Netflix’s push to justify its proposed $72 billion acquisition of Warner Bros Discovery has placed an unusual argument at the center of what is shaping up to be one of the most closely watched antitrust battles in modern media. The streaming giant has framed the deal as a defensive necessity, arguing that scale is essential to compete with YouTube, now the most-watched video platform in the United States. Yet among antitrust lawyers, former regulators, and competition economists, that comparison is widely viewed as fragile, if not strategically risky.
At stake is not only whether Netflix can absorb Warner Bros Discovery’s studios and HBO Max, but also how regulators define competition in an entertainment landscape that spans subscription streaming, advertising-supported video, user-generated content, and traditional television. The skepticism surrounding Netflix’s YouTube rivalry claim reflects deeper doubts about whether merging two of the largest premium content libraries would strengthen competition or instead concentrate power in a way regulators have increasingly moved to block.
Why Netflix is leaning on the YouTube narrative
Netflix’s decision to emphasize YouTube as its primary competitive threat is rooted in shifting viewing habits. YouTube commands a growing share of total screen time, particularly among younger audiences, and increasingly rivals traditional television in daily engagement. From Netflix’s perspective, this makes YouTube not just a tech platform, but a dominant distributor of video entertainment that competes for attention, advertising dollars, and cultural relevance.
By positioning itself against YouTube rather than against other subscription streaming services, Netflix is attempting to broaden the relevant market definition. A wider market makes consolidation appear less threatening, as Netflix can argue that even after acquiring Warner Bros Discovery, it would still face intense competition from a vast and powerful rival with unmatched reach.
The logic is strategically understandable. Regulators typically scrutinize mergers more aggressively when they eliminate direct competitors within a narrowly defined market. By framing YouTube as the true benchmark, Netflix seeks to dilute concerns that combining Netflix and HBO Max would reduce competition among paid, premium streaming platforms.
Yet this approach also exposes Netflix to a fundamental challenge: convincing regulators that YouTube is meaningfully substitutable for scripted series, films, and prestige content that define the Netflix and HBO brands.
The problem of substitutability in regulators’ eyes
Antitrust enforcement hinges on whether consumers view two products as substitutes. While viewers may split their time between YouTube clips and Netflix dramas, regulators tend to distinguish between products based on function, pricing, and consumer expectations. YouTube’s core offering is free, advertising-supported, and dominated by user-generated and short-form content. Netflix and HBO Max, by contrast, sell access to professionally produced films and series through monthly subscriptions.
This distinction matters because regulators are less concerned with competition for “attention” in the abstract than with competition within identifiable product markets. From that perspective, binge-watching a prestige drama and scrolling through creator videos are not equivalent consumer choices, even if both occur on the same screen.
Past enforcement actions suggest regulators will probe Netflix’s internal documents to see how it actually defines its competitors. If Netflix’s own strategy presentations emphasize competition with Disney, Amazon, Apple, or traditional studios—rather than YouTube—that evidence could undermine its public narrative. Regulators have repeatedly relied on such internal records to challenge mergers when companies’ courtroom arguments diverge from their internal assessments.
This dynamic places Netflix in a delicate position. The broader its market definition, the harder it becomes to reconcile with how the company prices, markets, and structures its services.
Scale, content power, and fears of market dominance
Beyond the YouTube argument, regulators are likely to focus on the sheer scale of the combined entity. Netflix and Warner Bros Discovery together would control a vast portfolio of intellectual property, spanning global franchises, premium television brands, theatrical releases, and a massive subscriber base approaching half a billion worldwide.
Such scale raises concerns about bargaining power over talent, distributors, and advertisers. A combined Netflix-HBO operation could exert significant influence over licensing terms, production economics, and release strategies, potentially squeezing smaller studios and independent creators. Regulators may also question whether competitors could realistically replicate that scale, especially given rising production costs and the capital intensity of global content distribution.
Netflix has attempted to counter these concerns by pointing to ongoing fragmentation in the media industry and the presence of numerous competitors. Yet recent antitrust enforcement has shown less tolerance for arguments that rely solely on the existence of many players, particularly when a merger combines two leaders within a specific segment.
The concern is not merely higher prices, but reduced innovation and fewer viable paths for content creators to reach audiences without passing through a dominant gatekeeper.
Bundling claims and the credibility gap
Netflix has also suggested that the merger could benefit consumers through bundling, allowing existing subscribers to access HBO Max content at a lower incremental cost. In theory, bundling can generate efficiencies and lower average prices. In practice, regulators have grown increasingly skeptical of such claims, particularly when they involve mergers between large, established firms.
