[HN Gopher] Amazon is reportedly negotiating to acquire MGM for ...
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Amazon is reportedly negotiating to acquire MGM for about $9B
Author : pseudolus
Score : 192 points
Date : 2021-05-18 13:18 UTC (9 hours ago)
(HTM) web link (www.businessinsider.com)
(TXT) w3m dump (www.businessinsider.com)
| ryanmarsh wrote:
| Well that's one way to reduce the cost of hosting Re:Invent,
| vertically integrate.
| oblak wrote:
| Here's hoping for a new Stargate TV show! Despite a couple of
| amazing BSG seasons, SG-1 is just better overall.
|
| I don't event want the old crew. Just give us something cool. The
| only good thing that came out of SG Universe was the opening
| episode. It was awesome.
| mrfusion wrote:
| BSG?
| [deleted]
| [deleted]
| jjcon wrote:
| Battlestar galactica
| zyamada wrote:
| I'm assuming they're 2004 version of Battlestar Galactica.
| slumdev wrote:
| Do you really want that? When a streaming service reboots a
| classic, you end up with:
|
| 1. The plot is pretty thin and always involves a twist. _That_
| the twist happens is predictable, and so the contents of the
| twist become more and more ridiculous to try to reclaim
| unpredictability.
|
| 2. Every episode is a cliff hanger in service of the twist from
| #1.
|
| 3. Unnecessary lewdness means you can't enjoy it with your
| kids.
|
| 4. It probably won't contain the things that made you enjoy the
| original. What even is fan service if a large number of the
| fans hate it?
| Kye wrote:
| Who said anything about a reboot? A new series is fine.
| Universe got better with age and perspective. Atlantis was
| already solid when it was new. I wouldn't even mind a The
| Expanse/Stargate crossover where they turn out to be parallel
| universes. Stargate Universe already hinted at a new Big Bad
| that could be the one they're hinting at in The Expanse.
| TeMPOraL wrote:
| Unfortunately, reboots are what usually happens with
| developed shows. Stargate universe (not to be confused with
| Stargate Universe) has grown very large over the run of the
| TV shows, and more importantly, it _evolved_. By
| SG:Universe, Stargateverse looked much different than what
| it was when SG-1 started.
|
| This creates a problem for future development - existing
| canon severely constraints the writers. Between writers
| complaining and executives looking to maximize the size of
| potential target audience, what usually happens is thus a
| reboot: the preexisting cannon gets dropped, but is often
| referenced to score cheap points with fans of the old show.
|
| For reference, just look at what happened with Star Trek
| past its gold era (TNG-ENT).
| Kye wrote:
| I look at what happened and see a lot of good. I like
| Picard, Discovery, Lower Decks, and the reboot movies.
| Discovery found a way to reuse a lot of existing canon
| _and_ essentially reboot it. I think it worked well. It
| took some time to get things moving in the right
| direction as all Star Trek series do, and the showrunner
| changes didn 't help, but I look forward to what's next.
| gojomo wrote:
| I'd love to see a reboot - in fact, I think it'd be the
| best way to repurpose & extend the premise & lore & themes.
|
| The setup for SG1 was pure scifi gold, delivering all the
| frills fans could want:
|
| * 'relatable 20thC/21stC person' space adventures-in-
| wonderland
|
| * planets-of-the-week _plus_ long arcs of discovery &
| tech-advancement
|
| * galactic space opera & epic space wars that only
| _sometimes_ risk Earth itself
|
| * worldly intrigue referencing current politics/culture:
| evil Senators! human & alien conspiracies! Wormhole
| X-Treme!
|
| But, eventually accumulated 'canon debt' & the frift of
| decades of real history makes new consistent stories that
| are equally relatable to the 2020s nearly impossible. Our
| heroes got pretty overpowered at times late in SG1 and SGA.
|
| So, clean reboot! It worked great for BSG. Treat the whole
| past as a mythology to mine & remix, with winking
| fanservice rather than strained consistency & retcons. Give
| us some more Aschen & Tollan, Hebridans & Serrakin. Put
| some more vaguely-interesting unfolding pseudoscience
| behind the magic woo that dominated later storylines. Add
| some new mysteries to the gates, the gate network, & the
| gate-builders.
|
| What's now possible with streaming prestige-series money,
| improved digital effects, & a smart full-universe paced
| master plan could be incredible.
| jjcon wrote:
| I fear Amazon will just screw it up - theyll make it an edgy
| game of thrones style show where people explode in vats of
| blood in episode 1 and then they'll deflect all criticism by
| adding touches of the latest twitter trends to an episode here
| and there
| truth_ wrote:
| I have watched all of Naren Shankar's Expanse. It was revived
| by Amazon, and quite nicely. There are very few complaints
| among the fans, if any at all.
| jjcon wrote:
| That is pretty different- expanse had an existing crew,
| cast and story arc to utilize. They could allow them to
| just keep doing their thing.
| echelon wrote:
| How many industries can a single company operate in and dominate?
|
| If Walmart had done this in the 2000's, the DOJ would have
| stopped them.
| tastyfreeze wrote:
| How is this different than corporate conglomerates formed by
| previous generations?
| missedthecue wrote:
| God forbid Amazon bring fresh and invigorating competition into
| legacy industries. Whatever will the consumer do??
| CountDrewku wrote:
| Yes because having zero competition and no motivation to
| improve quality always brings out the freshest ideas and the
| best consumer experiences....
| mikece wrote:
| There were rumors early in the lockdown that Amazon was a prime
| candidate (no pun intended) for acquiring AMC Entertainment and
| vertically integrating the creation of content as well as
| distribution via digital and cinema consumption. This move would
| certainly add to the vertical integration theme and make them a
| heavier hitter in Hollywood.
| spbaar wrote:
| Aren't movies and movie theaters one of the only industries
| where that type of vertical integration is explicitly illegal?
| [deleted]
| lotsofpulp wrote:
| https://www.justice.gov/opa/pr/federal-court-terminates-
| para...
|
| Not as of Aug 2020.
| [deleted]
| JohnHaugeland wrote:
| Under the Paramount decrees of 1948, it was decided that the
| theaters plus the studios were creating a monopoly. After
| all, it's not like anyone had screens at home.
|
| That was vacated last year, in observation that TV and the
| internet now exist.
|
| https://www.justice.gov/opa/pr/department-justice-files-
| moti...
| Kye wrote:
| Maybe now we'll finally get a new Stargate series.
| WorldMaker wrote:
| Stargate: Origins was a "new series" (2018) that was recently
| made. It just only ever "aired" on the Stargate-only streaming
| service that no one paid for.
|
| https://www.imdb.com/title/tt7161862/
| Kye wrote:
| It's popped up on a few streaming platforms stitched together
| as Stargate Origins: Catherine. It wasn't too bad.
| tastyfreeze wrote:
| Producer Brad Wright teased at a new series back in March.
|
| https://www.gateworld.net/news/2021/03/next-stargate-project...
| tzs wrote:
| MGM does not participate in "Movies Anywhere". I wonder if Amazon
| would change that?
| neonate wrote:
| https://archive.md/kcONP
| snarf21 wrote:
| 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.
| nojito wrote:
| 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.
| woeIsPG wrote:
| 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.
| throwaway_kufu wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| throwaway_kufu wrote:
| 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.
| sokoloff wrote:
| What is the SEC failing to do with respect to Amazon
| potentially buying MGM?
|
| With respect to Amazon in general?
| nothis wrote:
| 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 wrote:
| 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.
| huitzitziltzin wrote:
| _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.
| ncallaway wrote:
| The vertical integration of the distribution of media and the
| production of media is extremely problematic because of the
| way copyright operates in this country.
|
| I think you have to examine vertical integration in copyright
| affected industries differently than you would in, say, the
| vertical integration of steel production with a company that
| consumes steel.
|
| The interaction with copyright invariably creates issues for
| the end-consumer, which is why consumers in the media
| ecosystem are often better off when distributors and
| producers are separate.
| usrusr wrote:
| Do you think consumers were better off back when cinemas
| and studios were one (MGM was Loew)? Was the United States
| vs Paramount of 1948 a mistake?
| bhupy wrote:
| One glaring difference between 1948 and 2021 is that
| distribution is basically free now. Whereas in 1948,
| one's ability to consume media was dictated by their
| physical location, today there is close to zero marginal
| cost to deliver digital media and low barriers to entry
| for new entrants. Just consider how many streaming
| services there were 10 years ago vs today.
|
| No human consumes enough TV media to warrant subscribing
| to every single streaming service at the same time, and
| there's certainly a lot that can be improved to make the
| "a la carte" experience of selectively
| subscribing/unsubscribing to services on demand more
| seamless -- but the way the industry operates across the
| entire supply chain is dramatically different today.
| usrusr wrote:
| The distribution argument would be true if pay per view
| was the dominant form, but subscriptions are. And in the
| studio days, how many people didn't have access to at
| least one theatre of each in range? I might be mistaken
| but I don't think that limited film choice in rural areas
| was the main concern back then.
|
| Now we have subscriptions. It would be as crazy as it
| sounds, we are almost at the point where a preference of
| Picard over Kirk could have an effect on which toilet
| paper you end up buying.
|
| But I agree in so far as that it is far from as bad as it
| could be if they tightened down on
| unsubscribe/resubscribe (which I think will inevitably
| happen one day). Still, I've been to that party that end
| with one room full of "Amazons", one room full of
| "Neflixers" and those left over wondering what they all
| talk about.
| bhupy wrote:
| > Still, I've been to that party that end with one room
| full of "Amazons", one room full of "Neflixers" and those
| left over wondering what they all talk about.
|
| I really like what you said here. A familiar analogy that
| I like to use is cable TV: Netflix and Amazon are just
| "channels", each with different shows. When one half of
| the room is full of "Amazons", that's just the half of
| the room that's interested in some subset of shows not
| too dissimilar from what it might have been like to be a
| regular viewer of a serial television series in the days
| of yore.
