Netflix’s $72B bid for Warner Bros Discovery faces antitrust scrutiny as regulators question claims it competes with YouTube.
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| Netflix argues its Warner Bros acquisition is needed to compete with YouTube, but antitrust experts say regulators may reject the claim. Image: CH |
December 13, Los Angeles, United States
Netflix’s $72 billion plan to acquire Warner Bros Discovery, including its studios and HBO Max, is under intense scrutiny from U.S. and global regulators, raising questions about whether the streaming giant can convincingly argue that the merger is needed to compete with YouTube.
Netflix contends that combining with Warner Bros is essential to challenge Alphabet’s YouTube, which Nielsen ranks as America’s most-watched TV distributor. If approved, the deal would create a streaming powerhouse with 428 million combined subscribers.
However, antitrust experts say the company faces an uphill battle. “Netflix is trying to argue it competes with YouTube because people only watch a certain amount of content a day,” said Abiel Garcia, antitrust partner at Kesselman Brantly Stockinger. “That argument ultimately fails.”
The core challenge is the difference in business models and audiences. Netflix invests billions in scripted originals, including hits like Stranger Things and KPop Demon Hunters, generating subscription revenue of $7.99–$24.99 per month and growing advertising income. YouTube, in contrast, thrives on user-generated content, viral creators, music, and children’s programming, driven primarily by advertising, with over 450 million subscribers and more overall viewing time than Netflix. In October, YouTube accounted for 12.9% of streaming viewership, compared with Netflix’s projected 9% even after merging with HBO Max.
“The DOJ is not likely to see YouTube videos as a substitute for Netflix shows and movies,” said Robin Crauthers, partner at McCarter & English and former DOJ antitrust attorney. “Netflix will have a difficult time making that argument.”
Regulators typically focus on specific sub-markets when assessing mergers. Past cases, such as the FTC’s blocking of Whole Foods’ acquisition of Wild Oats and its challenge to Tapestry’s merger with Capri, show that authorities scrutinize whether consolidation significantly reduces competition in narrowly defined markets, not broad categories of perceived competitors.
Recent reforms require companies to submit internal competition analyses earlier, giving regulators a detailed view of how a company perceives its rivals. Shaoul Sussman, a former FTC attorney, noted that if Netflix’s internal documents do not treat YouTube as a major competitor, or focus only on subscription-based streaming categories, it could weaken the company’s defense.
Netflix has also suggested the merger could lower costs for HBO Max subscribers through bundling with Netflix. However, antitrust experts remain skeptical that cost savings will meaningfully benefit consumers. The DOJ will also examine whether the deal could give Netflix the power to raise prices for subscribers who do not participate in any bundle.
Ultimately, Netflix faces a high bar to convince regulators that the Warner Bros acquisition is necessary to compete with YouTube. While the company frames the deal as a strategic necessity in the battle for streaming dominance, antitrust authorities are likely to demand clear evidence that the merger will enhance competition rather than entrench Netflix’s market power.