Antitrust authorities tend to ask whether claimed efficiencies are merger-specific and whether they are likely to be passed on to consumers rather than absorbed as profit. Bundling can also have exclusionary effects, making it harder for smaller rivals to compete if consumers gravitate toward all-in-one packages from dominant players.
Another concern is price discrimination. A combined Netflix-HBO entity might offer attractive bundles while raising prices for standalone subscribers or limiting access to premium content outside its ecosystem. Regulators may see this as a risk to consumer choice rather than a clear benefit.
These doubts reflect a broader enforcement philosophy that places less weight on speculative consumer benefits and more emphasis on preserving competitive market structures.
Document scrutiny and the new merger environment
Netflix faces this challenge in a tougher regulatory climate than in previous consolidation waves. Recent reforms to merger review processes have expanded document disclosure requirements and accelerated access to internal analyses. This increases the likelihood that regulators will uncover discrepancies between Netflix’s public arguments and its internal strategic thinking.
If internal communications emphasize competition within subscription streaming or highlight HBO Max as a close rival rather than a complementary asset, regulators could use that evidence to argue the merger would substantially lessen competition. The burden would then shift to Netflix to demonstrate why those internal assessments no longer apply.
This environment reduces the effectiveness of aggressive narrative strategies and increases the importance of consistency. For Netflix, the YouTube rivalry claim may resonate with investors and the public, but it must withstand forensic scrutiny from regulators trained to dissect market definitions.
A test case for the future of media consolidation
The skepticism surrounding Netflix’s YouTube argument reflects a larger tension in antitrust policy: how to regulate competition in converging digital markets without collapsing all distinctions into a single attention economy. If regulators accept Netflix’s framing, it could open the door to broader consolidation across media and technology. If they reject it, the deal could become a landmark example of enforcement boundaries in the streaming era.
For Netflix, the stakes extend beyond this acquisition. The outcome will shape how aggressively the company can pursue scale through mergers versus organic growth. It will also signal how regulators view the balance between traditional content businesses and platform-based video giants.
As the review process unfolds, the core question will not be whether YouTube is powerful, but whether its dominance truly constrains Netflix in the same way another premium streaming service would. On that point, skepticism remains strong, and it may prove to be the defining obstacle standing between Netflix and its most ambitious deal to date.
(Source:www.channelnewsasia.com)
At stake is not only whether Netflix can absorb Warner Bros Discovery’s studios and HBO Max, but also how regulators define competition in an entertainment landscape that spans subscription streaming, advertising-supported video, user-generated content, and traditional television. The skepticism surrounding Netflix’s YouTube rivalry claim reflects deeper doubts about whether merging two of the largest premium content libraries would strengthen competition or instead concentrate power in a way regulators have increasingly moved to block.
Why Netflix is leaning on the YouTube narrative
Netflix’s decision to emphasize YouTube as its primary competitive threat is rooted in shifting viewing habits. YouTube commands a growing share of total screen time, particularly among younger audiences, and increasingly rivals traditional television in daily engagement. From Netflix’s perspective, this makes YouTube not just a tech platform, but a dominant distributor of video entertainment that competes for attention, advertising dollars, and cultural relevance.
By positioning itself against YouTube rather than against other subscription streaming services, Netflix is attempting to broaden the relevant market definition. A wider market makes consolidation appear less threatening, as Netflix can argue that even after acquiring Warner Bros Discovery, it would still face intense competition from a vast and powerful rival with unmatched reach.
The logic is strategically understandable. Regulators typically scrutinize mergers more aggressively when they eliminate direct competitors within a narrowly defined market. By framing YouTube as the true benchmark, Netflix seeks to dilute concerns that combining Netflix and HBO Max would reduce competition among paid, premium streaming platforms.
Yet this approach also exposes Netflix to a fundamental challenge: convincing regulators that YouTube is meaningfully substitutable for scripted series, films, and prestige content that define the Netflix and HBO brands.
The problem of substitutability in regulators’ eyes
Antitrust enforcement hinges on whether consumers view two products as substitutes. While viewers may split their time between YouTube clips and Netflix dramas, regulators tend to distinguish between products based on function, pricing, and consumer expectations. YouTube’s core offering is free, advertising-supported, and dominated by user-generated and short-form content. Netflix and HBO Max, by contrast, sell access to professionally produced films and series through monthly subscriptions.
