 5y ago

As I understand it, the test for monopoly is detrimental effect for consumers, not control of a market. Making your company more vertically integrated (by buying a back catalog in this case I guess) probably doesn't trip any alarms. I'm surprised that they don't buy Penguin. Maybe Bertelsmann has no interest in selling. If you think about it, publishers of print/music/movies are essentially built on monopoly given the single sourcing of a title. It's not as simple as cornering the market on wheat or oil.

ghaff 5y ago
Book publishing is a rather fragmented market and a lot of the growth is in self-publishing, which Amazon already own a big chunk of in various ways. I'm not sure why Amazon would have any interest in an old school publisher.
- kingsuper20 5y ago
  You can make the same argument about buying MGM. Looking at Publishers Weekly, I see this: "An important driver of print book sales last year was the continuing increase in backlist sales, McLean said. Backlist titles accounted for 67% of all print units purchased in 2020, up from 63% the year before. In 2010, backlist accounted for only 54% of all unit sales. " https://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/85453-a-year-for-the-record-books.html https://www.publishersweekly.com/pw/by-topic/industry-news/b... I think you could make a strong argument for buying a large publisher (or anything really) given a good ROI.

woeIsPG 5y ago

Not while economic power and politics are controlled by the same generation and social networks. Those who were raised on censored television and waving “the correct flag” went too many times around the sun like that to be able to reconsider themselves as anything but completely appropriate. Wfh offered a perfect opportunity to exert political pressure; don’t open them laptops! But the masses identity is game-fied jobs and consumerism. We must not upset the natural order. Don’t mind me; I quit my job, sold all my gadgets (except an old iPhone) and got into learning music last year, to ride out the pandemic. I’ve gone bonkers.

nothis 5y ago

Thank god this is the top comment. I came in here thinking, "that can't possibly be legal". I understand there's advantages to larger acquisitions but the past decades have been ridiculous. The fact that "AOL Time Warner" was ever allowed to exist is ridiculous.

xkjkls 5y ago
AOL Time Warner was the worst merger of all time. I don't know if it shouldn't have existed, but Time Warner shareholders basically got completely screwed.

xwdv 5y ago

What is wrong with shareholder value over everything else? What is the else? Shareholders sink a ton of capital into companies and take on significant risk of loss, why can't they be compensated for it?

omgwtfbbq 5y ago
>What is the else? Happiness, human flourishing, societal improvement, literally all of life. Is this a real question? >significant risk of loss Lol?
TheCoelacanth 5y ago
How about the people of the country that those agencies are supposed to be serving?

sokoloff 5y ago

What is the SEC failing to do with respect to Amazon potentially buying MGM? With respect to Amazon in general?