Highlights
- Netflix claims YouTube is a direct competitor to justify the Netflix-Warner Bros merger, but antitrust experts argue the comparison is legally weak.
- Under stricter U.S. antitrust review standards, regulators are demanding internal Netflix documents that may undermine its competition narrative.
- The Warner Bros. Discovery acquisition continues to draw opposition from lawmakers, unions, and consumers.
Netflix’s proposed acquisition of Warner Bros. Discovery (WBD) is facing fresh skepticism after the company argued that the merger is necessary to compete with Alphabet-owned YouTube. Netflix positioned YouTube as a rival after a recent report from media analysis firm Nielsen ranked YouTube as America's most-watched TV distributor.
The argument follows the long-standing controversy and pushback surrounding the Netflix-WBD deal, which has been a focal point for U.S. authorities and Hollywood unions due to concerns about market consolidation and reduced competition in subscription video markets. However, attorneys suggest that the proposed comparison is legally weak and the Justice Department is unlikely to see Netflix and YouTube as rivals due to the difference in their content.
YouTube is predominantly ad-supported and driven by user-generated content, while Netflix operates mainly as a paid subscription service built on professionally produced film and television. YouTube commands more viewing time because of the user-generated content of popular creators like MrBeast, artists, and free children’s content.
Loopholes in Netflix’s YouTube Rivalry Claim
Netflix’s argument ultimately fails, according to Kesselman Brantly Stockinger’s antitrust partner, Abiel Garcia. She stated, “Netflix is trying to say it competes with YouTube because people only watch a certain amount of content a day,” highlighting the fragility of Netflix’s statement.
Robin Crauthers, a former U.S. Justice Department antitrust official, similarly said, “Netflix is going to have a difficult time making arguments that YouTube is substitutable for the kind of content that's on HBO Max and Netflix,” weakening Netflix’s central defense.
The deal will be scrutinized under tougher U.S. merger review standards. As part of that process, Netflix is facing demands to turn over internal documents analyzing competition. These materials could reveal whether the company itself has historically treated YouTube as a true rival or only as a peripheral benchmark. Former FTC antitrust attorney, Shaoul Sussman, stated that the documents will “give the government a leg up in the investigation,” and if Netflix excludes YouTube as a major competitor, it will undermine the company’s arguments.
Netflix–WBD Deal Faces Mounting Pushback
Netflix announced the $72 billion USD Warner Bros. Discovery earlier this month, pitching it as a way to combine scale, content libraries, and global distribution. Since then, the deal has encountered resistance from multiple fronts. Both Republicans and Democrats have raised concerns about further consolidation. Hollywood unions have warned about potential job losses and fewer theatrical releases.
On Dec 9, the deal faced a consumer class lawsuit from an HBO Max subscriber stating the deal reduces video-on-demand (VoD) market competition in the U.S. Shortly after, financial pressure was added to the scrutiny. Netflix has acknowledged it would need substantial borrowing to finance the acquisition, a point critics say underscores how aggressively the company is stretching to close the deal.
Against that backdrop, Netflix’s YouTube argument could be seen as part of a broader effort to justify consolidation in a market where the company already holds a leading position. Analysis from Nielsen shows eight out of the top 10 most-streamed original series are from the streaming giant.
As Netflix's proposition faces multiple pushbacks, WBD’s board seems to be weighing alternatives. The company has confirmed it is reviewing a hostile bid from Paramount. While no decision has been announced, the competing offer complicates Netflix’s position and raises questions about whether regulators might see other outcomes as less harmful to the WBD acquisition.
