Congress Urges FTC to Scrutinize Proposed EA Acquisition Over Labor Concerns
The U.S. Congress has requested that the Federal Trade Commission (FTC) conduct a comprehensive investigation into the planned acquisition of Electronic Arts (EA). Lawmakers expressed their worries about the deal's potential effects on workers and competition in the U.S. video game industry through their letter to FTC Chair Andrew N. Ferguson.
Saudi Arabia's Public Investment Fund (PIF) will acquire the company through its partnership with Silver Lake and Affinity Partners. The letter co-chaired by Representatives Debbie Dingell and Steven Horsford of the Congressional Labor Caucus presents multiple central issues of concern.
Impact on Job Security and Worker Wages
The current letter demonstrates how the video game industry has experienced ongoing instability problems which resulted in more than 35000 job cuts since 2022. The report shows that EA has cut more than 1700 U.S. jobs since 2023 while the company reports a major decline in median worker salary from the previous year.
The lawmakers fear that the acquisition which requires a minimum of $20 billion in debt financing will compel the acquiring companies to implement aggressive cost-cutting strategies. The potential cost-cutting measures will include:
- Additional layoffs and job relocation to international locations
- Studio restructuring or closures
- Further pay reductions
Risks of Market Dominance and Cross-Industry Leverage
The letter highlights how EA could increase its control over the video game labor market through its planned acquisition. The proposed buyers maintain substantial ownership positions in industries that connect to sports leagues and talent management and sports-betting platforms. For example, Silver Lake has ties to WME and TKO, while PIF owns LIV Golf.
Cross-ownership between these companies will enable EA to operate under the same corporate structure which includes essential sports and entertainment companies that provide important licenses. Members of congress believe that this situation will lead to self-preferencing and anticompetitive collusion which will restrict worker movement and decrease employees' power to negotiate within the business sector.
Antitrust and Labor Market Concerns
The letter cites the FTC's 2023 Merger Guidelines which explain that mergers that damage workers or let powerful companies decrease labor demand violate antitrust regulations. The lawmakers believe that the EA acquisition requires investigation because it enables companies to implement anti-labor actions which include hiring bans and informal agreements to avoid recruiting each other's staff.
The letter respectfully urges the FTC to conduct a thorough investigation into the labor market consequences of the proposed acquisition before it is allowed to proceed.