|
| However, whereas before, you had to subscribe to all of
| the channels in bulk. Today, you have the option to pick
| and choose the "channels" you want to pay for on any
| given month given the TV shows you care about. I think we
| agree that the experience to do this can be improved, but
| I think we also agree that it will inevitably happen one
| day.
| usrusr wrote:
| The truth is that "they" (sorry) will do everything they
| can to extract the highest fraction of consumer income
| they can. I'm in a market where before streaming it was
| basically all FTA which means that I have no idea what to
| expect. In a market where cable fees already meant a
| subscription to otherwise unavailable content, I'd expect
| that number to end up a lower bound of typical spending.
| ghaff wrote:
| If unsubscribe/resubscribe became an issue, what I expect
| would happen is that they might go to annual plans only
| or at least make annual a lot more attractive relative
| monthly. (That said, I expect that most people don't
| really optimize their monthly subscriptions that way. I
| will drop things I'm not really using at the moment, but
| it's usually in the vein of "Hmm. I haven't watched HBO
| for a couple months."
| ghaff wrote:
| At one level, it would be nice if all the subscription
| streaming services, a la carte content, and live TV could
| be accessed from a single subscription portal. But I
| suspect that most people wouldn't be willing to pay the
| $200 (or whatever) per month that such a service would
| probably cost. (And that's not an outlandish number;
| that's only about 2x what cable costs in a lot of places
| in the US.)
| bhupy wrote:
| That's not the point that I'm making. You're absolutely
| right that nobody would ever pay $200 or whatever per
| month for such a service, but that's because nobody would
| ever consumer $200 worth of TV series on any given month.
| It's just not humanly feasible.
|
| The average human being consumes 2-3 TV shows at most on
| any given month. In the absolute worst case, that extends
| to 2-3 separate streaming subscriptions. The only thing
| that changes over the course of the year is _which_ 3 TV
| shows one is watching (and therefore _which_ underlying
| streaming service they care about).
|
| The future isn't a $200 bundle of every streaming service
| available on-demand; the future is an LRU cache that
| automatically unsubscribes you from a streaming service
| if you haven't watched a show on it in the last month,
| and then re-subscribes you the moment you do. Given the
| current price of streaming services, it probably works
| out closer to (at most) $45/month, on average.
| usrusr wrote:
| > the future is an LRU cache that automatically
| unsubscribes you from a streaming service if you haven't
| watched a show on it in the last month
|
| The future is rolling window two years subscription or
| something along those lines, because someone will
| inevitably build that LRU and it will be quite poplar for
| all seven weeks of operation.
| com2kid wrote:
| FWIW I know multiple people with a $200 a month cable TV
| bill. Per box rental, multiple TVs, and a sports or
| premium channel package, the bill is easily at $200.
| ghaff wrote:
| That's probably about the right dollar figure for most
| people depending upon how you count Amazon Prime and how
| much a la carte movie purchasing/renting they do. Though
| I'd add that, if they also have to pay for live TV (for
| example, if they can't get it over the air) for sports,
| etc., that brings the total to probably more than $100.
| huitzitziltzin wrote:
| Vertical integration in steel production could as easily
| involve intellectual property as it does here.
|
| As a hypothetical example, imagine if Apple had sourced the
| M1 chip from a third party which it now proposed to buy.
| There would be intellectual property at stake there too.
| This case is no different.
|
| And indeed, in the Apple hypothetical you could well expect
| consumers to be _better off_ and for exactly the same
| reason: if Apple purchases an input (the M1 chip) from a
| monopoly supplier (the hypothetical non-Apple-producer),
| vertical integration removes one monopoly markup.
|
| I do not _know_ exactly what will happen in this case, but
| it seems like Amazon 's proposing to buy a single studio is
| _very unlikely_ to result in harm to consumers.
|
| The copyright issues do not make the case relevantly
| different.
| NoSorryCannot wrote:
| The measure of "consumer welfare" used by US antitrust is
| mostly concerned with prices, which I've always thought
| was a bit cynical but it is what it is. Do consumers
| stand to pay higher prices when a single company controls
| the production, licensing, and distribution of content?
|
| I would argue yes and the government has argued it, too,
| when they forced movie studios to divest their stakes in
| movie theaters.
| bhupy wrote:
| I think you're both arguing the same point: that monopoly
| markups can negatively impact consumer welfare.
|
| The central argument is whether Amazon _specifically_ is
| a monopoly in any of the industries in which it operates,
| so as to be able to charge higher prices you speak of --
| that 's not what's happening.
|
| In fact, the GP comment laid out exactly why vertical
| acquisitions often _improve_ consumer welfare, in the
| case that the company being sold is itself a monopoly:
|
| > And indeed, in the Apple hypothetical you could well
| expect consumers to be better off and for exactly the
| same reason: if Apple purchases an input (the M1 chip)
| from a monopoly supplier (the hypothetical non-Apple-
| producer), vertical integration removes one monopoly
| markup.
| ncallaway wrote:
| > Vertical integration in steel production could as
| easily involve intellectual property as it does here.
|
| I didn't say Intellectual Property, I said Copyright.
| Copyright--much more than other forms of IP--has a
| significant impact on our shared culture and cultural
| transmission. Yes, there may be other factors with IP
| that we should consider when dealing with mergers, but
| end-users and everyday people are harmed _much much_ more
| often due to copyright issues than they ever are due to
| patent and trademark issues.
|
| > I do not know exactly what will happen in this case,
| but it seems like Amazon's proposing to buy a single
| studio is very unlikely to result in harm to consumers.
|
| Sure, and I do not know exactly what will happen when we
| place a straw on a camel's back. But in each case it
| seems like it's very unlikely that the camel's back will
| break. It's a sorities paradox in reverse: Which
| individual acquisition is the point at which network
| effects start creating problems. Each individual M&A is
| unlikely to be the one that causes the problem, and yet
| if you allow each one because it is unlikely, eventually
| the system stops functioning correctly.
| bhupy wrote:
| Based on this line of reasoning, literally any
| acquisition is bad. What's the limiting principle?
| ncallaway wrote:
| I disagree.
|
| Based on this line of reasoning, literally any
| acquisition that increases the power of copyright holders
| has _downsides_.
|
| I'm not saying acquisitions can't _also_ have have
| upsides. I 'm not saying that the net benefit can't be
| positive for the end-consumer.
|
| I agree with huitzitziltzin that it's possible that this
| acquisition is net welfare-improving. I think we probably
| mostly disagree in:
|
| - the extent of the downsides to increasing the power of
| copyright holders, AND
|
| - the probability that this particular acquisition is net
| welfare-increasing
| kevin_thibedeau wrote:
| Why shouldn't they control the copyright on entertainment
| media they own? Can I help myself to your property any way
| I see fit?
| ncallaway wrote:
| I didn't say they shouldn't control the copyright.
|
| I said we shouldn't uncritically allow massive copyright
| holders to both produce and distribute their media.
| tenebrisalietum wrote:
| Intellectual property is not real property.
|
| The idea that media is "consumed" is an artifice. When
| you consume a media product, it actually still exists and
| nothing is meaningfully physically depleted.
|
| Intellectual property is an artificial law construct
| meant to "promote the progress of science and useful
| arts, by securing for limited times to authors and
| inventors the exclusive right to their respective
| writings and discoveries" according to the Constitution.
|
| Sitting on your ass and collecting rent every time
| someone watches a movie from the 1940's for the next 150+
| years--which is an action on a copy of a work and not
| really equivalent to anything involving real property--is
| not promoting the progress of anything but the wealth and
| power of media conglomerates. Combine this with the
| ability of money to buy laws and you are looking at
| establishment of permanent legacies through copyright.
| dehrmann wrote:
| I have mixed feelings about this one because
| rightsholders essentially have a monopoly on their
| content. 5+ video streaming platforms is bad for
| consumers, and this exists because rightsholders are
| allowed to control their content. It doesn't happen in
| the music space because Spotify was there first, had
| everything, record labels had a stake, and record labels
| were desperate post-Napster, so the Warner Music App
| would be a joke. Hulu was the industry's chance to get it
| right and have a viable Netflix competitor, but content
| owners weren't desperate enough, so the landscape became
| balkanized.
|
| On the other hand, it is their content.
| katbyte wrote:
| Spotify killed music piracy and Netflix did it for video
| content. Now that copyright holders got greedy and
| there's 5+ services, none as good as Netflix, none have
| all the shows anyone wants people are turning back to
| piracy in a big way and services like plex and Emby make
| sharing easy, people even setup serves and sell access!
|
| It's their content and they can do what they want; but
| you can't stop piracy
| ghaff wrote:
| There's a ton of stuff that was never on Netflix
| streaming. In fact, when Netflix started charging
| separately for streaming I dropped it and just kept the
| DVD rental option. It took House of Cards to get me back
| on.
|
| And Amazon Prime Video is quite good. Certainly HBO stuff
| was never available elsewhere (except for purchase or
| physical rental). Yes, Disney siphoned some stuff off the
| other services, but again much of that wasn't available
| for subscription streaming pre-Disney+ (which at current
| pricing is actually a pretty good deal).
|
| I really can't be bothered with piracy unless I really
| want to see something and just can't find it elsewhere.
| bhupy wrote:
| > I have mixed feelings about this one because
| rightsholders essentially have a monopoly on their
| content. 5+ video streaming platforms is bad for
| consumers, and this exists because rightsholders are
| allowed to control their content.
|
| I find this to be sort of self-contradictory. On the one
| hand, monopolies are bad, but on the other, having 5+
| platforms is bad. Which is it?
