This week the Senate Judiciary subcommittee responsible for antitrust issues held a hearing on the proposed merger between Netflix and Warner Brothers Discovery. The Monopoly Man in attendance embodied the concern that was top of mind for every committee member: Netflix is already the dominant player in subscription video-on-demand, and its acquisition of Warner Bros. could cement its unrivaled monopoly.
As Chairman Mike Lee put it, Netflix could become “the one platform to rule them all” if the merger is allowed to happen. This outcome would harm both consumers of streaming services as well as the talent that generates such compelling content.
Not surprisingly, Netflix CEO Ted Sarandos tried to deflate concerns by casting a sprawling definition of the relevant market in which Netflix competes. His prepared remarks mention YouTube, Netflix’s purported rival, 25 times. “Including YouTube and the like, Netflix accounts for less than 10% of TV viewing,” Mr. Sarandos insisted.
Bruce Campbell, Chief Revenue and Strategy Officer for Warner Bros., added that Netflix competes against short form user-generated content, like TikTok and Instagram.
It shouldn’t require an antitrust economist to understand why their comparisons to ad-supported, amateur-produced content are misleading. But here goes one anyway.
