Shutting Apple out of the Oscars Could Be an Antitrust Violation

Apple’s new TV+ service isn’t coming until later this fall, but we know that Apple has already been making plans to put its original movies up for Academy Awards, ambitions that are ruffling the feathers of at least some Hollywood heavyweights, who have gone on the record in saying that content from streaming services such as Apple’s upcoming TV+, along with the likes of Netflix and Amazon, shouldn’t be eligible to win Oscars.

In fact, one of the most vocal opponents of Oscar eligibility for streaming content is Steve Spielberg, who sits on the Board of Governors for the Academy of Motion Pictures Arts and Sciences (AMPAS), yet somewhat ironically took the stage at the launch of Apple TV+ last week to promote his reboot of Amazing Stories.

To be clear, however, Spielberg’s alliance with Apple isn’t as hypocritical as it may seem on the surface. The Hollywood director isn’t railing against streaming services in general, but rather trying to make the point that the Oscars should be limited to only including those films that are shown on the big screen. Spielberg is all for Apple, Netflix, and others being able to win Emmys — the awards normally given to made-for-TV movies — but should be barred from competing for Oscars unless they offer more than a mere “token” theatrical release.

Despite its best efforts, however, it turns out that the Academy’s position may actually not be tenable — or in the very least it’s going to have to tread lightly. A new exclusive report by Variety indicates that the U.S. Department of Justice is actually keeping a close eye on Hollywood to see if its plans may in fact represent a breach of antitrust and competition laws.

Variety obtained a letter sent the AMPAS CEO Dawn Hudson last month by Makan Delrahim, head of the DOJ’s Antitrust Division, expressing concerns that the new rules will be written “in a way that tends to suppress competition.”

In the event that the Academy — an association that includes multiple competitors in its membership — establishes certain eligibility requirements for the Oscars that eliminate competition without procompetitive justification, such conduct may raise antitrust concerns.

Makan Delrahim, Assistant Attorney General, U.S. Department of Justice Antitrust Division

According to Variety, the letter was a specific response to recent comments by Spielberg that the Academy was making plans to push through changes to Oscar eligibility by specifically restricting movies that debut on streaming services alongside their theatrical releases. Spielberg’s earlier comments came after Netflix’s Roma won several Oscars at this year’s awards, despite only an extremely limited theatrical release that seemed intended solely to meet the bare minimum of eligibility criteria.

In the letter, Delrahim cites Section 1 of the Sherman Act, the foundational U.S. law that prohibits competitors from making anticompetitive agreements. Since AMPAS is made up of members that also compete in the Oscars, it’s easy to see how crafting rules that bar new studios from competing — especially those who are non-members — could easily be considered a violation of antitrust law.

However, Delrahim suggests that the other consideration would be whether such an exclusion “tends to diminish the excluded films’ sales,” which might end up being hard to measure in the case of streaming services, where the “sales” of a given movie are not as tangible as they are for traditional theatrical releases, where box office and DVDs sales provide a much clearer indication of revenue.

Ultimately, the tone of the letter seems to reflect the Justice Department’s more widespread concerns that traditional media outlets, including not only Hollywood, but cable companies and broadcasters, are likely to try and limit competition from new streaming video entrants — a move that would have an even larger impact on Apple as it works to get its fledgling TV+ service up and running later this year. However, Delrahim makes it clear that the DOJ is not trying to prevent the Academy from making any rule changes, but at the same time is making it clear that such changes will be under the scrutiny of its Antitrust Division, and that the Academy should therefore be careful. The Academy of Motion Picture Arts and Sciences is expected to hold its Board of Governor’s meeting on April 23 to discuss awards rules, and although they’ve said nothing specific about what may be on the docket, a spokesperson said that “all branches will be submitting possible updates for consideration.”