|
| My (perhaps unpopular) opinion is that having more and
| more streaming platforms ("balkanized", to use your term)
| is extremely good for consumers. The low barriers to
| entry and the near-zero marginal distribution costs make
| this the perfect industry for competition (and as a
| result, consumer welfare).
|
| It's a common misconception that having N streaming
| platforms necessarily means that consumers spend N *
| subscription cost dollars per month, but that's not a
| sensible user pattern. Nobody consumes from every single
| streaming service at the same time. Instead, we have a
| sort of TDMA style consumption of media that allows us to
| constantly subscribe/unsubscribe/resubscribe from
| services as we chew threw our respective TV show
| backlogs. Savvy consumers have benefited the most from
| this reality, and it's only a matter of time until we see
| subscription management products that extend this benefit
| to un-savvy consumers in seamless ways.
|
| One day, streaming services will look to consolidate so
| as to be able to extract monopoly rents. These are
| _horizontal_ acquisitions that would be terrible for
| consumer welfare, and those are the kinds of acquisitions
| the US FTC would likely police.
| dehrmann wrote:
| > On the one hand, monopolies are bad, but on the other,
| having 5+ platforms is bad. Which is it?
|
| The problem isn't that there are 5 platforms; it's that
| they don't have the same content.
| bhupy wrote:
| Right, and that's exactly the point. No one ever consumes
| the set-union of all content _at the same time_.
|
| Having multiple platforms have different content is not
| all that different from having multiple TV channels have
| different content, except now I'm not forced to subscribe
| to a giant bundle of channels when I only realistically
| use 2-3 at any given time.
| hannasanarion wrote:
| The issue is owning copyright _and_ distribution.
|
| This isn't some kind of new idea, in the 1930s the US
| government forced movie studios to be separate companies
| from movie theaters on antitrust grounds.
| lotsofpulp wrote:
| > The interaction with copyright invariably creates issues
| for the end-consumer, which is why consumers in the media
| ecosystem are often better off when distributors and
| producers are separate.
|
| And addressing it via enforcing separate distributors and
| producers allows the copyright issue (the real issue) to go
| unchecked, since politically, it's harder to attack it as a
| problem.
|
| It might even be politically necessary for people to feel
| the pain before we can get back to decent copyright
| lengths.
| ncallaway wrote:
| To me, the problem with copyright law is that there are
| entities that have businesses that are built on copyright
| protection that are so powerful they can nearly dictate
| what the copyright laws are ( _cough_ Disney _cough_ ).
|
| So, from my perspective, _any_ system that allows those
| powerful entities to continue to accumulate _more_ power
| and wealth is always going to harm efforts to change
| copyright law.
|
| We need to weaken the power that companies wield over
| copyright law, and that's _harder_ the more powerful
| those companies are.
| huitzitziltzin wrote:
| > copyright law is that there are entities that have
| businesses that are built on copyright protection that
| are so powerful they can nearly dictate what the
| copyright laws are (cough Disney cough).
|
| I fully agree w/ this criticism of copyright law. I do
| not think that has a substantial intersection w/ the
| competitive effects of this proposed acquisition.
| ncallaway wrote:
| > I do not think that has a substantial intersection w/
| the competitive effects of this proposed acquisition
|
| My understanding is that MGM has a large holding of
| copyrighted media, and therefore substantial interests in
| protecting and extending the rights and terms afforded by
| copyright law. For example, they have led consortiums of
| large entertainment companies in the past to bring
| copyright lawsuits to the Supreme Court (MGM Studios,
| Inc. v. Grokster, Ltd).
|
| My other understanding is that Amazon is a very powerful
| corporation, that has complex interactions with copyright
| law already (they are a distributor of both physical and
| electronic media through Amazon Video and Amazon Music;
| they are a content producer through Amazon Games studios
| and Amazon Original Series [also already built on the
| back of other acquisitions]). This acquisition gives
| another significant interest in copyright protection to
| an entity that is already extremely powerful.
|
| We're going to M&A our way to another Mouse on the
| copyright front (which was also built largely on the back
| of "mostly-harmless-at-the-time-but-problematic-in-
| aggregate" acquisitions), until massive swaths of our
| cultural expression are owned by a very small handful of
| organizations.
|
| I suppose maybe a disconnect we have is there is a non-
| financial "consumer welfare" question that I don't see
| being asked. Consumer welfare is generally only
| approached from the financial perspective of: "what will
| the financial cost to a consumer be to obtain the rights
| to consume media"; I don't see anyone attempting to
| defend consumer welfare from a _cultural_ perspective of:
| "Which entities do we have to ask permission from in
| order to interact with important elements of our culture
| and society?"
| glasscactus wrote:
| True, but this isn't vertical integration of
| delivery/production like the AT&T / Time Warner merger.
| Thank god AT&T is exactly as incompetent as we all thought
| they were. There's nothing to see here. Amazon is just
| expanding their existing footprint in a market segment
| where they are barely afloat.
| kingsuper20 wrote:
| To repeat myself in another post here, copyright is a funny
| thing in that it proposes a form of monopoly, just on the
| small scale.
|
| I think it's hard to avoid the conclusion that increasingly
| strong copyright holders (given all of the media mergers)
| implies increasingly strong copyright law.
|
| Add that to the expanding ability of parsing for copyright
| violations and I can imagine the Disney Police parachuting
| in to arrest you for that counterfeit Micky Mouse watch 150
| years after Steamboat Willie.
| TeMPOraL wrote:
| Don't forget about Disney Stasi agents standing behind
| you just now, tasked with protecting the good name of the
| House of Mouse.
| WorldMaker wrote:
| Plus, the US _has_ in the past busted vertical integration
| /monopolies, in this very industry. The "Paramount
| decision" may be almost forgotten today, and recent court
| decisions have argued it has "expired", but it absolutely
| set the precedent that there is a very public concern
| especially with entertainment media when the distributors
| are the producers.
|
| https://en.wikipedia.org/wiki/United_States_v._Paramount_Pi
| c....
| 360walk wrote:
| As an economist, what do you think of the Amazon Antitrust
| Paradox?
|
| https://www.yalelawjournal.org/note/amazons-antitrust-
| parado...
|
| > The current framework in antitrust fails to register
| certain forms of anticompetitive harm and therefore is
| unequipped to promote real competition--a shortcoming that is
| illuminated and amplified in the context of online platforms
| and data-driven markets. This failure stems both from
| assumptions embedded in the Chicago School framework and from
| the way this framework assesses competition.
|
| > Notably, the present approach fails even if one believes
| that antitrust should promote only consumer interests.
| Critically, consumer interests include not only cost but also
| product quality, variety, and innovation. Protecting these
| long-term interests requires a much thicker conception of
| "consumer welfare" than what guides the current approach. But
| more importantly, the undue focus on consumer welfare is
| misguided. It betrays legislative history, which reveals that
| Congress passed antitrust laws to promote a host of political
| economic ends--including our interests as workers, producers,
| entrepreneurs, and citizens. It also mistakenly supplants a
| concern about process and structure (i.e., whether power is
| sufficiently distributed to keep markets competitive) with a
| calculation regarding outcome (i.e., whether consumers are
| materially better off).
|
| > Antitrust law and competition policy should promote not
| welfare but competitive markets. By refocusing attention back
| on process and structure, this approach would be faithful to
| the legislative history of major antitrust laws. It would
| also promote actual competition--unlike the present
| framework, which is overseeing concentrations of power that
| risk precluding real competition.
| huitzitziltzin wrote:
| So: - I have read it. - It was a while ago (several
| years?). - I should probably read it again.
|
| But... I didn't think much of it the first time. I don't
| think the claims are well motivated. I think she assumes
| "Amazon bad" from the beginning and contorts some not-very-
| strong arguments in favor of that conclusion.
|
| I do remember the claim in the first quoted paragraph that
| there was something _unique_ about the threat (I guess
| that's how she sees it?) posed by Amazon. That had the
| potential to be an interesting claim, but I really didn't
| see any evidence to back it up in the article.
|
| The second quoted paragraph contains one suggestion which
| is just completely false: that consumer product variety is
| limited by Amazon. I mean, have you ever tried to wade
| through pages of junk to find the thing you searched for? I
| have. There is an absolute profusion of goods on the site.
| That claim does not stand up to the slightest scrutiny.
|
| If the idea is instead that the fact that most consumers
| _choose amazon_ instead of some other retailer is the
| channel by which variety is harmed, well... that also does
| not stand up to scrutiny in a world with Walmart and target
| and Etsy and a million other online retailers.
|
| The thing in the same paragraph about the "legislative
| history" of antitrust is Khan's idea to try to reorient
| antitrust law with (from my recollection) a specific desire
| to punish or break up Amazon in particular in mind. The
| claim that Amazon does not compete in a competitive market
| which is supposed to justify this does not stand up to
| scrutiny either.
|
| I don't agree (in the third paragraph) that antitrust
| should be reoriented away from a consumer welfare standard,
| but even if I did, I think Amazon does compete in
| competitive markets already! (Why would we orient away from
| consumer welfare anyway? Would we like (e.g.) all consumers
| to pay higher prices (lowering welfare) but have the
| "product variety" provided by hypothetical, post-break-up
| Amazons 1, 2 and 3? What would be the point of that?)
|
| My overall impression was that the entire article was
| written with the conclusion "Amazon is bad" in mind.
| kingsuper20 wrote:
| >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 wrote:
| > 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.
| kingsuper20 wrote:
| >what incentive does a for profit company have to shift
| any gains from economies of scale/etc to consumers?
|
| You'd have to have listen in to a Walmart upper
| management meeting to see why, but my guess is that all
| commerce is somewhat fungible. There's always a bit more
| growth to be eked by lowering prices or increasing value
| of products.
|
| I'm not saying that this always happens, or that it isn't
| shared with increasing profits. Gigantism in box stores
| could be used in areas for monopoly pricing where they
| have wiped out smaller competitors (who themselves wiped
| out smaller competitors) but there are numerous cases
| where it hasn't happened. I'd say that fear of anti-trust
| action is only part of the reason.