This distinction matters because regulators are less concerned with competition for “attention” in the abstract than with competition within identifiable product markets. From that perspective, binge-watching a prestige drama and scrolling through creator videos are not equivalent consumer choices, even if both occur on the same screen.
Past enforcement actions suggest regulators will probe Netflix’s internal documents to see how it actually defines its competitors. If Netflix’s own strategy presentations emphasize competition with Disney, Amazon, Apple, or traditional studios—rather than YouTube—that evidence could undermine its public narrative. Regulators have repeatedly relied on such internal records to challenge mergers when companies’ courtroom arguments diverge from their internal assessments.
This dynamic places Netflix in a delicate position. The broader its market definition, the harder it becomes to reconcile with how the company prices, markets, and structures its services.
Scale, content power, and fears of market dominance
Beyond the YouTube argument, regulators are likely to focus on the sheer scale of the combined entity. Netflix and Warner Bros Discovery together would control a vast portfolio of intellectual property, spanning global franchises, premium television brands, theatrical releases, and a massive subscriber base approaching half a billion worldwide.
Such scale raises concerns about bargaining power over talent, distributors, and advertisers. A combined Netflix-HBO operation could exert significant influence over licensing terms, production economics, and release strategies, potentially squeezing smaller studios and independent creators. Regulators may also question whether competitors could realistically replicate that scale, especially given rising production costs and the capital intensity of global content distribution.
Netflix has attempted to counter these concerns by pointing to ongoing fragmentation in the media industry and the presence of numerous competitors. Yet recent antitrust enforcement has shown less tolerance for arguments that rely solely on the existence of many players, particularly when a merger combines two leaders within a specific segment.
The concern is not merely higher prices, but reduced innovation and fewer viable paths for content creators to reach audiences without passing through a dominant gatekeeper.
Bundling claims and the credibility gap
Netflix has also suggested that the merger could benefit consumers through bundling, allowing existing subscribers to access HBO Max content at a lower incremental cost. In theory, bundling can generate efficiencies and lower average prices. In practice, regulators have grown increasingly skeptical of such claims, particularly when they involve mergers between large, established firms.
Antitrust authorities tend to ask whether claimed efficiencies are merger-specific and whether they are likely to be passed on to consumers rather than absorbed as profit. Bundling can also have exclusionary effects, making it harder for smaller rivals to compete if consumers gravitate toward all-in-one packages from dominant players.
Another concern is price discrimination. A combined Netflix-HBO entity might offer attractive bundles while raising prices for standalone subscribers or limiting access to premium content outside its ecosystem. Regulators may see this as a risk to consumer choice rather than a clear benefit.
These doubts reflect a broader enforcement philosophy that places less weight on speculative consumer benefits and more emphasis on preserving competitive market structures.
Document scrutiny and the new merger environment
Netflix faces this challenge in a tougher regulatory climate than in previous consolidation waves. Recent reforms to merger review processes have expanded document disclosure requirements and accelerated access to internal analyses. This increases the likelihood that regulators will uncover discrepancies between Netflix’s public arguments and its internal strategic thinking.
If internal communications emphasize competition within subscription streaming or highlight HBO Max as a close rival rather than a complementary asset, regulators could use that evidence to argue the merger would substantially lessen competition. The burden would then shift to Netflix to demonstrate why those internal assessments no longer apply.
This environment reduces the effectiveness of aggressive narrative strategies and increases the importance of consistency. For Netflix, the YouTube rivalry claim may resonate with investors and the public, but it must withstand forensic scrutiny from regulators trained to dissect market definitions.
A test case for the future of media consolidation
The skepticism surrounding Netflix’s YouTube argument reflects a larger tension in antitrust policy: how to regulate competition in converging digital markets without collapsing all distinctions into a single attention economy. If regulators accept Netflix’s framing, it could open the door to broader consolidation across media and technology. If they reject it, the deal could become a landmark example of enforcement boundaries in the streaming era.
For Netflix, the stakes extend beyond this acquisition. The outcome will shape how aggressively the company can pursue scale through mergers versus organic growth. It will also signal how regulators view the balance between traditional content businesses and platform-based video giants.
As the review process unfolds, the core question will not be whether YouTube is powerful, but whether its dominance truly constrains Netflix in the same way another premium streaming service would. On that point, skepticism remains strong, and it may prove to be the defining obstacle standing between Netflix and its most ambitious deal to date.
(Source:www.channelnewsasia.com)