| pessimizer wrote:
| https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic.
| ...
| Red_Leaves_Flyy wrote:
| MGM controls a massive library of shows and movies. Many are
| or have been on Amazon videos competitors. These will,
| likely, all disappear from competitors in the same way Disney
| is rounding their carriages.
|
| The root of the problem is that all of these platforms users
| are harmed by the siloed nature of the industry, in more or
| less the same ways. A better solution for the customer would
| be something akin to the way licensing works in the music
| industry. Let everyone host everything, charge what they
| will, and pay fixed royalties out of their income.
|
| I'm not an economist, lawyer, musician or whatever. I'm just
| a very disgruntled consumer that's seen the potential of the
| streaming industry get destroyed by greed and overpaid
| lawyers. There are many shows and movies that are, for no
| good reasons, only available on aftermarket listings for old
| vhs, and sometimes dvd. Finding these alternatively is even
| difficult.
|
| Companies could be working on UX, social functions, or
| recommendation algorithms but instead they're lighting money
| on fire to license a revolving pile of meh that'll juice
| their subscribers enough to hit their quarterly metrics. I'm
| entirely disinterested in googling where to stream every show
| and movie and pay between mandatory ads, and North of
| $5/episode to watch a show on whichever provider has the
| rights to stream it. It's such a poor experience that I've
| returned to a personal media library and have opted out of
| the streaming industry entirely.
| sangnoir wrote:
| > Disney is rounding their carriages.
|
| Completely off-topic - is there a term for such
| 'approximate' idioms? I sometimes can't quite remember the
| exact words in a turn of phrase - my mind goes blank and I
| substitute words with similar meaning. The more familiar
| phrase to parent is "Disney is _circling their wagons_ "
| Red_Leaves_Flyy wrote:
| I have no idea, but am curious to know as well...
|
| Nice catch!
| jjcon wrote:
| > I am an economist and that is my field. I disagree with
| your take
|
| Maybe economists need to get a new take cause this shit is
| obviously ridiculous
|
| EDIT: see the already pending antitrust litigation against
| Amazon in EU and US
| ameister14 wrote:
| It can't be that obvious, because I don't see it. How does
| Amazon buying MGM create a negative outcome for consumers?
| mnd999 wrote:
| Exclusive content.
| huitzitziltzin wrote:
| Netflix has exclusive content. ABC, NBC, Discovery, ...
| all have exclusive content.
|
| Why does Amazon buying MGM and getting some exclusive MGM
| content _harm consumers_?
| mnd999 wrote:
| See my other comment above.
| ameister14 wrote:
| It doesn't increase the amount of exclusive content,
| though, does it?
|
| If this is your objection: "It is a bad thing for the
| consumer because it means more exclusive titles which is
| gives rise to a false market. It looks like consumers
| have a choice of platforms with content, but when that
| content is exclusive the consumer ends up having to pay
| for all the platforms to see the content they want to
| see. This in effect means more costs for the consumer and
| less choice."
|
| Then wouldn't consolidating existing exclusive content
| mean consumers pay for less platforms?
| jjcon wrote:
| Less competitive marketplaces harm consumers.
| Consolidation means less competition. Amazon is already
| under antitrust charges and investigations in the EU and
| US for these types of misdeeds.
| NikolaeVarius wrote:
| So literally any acquisition is bad?
| ameister14 wrote:
| >Less competitive marketplaces harm consumers.
|
| That's not a law.
|
| There are a lot of examples of more competitive markets
| harming consumers - the trick is regulating the products
| and the relationship between producer and consumer.
| Spivak wrote:
| There is no marketplace for copyrighted content and there
| can't really ever be one unless you mandate compulsory
| licensing. If you want to watch Frozen then you have to
| buy from Disney or one of their approved vendors. You
| can't take your business elsewhere and so from a monopoly
| standpoint it doesn't matter who actually owns it. You
| might not like that Amazon in particular owns MGM because
| because it means that their content will likely only be
| available on Prime but nothing was stopping them from
| making an exclusive deal prior to the merger.
| huitzitziltzin wrote:
| I'm all ears if you have a good idea. "Obviously
| ridiculous" sounds like a great standard to block an
| acquisition. Explain what's _obviously ridiculous_ about
| it.
|
| I judge these things on the potential for harm to
| consumers. I don't see that here. Perhaps you do.
|
| Do you see this leading to increased prices or a reduction
| in quantity consumed? (And of what, btw?) That's how we
| make these judgments so if it's obvious to you, let's talk.
| jjcon wrote:
| > Do you see this leading to increased prices or a
| reduction in quantity consumed?
|
| We're way past that at this point. Amazon is closer to a
| level of government than traditional company. They are
| already under multiple antitrust investigations in
| multiple countries and jurisdictions so it's nuts for you
| to go all pikachu face on the comment that they may be
| guilty of such.
|
| The amount of power Amazon has over media, retail and
| internet is unparalleled and is a threat to a well
| regulated democracy. Their second HQ is going in DC metro
| for a reason.
|
| IMO Amazon should be split into a dozen companies. Would
| that be good for consumers on day 1? No. But it would
| create a better market over time just as when the
| megacorps of the past have been split up.
| vel0city wrote:
| > The amount of power Amazon has over media, retail and
| internet is unparalleled and is a threat to a well
| regulated democracy.
|
| I don't subscribe to any Amazon-owned media. I consume
| tons of media practically every day. If Amazon was a
| monopoly in media, shouldn't it be near impossible for me
| to get non-Amazon owned media?
|
| I've purchased maybe a dozen items from Amazon in the
| last few years. It makes up <1% of my retail spending. If
| they were a monopoly in retail, shouldn't it be hard for
| me shop at any other retail space?
|
| I somehow manage to host tons of applications both
| professionally and personally. I only really use S3 and
| Amazon DNS, and that's in only a few limited places and
| could be easily replaced. If Amazon was a monopoly in
| internet services, shouldn't I pretty much be forced to
| use them for something?
|
| I don't even have to try and I can avoid them for my own
| usages, both professionally and personally.
| huitzitziltzin wrote:
| > Amazon is closer to a level of government than
| traditional company.
|
| I'm not sure what this could possibly mean.
|
| > is a threat to a well regulated democracy
|
| Ok - tell me how. Is Jeff Bezos going to... buy the
| Presidency? A Senate seat? Or... ? I really don't see
| what you have in mind.
|
| > IMO Amazon should be split into a dozen companies.
|
| You can do this if you want. You could split AWS from the
| retail operation, I guess. I wouldn't expect any outcome
| for consumers to be better. If you have a different idea,
| tell me what outcome and why you think it gets better.
|
| And probably you don't want this, b just like w/ Standard
| Oil this would likely have the effect of making Jeff
| Bezos richer.
| jjcon wrote:
| Did I say anything about bezos? No. Quit deflecting and
| making strawmen.
|
| Amazon is already under antitrust charges in the EU and
| under investigation for antitrust in the US, stop
| ignoring that fact.
| huitzitziltzin wrote:
| > Did I say anything about bezos?
|
| I'm trying to understand what you meant when you said
| that Amazon is a threat to democracy. That is a very
| strong claim. What exactly do you mean and what is your
| evidence for it?
|
| > stop ignoring that fact
|
| I'm not ignoring the fact that there is criticism of
| Amazon and that it is being investigated. I'm expressing
| an opinion on the basis of professional expertise: I do
| not see Amazon as a monopolist in general, nor do I see
| any particular concern from this acquisition.
| NeuNeurosis wrote:
| But it's not just about 'consumers' is it? I mean its
| great and all that you are playing devils advocate and
| using your education to argue on behalf of a Trillion
| dollar corporation but this isn't just about what an
| economist thinks, especially since economists get it
| wrong all the time. This entire discussion is about
| peoples natural reaction to a super large entity, that as
| one of your supporters put it "single-handedly makes up
| 4% of the US economy" buying more of the US economy thus
| further concentrating money/power in fewer hands.
| huitzitziltzin wrote:
| Sorry to disappoint you, but this is what I actually
| believe. I am not playing devils advocate.
|
| Economists do get it wrong. If you think this will reduce
| consumer welfare (which is one of the standards used to
| judge mergers), tell me how.
|
| I see no reason to block the merger on the grounds that
| Amazon is a trillion dollar company, rather than a 900 or
| 800 or whatever billion dollar company.
|
| Amazon is not 4% of the US economy, btw.
| hn_ta wrote:
| > But it's not just about 'consumers' is it?
|
| Who else is it about? If any sort of investigation is to
| be brought into it, the main investigation would be on
| behalf of consumers right?
|
| > "single-handedly makes up 4% of the US economy"
|
| Correction: 4% of the US stock market, not the US
| economy.
|
| Regardless, is your argument that any company that is at
| a certain threshold % of the US economy/stock market
| should not do acquisitions or expand their business?
| arrosenberg wrote:
| > 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.
|
| > If your prediction is that this will result in a welfare
| loss to consumers I would ask that you offer some evidence.
|
| You are going to need to bring some evidence to support that
| notion, it's not on average people to prove that your merger
| isn't going to cause harm. Thankfully the Borkist era is very
| quickly coming to its end.
|
| Consolidation should be blocked by default once companies
| reach a certain size. In order to proceed they should have to
| substantially prove that both consumers and labor are not
| going to be harmed by the merger. Any other arrangement
| results in speculative handwaving by lawyers and economists,
| and the supposed benefits almost never materialize, except
| for shareholders.
|
| > Most of the hate Amazon gets on this site for being a
| "monopoly" is extremely wide of the mark.
|
| What nonsense. Amazon has consistently used their platform
| anti-competitively to take over valuable product lines. They
| keep expanding into unrelated verticals in violation of
| federal law, and they are committing substantial,
| transnational labor abuses. Use whatever term you want to
| describe it.
| nerdponx wrote:
| > 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.
|
| I'm curious how this could possibly turn out to be anything
| but anti-consumer.
|
| I'm sure that _in general_ and _in the past_ there can be and
| have been welfare-improving vertical mergers. But this
| particular one seems questionable.
|
| > What job do you want the FTC to do here?
|
| I would like them to carefully and thoroughly evaluate the
| welfare effects of this merger, and block the merger if it's
| not obviously welfare-improving, and not in the Kaldor-Hicks
| sense.
| huitzitziltzin wrote:
| > I'm curious how this could possibly turn out to be
| anything but anti-consumer. ... this particular one seems
| questionable.
|
| Again... why? The easiest vertical merger cases I teach to
| undergrads are welfare-improving. I don't see any reason to
| think that this one is anti-consumer. _What_ do you think
| will go wrong here?
|
| > I would like them to carefully and thoroughly evaluate
| the welfare effects of this merger,
|
| They will b/c that's what they do. The OP to whom I was
| replying suggested that the FTC had "failed" us somehow. I
| would not expect the FTC to find any grounds to block this
| acquisition, though I could be wrong.
| nerdponx wrote:
| It's been a while since I studied industrial
| organization, but isn't the basic idea behind the
| "textbook" vertical merger that some of the reduced
| marginal costs of production get passed on to the
| consumer in the form of higher quantity and lower price?
|
| That probably _would_ happen, by way of more MGM
| properties becoming available and costing less on the
| Amazon streaming platform. My concern is that "welfare
| of consumers who use Amazon to stream MGM movies" is not
| a useful proxy for "overall effect on society".
|
| Moreover, Amazon is _already vertically integrated_. They
| are already a movie and TV studio. They already own and
| produce a lot of their own content.
|
| What is the broader effect on the market? Will this
| snowball into further acquisitions that don't benefit
| consumers later? None of that is covered by the textbook
| model.
|
| Unless there's serious research that corroborates the
| textbook outcome in a "realistic" (messy) scenario like
| this, I can't set my prior to anything but "extremely
| pessimistic."
| wallacoloo wrote:
| > This has a decent chance to be pro-consumer.
|
| What does it mean to be "pro-consumer"? You can't reasonably
| use that metric to decide antitrust cases if you aren't
| directly querying consumers on whether they want the company
| to be broken up or not. When the FTC decides what is or isn't
| pro-consumer, that's the same as me claiming that I know how
| you're going to vote on issue X, and then claiming that
| you're "voting against your interests" when you vote the
| opposite way.
|
| Anyway, there's another lens besides consumer welfare and
| monopoly here: diversity provides protection against the
| unforeseen, as well as an increased rate of innovation. We
| see this in natural selection where species routinely go
| extinct and, on the occasion, whole classes of animals are
| wiped off the planet but life as a whole continues because of
| the diversity before any event.
|
| When we accept high concentration in our economy, we lose the
| safeguards that come with diversity. With enough
| concentration the unforeseen events become actual existential
| threats. I'm not going to claim we're there yet -- if Amazon
| failed we still have Walmart, and Azure, etc -- but I didn't
| see anything in your viewpoint that protects against a future
| where some things become "too big to fail".
|
| tl;dr diversity is a desirable property of most systems, and
| an antitrust framework should consider it.
| paganel wrote:
| > If your prediction is that this will result in a welfare
| loss to consumers I would ask that you offer some evidence.
|
| For what it's worth a company that is valued at between 1.5
| and 2 trillion usd has to come with evidence of how it isn't
| a monopoly/abusing its monopoly position, we can't reasonably
| talk about a "free market" when those numbers are involved.
|
| I'm not an economist and I'm not good with remembering names,
| but I do seem to remember that there was more than one
| economist in the past who said that one of the few ways of
| getting/acquiring "value" is to reach a monopoly position.
| $1.5 trillion is a hell lot of value.
| bhupy wrote:
| It feels like the aversion to the "trillion" market value
| is strictly psychological in response to an arbitrary order
| of magnitude. Keep in mind that the total value of all US
| companies combined as of March 2021 is $49 trillion
| (https://siblisresearch.com/data/us-stock-market-value/);
| Amazon represents just 4% of that.
|
| If we were to try to define Amazon's market, there's no
| reasonable definition you could come up with in which
| Amazon holds more than a 40% market share (https://www.ben-
| evans.com/benedictevans/2020/10/31/market-de...).
| jbullock35 wrote:
| The linked article allows that Amazon has much more than
| a 40% share of certain "segments":
|
| > Amazon has well over half of US book sales, and
| probably three quarters of ebook sales. So if we're
| arguing about how Amazon runs its books business, it
| unquestionably has market dominance. You have to pull out
| a segment, not the whole company.
|
| To speak more generally, my understanding is that
| arguments that Amazon is a monopolist are stronger when
| we focus on Amazon Marketplace than on (say) AWS, partly
| because there are many "segments" in which almost all
| products are sold through Amazon. But I wish that I had
| more data about this particular claim.
| bhupy wrote:
| Thanks for the correction, you're absolutely right about
| the ebook market share.
|
| Notwithstanding that, I think the general point is that
| this is a vertical acquisition completely unrelated to
| that market, in which Amazon has nowhere close to that
| kind of market share.
|
| Keep in mind that nobody here is arguing that we ought to
| have a free-for-all in acquisitions and do away with the
| FTC entirely. It's just that the FTC doesn't operate off
| of knee-jerk reactions to absolute dollar amount market
| valuations. Instead, the level of analysis is one that's
| more in line with what the GP commenter has been arguing.
| huitzitziltzin wrote:
| > For what it's worth a company that is valued at between
| 1.5 and 2 trillion usd has to come with evidence of how it
| isn't a monopoly/abusing its monopoly position,
|
| There is no good evidence I'm aware of which suggests that
| Amazon is a monopoly or anything like one in any market I'm
| aware of: certainly not in retail to consumers, nor in AWS
| (to pick a frequent target of criticism that I see on this
| site). If you have evidence which suggests Amazon is a
| monopolist in some market it competes in, please cite it.
|
| Amazon is large because it is successful. It is successful
| because it generally offers products cheaply and delivers
| them quickly. Period.
|
| That is _exactly_ the case that you do not want antitrust
| law to punish. Antitrust should preserve competition while
| not punishing successful firms.
|
| It is indeed true that _one way_ to become valuable is to
| acquire a monopoly position in a market. That is not the
| _only_ way. And it is not the way that Amazon has become
| such a valuable company.
| ignoramous wrote:
| > _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._
|
| Not saying you're lying (I am out of my depth here, for
| once), but your post reminds of this piece on
| noahpinion.substack.com, "Experts will lie to you":
| https://archive.is/ErWwa
| huitzitziltzin wrote:
| > Not saying you're lying
|
| Thanks. You can read this material for yourself in any
| undergraduate industrial organization textbook!
| ghaff wrote:
| I suppose it depends on how you view Amazon. They are a
| (primarily streaming) content distributor although they're
| also a (primarily TV) studio. It's a reasonable argument
| that a distributor acquiring a large back catalog of film
| IP is a vertical merger. Although to the welfare-improving
| point, giving that back catalog a straightforward route to
| consumers is not necessarily a bad thing.
| mnd999 wrote:
| It is a bad thing for the consumer because it means more
| exclusive titles which is gives rise to a false market.
| It looks like consumers have a choice of platforms with
| content, but when that content is exclusive the consumer
| ends up having to pay for all the platforms to see the
| content they want to see. This in effect means more costs
| for the consumer and less choice.
| setr wrote:
| Isn't this already the mechanism in play? They're all
| signing exclusivity deals between streaming companies, as
| the streaming companies strive to differentiate on really
| their only notable difference: their catalog.
|
| An MGM buy just further buys into the practice
| ghaff wrote:
| 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 wrote:
| Its for MGM's IP and back catalog so Amazon can literally
| rent it for a monthly price.
| JohnJamesRambo wrote:
| 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_fi...
| bryanrasmussen wrote:
| https://en.wikipedia.org/wiki/List_of_Metro-Goldwyn-
| Mayer_fi...
| ghaff wrote:
| 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 wrote:
| I found Amazon Prime movie section (good movies) better
| than Netflix.
|
| This buyout makes sence.
| ghaff wrote:
| Personally, I find the all-you-can-eat subscription subs
| all pretty bad for film. They have even good films but if
| you want to watch a _specific_ film, it 's unlikely they
| have it. Earlier in the pandemic I even reupped my
| Netflix DVD rental service for a while. (Sadly, Netflix
| is obviously not repurchasing a lot of older movies as
| the discs become unwatchable.)
| xkjkls wrote:
| A better list ranked by relevancy: https://www.the-
| numbers.com/box-office-records/worldwide/all...
| fredoralive wrote:
| Note that due to various deals back in the 80's, MGM
| doesn't own most of its older films, Warner Bros does.
| They do have the entire United Artists catalogue, and
| films from some other smaller studios like Orion
| pictures.
| lotsofpulp wrote:
| The better way to address this would be reducing copyright
| lengths to 20 years or something reasonable.
| e3bc54b2 wrote:
| That means losing out exclusivity on endless remakes,
| reboots and sequels. Since that's the majority of
| Hollywood money, I sincerely doubt it will change.
| vmception wrote:
| Many legislative opportunities just require shining a
| light on it.
|
| Disney lobbied for copyright lengths and other
| protections because nobody else cared. And didn't ask for
| more over recent years because people cared.
|
| You can do the same thing.
|
| There are many neglected and unused regulations because
| markets never formed around them. Congress or a
| regulatory body thought they were doing something useful
| but werent.
| fuzzer37 wrote:
| Yeah, because any of us have the same power as Disney.
| vmception wrote:
| Right, you don't. I think people are overestimating the
| pushback they'll get from other lobbyists, and also
| overestimating the amounts that motivate elected
| officials.
| WorldMaker wrote:
| Remakes/reboots/sequels keep the brand fresh (add new
| copyrighted elements) and keep trademarkable items
| relevant and trademarked, so even if copyright terms were
| shrunk again, it wouldn't mean fewer
| remakes/reboots/sequels, nor would it reduce
| "exclusivity" of them, given the trademark moat. It would
| probably mean _more_ remakes /reboots/sequels at standard
| intervals to "refresh" copyright/trademarks and keep the
| moat full.
|
| (Even Disney has publicly recognized to their
| shareholders their mistake in backing the previous
| copyright extension act and have no further reason to
| back more extensions because they've proven the trademark
| and trade dress moat is plenty sufficient. Seriously, try
| to make a commercial Steamboat Willy derivative all you
| want without using Mickey characters or concepts from
| later shorts/movies/pop culture. Try to do it without
| violating Disney's long held trademark on Mickey's
| general head shape. Or to use a different huge empire's
| with a giant moat of properties, some of the earliest
| Batman stories just finally entered the public domain,
| but there's almost no way to commercially create a new
| Batman story without accidentally using later still
| copyrighted ideas/characters [early Batman used a gun,
| feels sometimes unrecognizable to modern expectations;
| most of his favorite rogues didn't show up for decades
| later] and without violating extensive trademarks on Bat
| emblems and the cowl shape, etc.)
| kevin_thibedeau wrote:
| Trademarks would prevent derivative works after
| expiration.
| mikeryan wrote:
| Not from the studios perspective. They want the
| exclusivity.
| lotsofpulp wrote:
| Yes, so the proper way to help consumers is to remove the
| exclusivity and deal with the problem directly.
| Preventing mergers does not do anything, except add a
| middleman.
| bilbo0s wrote:
| This.
|
| Why is everyone ignoring these obvious solutions?
|
| I feel like there are these enormous movements out there
| to advance byzantine solutions to problems we could
| readily address with simple new rules. What's worse,
| these movements champion things like break ups, which
| will never work for the vast majority of these firms.
| Many are not monopolies, and do not operate as trusts.
| (Though FB, Google, and Amazon come closest.) Meeting
| legal definitions matter to Supremes. No matter how silly
| the legal definitions may seem to us as laymen.
|
| Two simple new rules. One, make the using of the private
| data of any user for commercial purposes explicitly
| illegal with draconian fines assessed per individual
| _violation_ , not per user. Two, redo copyright in the
| manner you suggest. No more renewing for what becomes
| something akin to a copyright perpetuity.
|
| These two rule changes would neuter the power of a lot of
| these companies.
| thiago_fm wrote:
| Agree. Those copyright laws were put into place a long
| time ago and made sense in the context of the past.
| Nowadays, they should just create a new one that fits the
| new distribution ways.
| fastball wrote:
| Right but so can MGM. The rent-seeking is there anyway,
| don't think it's anti-consumer for the rent-seeker to be
| Amazon rather than MGM.
| ameister14 wrote:
| As opposed to what, exactly? Is it currently available for
| free?
| JohnWhigham wrote:
| The Rockefellers and Vanderbilts of yester-century would be red
| with envy at the size and power of today's tech companies.
| fastball wrote:
| 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 wrote:
| 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 wrote:
| 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.
| xwdv wrote:
| They will not "bully you every inch of the way". Go
| ahead, start a competitor. Here's how it will go: First
| they will ignore you. You are so small they will not even
| know you exist. Then when you start getting some
| noticeable but still insignificant volume of marketshare,
| they will laugh at you. _Then_ when you actually start
| getting too much market share they will actually do
| something and fight you. If you survive that you will
| either win or they will buy you.
| JohnWhigham wrote:
| >If you survive that you will either win or they will buy
| you.
|
| That's the problem though. _No one_ in the modern age has
| traditionally won against these companies, they just get
| happily bought. It 's very arbitrary and sure, it's not
| breaking any laws, but it's also doing absolutely nothing
| for promoting a healthy industry. Is this the best "free"
| market we can muster?
| xwdv wrote:
| If you get bought out, then it just reveals what you're
| true intentions were all along.
| hindsightbias wrote:
| 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 wrote:
| 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)
| lotsofpulp wrote:
| 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.
| xwdv wrote:
| 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?
| TheCoelacanth wrote:
| How about the people of the country that those agencies are
| supposed to be serving?
| omgwtfbbq wrote:
| >What is the else?
|
| Happiness, human flourishing, societal improvement, literally
| all of life. Is this a real question?
|
| >significant risk of loss
|
| Lol?
| kingsuper20 wrote:
| 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 wrote:
| 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 wrote:
| 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/b...
|
| I think you could make a strong argument for buying a large
| publisher (or anything really) given a good ROI.
| JohnHaugeland wrote:
| this means that amazon will have about 4% of the industry
|
| this isn't even slightly a monopoly by the legal definition
| afavour wrote:
| 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 wrote:
| 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 wrote:
| 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 wrote:
| 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.
| afavour wrote:
| It doesn't sound like we disagree. Why couldn't the FEC
| allow the merger with a mandate that content be available
| on all (or a reasonable number of) platforms?
| lotsofpulp wrote:
| I think half measures can hurt more than they benefit,
| due to it being used politically as an excuse to not
| address the root issue by claiming it was already
| addressed.
|
| The root issue here is excessive copyright terms. Those
| are the source of the monopoly. We already solved the
| distribution problem with the internet, now it's a
| political issue of reducing copyright lengths. Any other
| solution will be used by politicians as an excuse to show
| they did something, or that nothing more needs to be
| done.
|
| Who cares who buys what once the content is in the public
| domain. It is a cleaner, resilient, and quicker solution.
|
| Also, it seems unfair that government would be able to
| dictate what Amazon can and cannot do with its content,
| but not others, so that is another political fight that
| can waste time and energy.
| afavour wrote:
| > The root issue here is excessive copyright terms.
|
| Not really. That's _an_ issue, certainly. But the
| consolidation of media ownership into companies that
| control the entire process from production to the
| hardware video is played on has very little to do with
| how long back catalogues retain copyright protection.
| JohnHaugeland wrote:
| Why else would the SEC or the FTC be involved?
|
| This isn't rent seeking. That phrase is becoming much too
| popular with the Apple store debacle.
| afavour wrote:
| The FTC exists to protect the interests of consumers.
| They're not just the "Anti-Monopoly Commission".
| JohnHaugeland wrote:
| The FEC only gets involved over specific things.
|
| If you want the FEC to be involved, you have to be able
| to say why they're involved.
|
| Instead of giving a feel good story about what you
| imagine they're for, please provide an FTC-appropriate
| vision of what they could get involved over
|
| It'd be like if I knocked a chair over, and you said "I'm
| calling the police," and I said "why would the police get
| involved," and you said "the police are there to protect
| us and our families."
|
| That's nice.
|
| What is the specific basis on which the FTC would get
| involved in this, please?
| afavour wrote:
| "The FEC only gets involved over specific things."
|
| On what basis? Legal restriction or historical precedent?
| This is how we get timid regulation, by never moving
| beyond what has gone before.
|
| "The basic statute enforced by the FTC, Section 5(a) of
| the FTC Act, empowers the agency to investigate and
| prevent unfair methods of competition, and unfair or
| deceptive acts or practices affecting commerce. This
| creates the Agency's two primary missions: protecting
| competition and protecting consumers. The statute gives
| the FTC authority to seek relief for consumers, including
| injunctions and restitution, and in some instances to
| seek civil penalties from wrongdoers. The FTC has the
| ability to implement trade regulation rules defining with
| specificity acts or practices that are unfair or
| deceptive and the Commission can publish reports and make
| legislative recommendations to Congress about issues
| affecting the economy. The Commission enforces various
| antitrust laws under Section 5(a) of the FTC Act as well
| as the Clayton Act. The FTC monitors all its orders to
| ensure compliance."
|
| https://www.ftc.gov/news-events/media-resources/what-ftc-
| doe...
|
| Your comparison is a little absurd. If the police had a
| specific role in investigating and preventing unfair
| chair usage than calling the police would seem like a
| very logical course of action.
|
| In this case, the FTC has a clear role in preventing
| unfair methods of competition. Huge media conglomerates
| closing out access to smaller competitors via the
| software and hardware consumers use to watch TV could
| certainly be considered unfair.
| omgwtfbbq wrote:
| The Monopoly grows...
| GeekyBear wrote:
| Isn't it the case that a radio station doesn't need the
| permission of a composer to play their work on the radio, but
| instead pays a non-negotiable fee?
|
| Internet radio stations work similarly, but also distribute money
| to the performer(s) and label.
|
| The core idea of forced licensing to any streaming service
| willing to pay a set fee could do a lot to prevent consumers from
| needing to pay for so many streaming services.
| adventured wrote:
| As a radio station you typically go through one of a few
| licensing companies, which you pay royalty checks to. For
| example:
|
| https://www.ascap.com/help/royalties-and-payment/payment/who...
|
| https://www.bmi.com/licensing
|
| You can't just play any music you want on the radio without
| permission (with an automatic fee attached). I've owned
| commercial radio stations and while you could play a vast
| amount of music with no hassle, it's due to the
| licensing/royalty agreements with companies like ASCAP & BMI
| that streamline the process.
|
| Pretty much everybody that plays music in the US has an
| agreement with ASCAP, including XM Sirius, all the streaming
| services, and just about every radio station.
| dalbasal wrote:
| Can artists opt in/out of this?
|
| Any thought on how this could be applied to
| youtube/podcasting/etc. I miss music shows.
| ghaff wrote:
| Music has compulsory licensing which pretty much no other
| copyrighted material has.
|
| >The core idea of forced licensing to any streaming service
| willing to pay a set fee could do a lot to prevent consumers
| from needing to pay for so many streaming services.
|
| I'm skeptical. While there are exclusives, one of the reasons
| Netflix, for example, doesn't have more content is that it has
| to balance the size of its catalog with the fact that consumers
| probably aren't mostly willing to pay $100/month.
| adventured wrote:
| Music has some compulsory licensing, it's limited in pretty
| significant ways though.
|
| That's why Taylor Swift was able to force her music off of
| Spotify and they couldn't do anything about it (such as just
| ignore her and pay a default fee). Obviously if Spotify could
| have done so at the time they'd have just paid a default
| compulsory rate and kept her popular albums on their network.
| GeekyBear wrote:
| > While there are exclusives, one of the reasons Netflix, for
| example, doesn't have more content is that it has to balance
| the size of its catalog with the fact that consumers probably
| aren't mostly willing to pay $100/month.
|
| I'm thinking more of the example of Disney changing the
| licensing terms on Netflix's former slate of Marvel based
| live action shows, before creating their own streaming
| service.
|
| Streaming services want exclusives, even if it means buying
| the production company.
|
| Netflix has been warning shareholders for several years of
| what it sees coming.
|
| >"Our early investment in doing original content more than
| six years ago was betting that... there would come a day when
| the studios and networks may opt not to license us content in
| favor of maybe creating their own services."
|
| https://www.forbes.com/sites/greatspeculations/2019/03/08/lo.
| ..
| ghaff wrote:
| Certainly we're moving towards a more fragmented landscape
| although it's also the case that Netflix (for example) will
| only pay so much for the rights to stream content at any
| given time.
|
| I daresay many of the same people who complained about the
| cable bundle are now complaining about having to manage a
| bunch of different streaming services, a la carte
| streaming, and yes torrents. Although, to be honest, it's
| cheaper overall if you can do without live TV (or can get
| over the air).
| GeekyBear wrote:
| I agree that streaming is still cheaper, but some sort of
| mandatory licensing scheme for video content would be
| able to put a stop to the current balkanization of
| television content.
| dageshi wrote:
| In any other industry, having companies compete against
| each other to create the best product in order to attract
| customers is the ideal situation... except television?
|
| People might not like balkanization of content, but it
| forces different services to compete against each other
| in a way that produces more and better content overall.
| More to the point, it's frankly no different to how TV
| channels used to work in the past.
| ghaff wrote:
| I wonder how many people who complain about the
| balkanization of content across multiple streaming
| services also weren't a fan of the cable bundle.
|
| Presumably, if you had mandatory licensing, you end up
| with a monopoly or duopoly of streaming services. (Which
| is more or less what you have in music--though it's
| arguably a triopoly if you count Amazon.) That's not
| _necessarily_ bad; it 's been pretty much OK (for
| consumers if not creators) in music. Though it would
| presumably reduce the incentive to produce tentpole
| content that brings people to your specific service.
| GeekyBear wrote:
| >it forces different services to compete against each
| other in a way that produces more and better content
| overall
|
| It seems more like another avenue through which a small
| number of mega-corporations can control ever increasing
| shares of the media marketplace to me.
|
| In my view, some sort of mandatory licensing scheme would
| force individually owned production companies to compete
| against each other to produce the best product.
| dageshi wrote:
| A small number of mega corporations have always
| controlled the media marketplace, the difference is
| streaming is shaking things up and making a new set of
| mega-corporations in addition to the existing ones.
| GeekyBear wrote:
| >A small number of mega corporations have always
| controlled the media marketplace
|
| Always? No.
|
| After the deregulation of the Clinton era? Yes.
|
| Fun fact: At the start of the Clinton administration,
| banks could not operate in more than one state.
| jack_jennings wrote:
| Can't wait for the Amazon themed casino on the Las Vegas strip.
| ianhawes wrote:
| I too initially thought of MGM Resorts.
| Thaxll wrote:
| Stargate coming to Amazon prime video! Maybe Jeff Bezos enjoys SG
| as much as The Expanse.
| tastyfreeze wrote:
| That was exactly my reaction. Stargate (all the series) is
| fantastic sci-fi.
| dalbasal wrote:
| There reality of current equity valuations is such that, if
| sustained, there is some some pretty savage consolidation to
| come. The only limit is antitrust, or fear of.
|
| $9bn is 0.5% of AMZN's current market cap, so $9bn represents a
| daily price fluctuation. They also have $45bn in cash reserves,
| so amazon could buy 5 MGMs without borrowing or issuing stock.
|
| That's not even a lot! Apple, Google & FB have $200bn, $140bn &
| $65bn respectively. Dividends don't seem to be a thing, and it's
| basically impossible to invest this much cash internally. These
| companies don't have factories to build, or any kind of hard
| capital investments to make. Even an epic, blue sky cash sink
| like Waymo isn't capable of burning through their available
| capital, nevermind credit. Large capital investment at meaningful
| scale is not part these companies' culture, or competencies.
|
| Acquisition is the only thing they _can_ do, besides buying
| bitcoin and vanguard. Meanwhile, acquisitions bid up prices and
| exasperate the scenario further.
|
| Morals and regulatory potential aside, does it not make sense for
| Tesla to buy and bury one or two major auto manufacturers? Ford
| is worth $50bn, GM is $80bn. Tesla is $600bn. Why bother
| competing?
|
| ^I'm purposely overstating, to make the provocative point...
| especially in regards to Tesla, who have no cash and other ways
| of doing capital investment anyway. Obviously, there is debt
| financing and other factors that complicate all of this.
| vishnugupta wrote:
| Amazon always has and continues to invest internally to expand
| e.g., new AWS regions, warehouse automation through robotics
| most of which are extremely capital intensive. Though your
| observation is right that MGM acquisition does make sense for
| Amazon because they OK to pay a premium to fast-track expanding
| their media business.
|
| The way I see it, Amazon, as a growth machine, keeps its growth
| options (organic/inorganic) open and when sees an opportunity
| for inorganic growth they will go for it. The most recent
| example being their acquisition of Whole Foods. They were
| anyway investing in growing their brick-and-mortar presence and
| opportunistically acquired Whole Foods to fast-track it.
|
| Relatedly, Amazon has to be one of the most diverse
| corporations ever. From AWS to media studio. Which other
| corporations come close?
| scottyah wrote:
| Eastern companies like yamaha and hyaundai. dirtbikes to
| pianos, cars to housing
| mattnewton wrote:
| That was my first thought, specifically the South Korean
| Chaebols like Samsung
| dehrmann wrote:
| > dirtbikes to pianos
|
| Yamaha's logo is three tuning forks. Always cracks me up
| seeing that on a dirtbike.
| sehugg wrote:
| Motorcycles have forks too, but if they resonate at 440
| Hz you have got issues...
| orky56 wrote:
| Good point. The Korean Chaebol [1] is all about the
| conglomerate.
|
| [1]https://en.wikipedia.org/wiki/Chaebol
| ksec wrote:
| >Relatedly, Amazon has to be one of the most diverse
| corporations ever.
|
| That is the exact problem Steve Yegge described [1].
| Americans has a world view that equals to America. Amazon
| doesn't even compare with Samsung in vertical
| integration.
|
| And in terms of diversity, it doesn't even need to be
| Korea Chaebol, dozens of other East Asia conglomerate are
| way more diverse than Amazon.
|
| [1] https://steve-yegge.medium.com/hurricane-china-how-
| to-prepar...
| laumars wrote:
| Diversifying used to be the norm (eg Thorn EMI, Virgin, etc).
| It's more of a modern trend to specialise in one field.
| dalbasal wrote:
| I agree, but...
|
| 2021 Amazon has AWS, which is hugely cash generative... hence
| the growing cash balance. They can't invest faster than it
| accumulates. Financially, they're like Apple, Google, Etc.
| now.
|
| Also, "capital intensive" is relative. Warehouse's investment
| numbers tend to be publicized, because politics. A big one is
| $200m, and that's a "media story" number which may be higher
| than the real, "capital investment" amount.
|
| Company valuations are one thing, but $10bn is a lot of
| capital. It's hard to actually invest that much. That's why
| the big software companies have so much of the damn stuff.
| donavanm wrote:
| > Large capital investment at meaningful scale is not part
| these companies' culture, or competencies.
|
| Am I missing something? The latest Amzn 10-Q shows $45B of
| "Purchases of property and equipment" $11B in lease principal
| payments in the past year. That's on the $42B cash on hand and
| $26.9B net income. Cash flow and capital investment seems like
| the crank Amazon has been turning for 20 years?
| xkjkls wrote:
| I think he means that Amazon isn't really an acquirer. Other
| than Whole Foods, I think their next biggest acquisition is
| Twitch? That's only two total acquisitions over ~1 billion
| over Amazon's entire history. For what is currently the
| largest market cap on earth, that's pretty shocking.
| kongolongo wrote:
| Zappos and Zoox were also both $1 billion acquisitions by
| Amazon
|
| Why only consider acquisitions over $1 billion though? They
| have quite a few $250 million+ acquisitions that were
| pretty big or key players in their respective niches.
| xkjkls wrote:
| Because a billion is a nice round number, and if you
| compare to other companies the same size, they've had a
| remarkably small number of acquisitions.
|
| Google has had Youtube, DoubleClick, Android, Motorola,
| Nest, HTC, Nest, Looker, Fitbit, Waze... and that's just
| what I remember.
|
| Facebook has had at least Instagram, WhatsApp and Oculus,
| but they've been around close to two decades less.
|
| For a company of Amazon's scale, it's lack of
| acquisitions is relatively surprising.
| efficax wrote:
| datacenters for all 4 are a huge capital investment. Perhaps
| less so for Apple, but Amazon, Google and Facebook all run
| their own datacenters and all of them will have to continue
| expanding their datacenter footprint if they continue to grow.
|
| That being said, it does seem like equity markets are in a
| bubble. Tesla at least is absurdly overvalued. If i had
| signifcant stake in TSLA I would be getting out asap and let
| someone else hold on to shares that are probably 300%
| overvalued.
| ebiester wrote:
| Amazon shares, relative to revenue, were absurdly overvalued
| for over a decade.
|
| Then they weren't.
|
| The argument for Tesla, much like Uber, is that they are
| going to figure out the rest. It's really almost a faith
| based investment, either way.
| dalbasal wrote:
| Huge yes. Huge relative to amzn & apple is a different
| matter.
| SyzygistSix wrote:
| Amazon could pay and treat their employees better. That would
| be an investment that would make me consider using their
| service again.
| dalbasal wrote:
| Technically that'd be a cost, not an investment.
| influx wrote:
| Amazon already pays their Warehouse workers $15/hour or more.
| How much should they get paid?
| stagger87 wrote:
| I'd start with something livable.
| subsaharancoder wrote:
| > I'd start with something livable
|
| Define "livable" in the context of wages
| stagger87 wrote:
| This term is already defined.
|
| https://en.wikipedia.org/wiki/Living_wage
|
| https://livingwage.mit.edu/
| SyzygistSix wrote:
| $15 would be a realistic minimum wage in many places. And
| they can treat their workers better.
|
| Costco is a good example of how to treat workers.
| iso1631 wrote:
| It seems the smart move in today's market is to acquire an
| organization for free with a leveraged buyout.
| throwaway1777 wrote:
| Apple does offer a dividend fwiw. The others often use cash for
| share buybacks which is part of why the price is so high. So
| it's not entirely like they just let the money sit there.
| dalbasal wrote:
| True, this is why I offered that caveat at the end. None of
| what I said is true in an absolute sense.
|
| Whether or not they pay dividends or buy back stock, the
| average net is large. That's why they've accumulated these
| record busting sums.
| benmller313 wrote:
| I don't think Amazon has done stock buy backs in almost 10
| years.
| xkjkls wrote:
| If you discount the automatic stock buybacks they do to
| compensate for employee stock bonuses this is true. But
| that is still a pretty large amount of money over the past
| decade.
| tablespoon wrote:
| > That's not even a lot! Apple, Google & FB have $200bn, $140bn
| & $65bn respectively. Dividends don't seem to be a thing, and
| it's basically impossible to invest this much cash internally.
| These companies don't have factories to build, or any kind of
| hard capital investments to make.
|
| Apple arguably does have factories to build, given how utterly
| dependent on China it is.
| UncleOxidant wrote:
| This. Apple should be looking into buying a semiconductor
| company and building more fabs. Preferably US based. Maybe
| Micron or TI. Micron's market cap is ~90B. TI's is about
| ~170B, so probably Micron.
| kodah wrote:
| I really would hate to see _Texas_ Instruments bought and
| buried by a coastal company. The Midwest really needs some
| of its own tech giants to drive their economies. I suspect
| TI would be absent from North Texas if Apple bought them or
| they 'd participate in the typical nastiness of moving all
| engineering to the coast and leaving sales and marketing in
| it's wake.
| duped wrote:
| Major nitpick but Texas is most certainly not part of the
| midwest. And acquisition is the wrong thing to fear,
| backwards economic policies and divestment from urban
| centers and education while labor protections even for
| high skilled employees continue to be eroded are system
| problems outside of the coastal hubs. Texans and
| midwesterners should be afraid of how their governments
| are dropping the ball, not of coastal companies buying
| out the locals.
|
| But the bigger scare of TI being acquired is that they
| are a major manufacturer of commodity components and
| Apple is a vertically integrated consumer electronics
| business. It would be devastating to American
| semiconductor marketplace if their portfolio was no
| longer available.
| kodah wrote:
| Sure, whatever region you want to call Texas feel free to
| call it that. It's largely arbitrary.
|
| The problem is that Dallas (and other areas) have been
| sucked dry of talent by tech companies for a while - even
| before the conservative economic policies you're
| handwaving about came into effect. Some of that is on the
| state for not being competitive enough, other parts of
| that have been on predatory practices by businesses that
| fuel things like state to state income inequality.
|
| Second, I don't need to be told what to be afraid of, so
| your condescending tone can take a listening stance. A
| software engineer in Dallas Texas doesn't make near the
| cost of living difference between a San Francisco job
| while doing the same thing and that is a problem. Full
| stop.
|
| That problem can be remedied by bringing more tech
| businesses to Texas and gating them out of the
| traditional coastal areas like New York, SF, Seattle, and
| Portland. There are other ways of remedying the problem
| and I'd love to hear them, but finger pointing at the
| Texas government without pointing at companies and other
| states sounds pretty fruitless.
| conro1108 wrote:
| > A software engineer in Dallas Texas doesn't make near
| the cost of living difference between a San Francisco job
| while doing the same thing and that is a problem. Full
| stop.
|
| Why is that a problem? Do you feel that the same gap
| needs to be closed globally, or just within the US?
|
| > finger pointing at the Texas government without
| pointing at companies and other states
|
| I don't think anyone is finger pointing at the Texas
| government while ignoring companies and other states. GP
| is saying that Texas is doing thing X, coastal states are
| doing thing Y, leading to companies (and engineers)
| choosing the coastal states because they prefer Y.
| kodah wrote:
| > Why is that a problem? Do you feel that the same gap
| needs to be closed globally, or just within the US?
|
| I'm sure you'd find it problematic if you're forced from
| an area just because of geo-pay. I can't build that kind
| of empathy for you though, you'll need to go find it.
|
| Nice whatabboutism on the second part. Yes, I think it
| needs to be closed on both. These companies produce
| digital products, not geographically sold ones. The
| contribution of an engineer in one place is the same as
| another, as long as the impact is the same.
|
| > GP is saying that Texas is doing thing X, coastal
| states are doing thing Y, leading to companies (and
| engineers) choosing the coastal states because they
| prefer Y.
|
| That's pretty much longer form of what I just said. The
| state can do things differently, but the state isn't even
| all or most of the answer. A lot of it has to do with
| wage suppression, which I covered above.
|
| Edit: I realize I come off a bit salty about this. I am.
| I am not conservative and this problem has personally
| impacted me. It's annoying to hear people speak about
| this with such utter lack of empathy, or rather that
| their political ideology comes shining through, but I get
| to most people it's probably just Tuesday.
| conro1108 wrote:
| I'd argue it's a bit dramatic to say I was "forced from
| an area" but I did move from the east coast to the Bay
| Area largely because pay disparity was much larger than
| the difference in cost of living. I saw that as an
| opportunity, not a punishment.
|
| > A lot of it has to do with wage suppression
|
| This is where I get a bit confused. Why would companies
| artificially push engineers to the areas where they
| command these disproportionately large salaries? Are you
| saying that they overpay engineers in general
| specifically to suppress wages of engineers that _are_ in
| Texas?
| selimthegrim wrote:
| I used to work for a TI software subcontractor in
| Portland. After getting strung along by a trainee manager
| from HQ the whole project was offshored. I can only
| imagine how the employees in TX are treated.
| kodah wrote:
| TI has been dying a slow death from what I've observed
| and heard. Outsourcing tends to be part of that, sorry it
| happened to you.
|
| When I worked in Texas there was a lot of outsourcing,
| but usually it's because there's not enough talent in the
| area to meet demand. It's a cyclical effect, which is
| what irritates me about coastal folks trying to deny
| their states and companies have participated in that
| process.
| cle wrote:
| Honestly I would be sad to see vertical consolidation like
| that. But given all the hype around M1 and the translation
| to $$$, it wouldn't surprise me.
| ksec wrote:
| They really don't. And neither do they need to buy
| SemiConductor Companies.
|
| Unlike most if not all other companies that outsource
| manufacturing. Apple still has the known how and detail view
| in not only the factory but the whole supply chain. They
| could, should they choose to, instantly assemble everything
| by themselves.
|
| Compared to other companies, they are making design changes
| and working with contract manufacture, but they have no idea
| how those machines in production actually works.
|
| Buying Semi or Fabs also doesn't make sense unless they
| intend to Fab for others.
| dalbasal wrote:
| Perhaps, and there seems to be more movement in the direction
| of late. Makes sense, considering how much trouble they've
| had "putting money to work."
|
| That said, Apple have a hell of job turning $200bn into
| factories.
|
| The scale of money, currently... is quite something to live
| up to.
| vineyardmike wrote:
| > That's not even a lot! Apple, Google & FB have $200bn, $140bn
| & $65bn respectively. Dividends don't seem to be a thing, and
| it's basically impossible to invest this much cash internally.
| These companies don't have factories to build, or any kind of
| hard capital investments to make.
|
| What about data centers?
| dalbasal wrote:
| All of this is relative to those companies' scale. They do,
| naturally, have capital investments to make. These just
| aren't enough to utilize their available capital, currently.
| vmception wrote:
| What's the provocative part?
|
| I like the insight. What you are saying is that liquidity needs
| to get much deeper to account for all the currency made
| available and consolidated.
| sangnoir wrote:
| The idea of Tesla buying and discontinuing GM for the sake of
| reducing competition is pretty provocative.
| dalbasal wrote:
| That is precisely what I meant by provocative.
| TMWNN wrote:
| If Bezos _doesn 't_ want to be the next Bond villain,[1] buying
| MGM is the best way to avoid being depicted as such.
|
| [1] Not him specifically, but a bald man described as an
| "Internet mogul" who is "one of the richest people on Earth" with
| "tentacles in every aspect of daily life", including "smart
| speakers in everyone's home"
| aero-glide2 wrote:
| I hope biden's new anti trust person does something about this.
| CountDrewku wrote:
| I wouldn't hold your breath. These companies are basically an
| arm of the government now.
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