Netflix reached an $82.7 billion acquisition agreement with Warner Bros. Discovery (WBD) in early December to purchase WBD Studio, which includes the massive streaming service HBO. This acquisition was preceded by price hikes, forcing subscribers and critics alike to ask the question: Is Netflix’s acquisition of WBD studios cause for concern?
“Yes, because if Netflix owns a higher percentage of streaming material, they can drive the price of subscription, making some people not able to afford the service,” said sophomore Aiden Lam.
Lam’s analysis holds up with Netflix’s history of subscription markups. Nobody likes paying more for a service on a monthly subscription, which becomes more likely if Netflix transforms into a monopoly.
This concern closely aligns with prior statements by Federal Trade Commission (FTC) chair Lina Khan. Khan has consistently argued that dominant companies can harm consumers through reduced competition and higher prices. But how are we protected from these practices?
Government teacher Kevin McManamon gave insight on the US government’s protective antitrust laws, which protect consumers.
How do antitrust authorities protect consumers against monopolistic practices?
Without the government, monopolies will eventually harm consumers. Because monopolies reduce choice, they don’t have any pressure or competition for prices and there are zero to minimal incentives for product improvement. The government keeps a competitive marketplace, which brings the happy forces of supply and demand.
Do you think that there is a potential antitrust case for the FTC to intervene with Netflix’s acquisition of Warner Bros?
It has the potential on two grounds. Number one, it could be anti-competitive, as far as products are concerned. Another thing is, Netflix is a portal as well as a provider of the product. You now get some vertical and horizontal monopoly going on here. They could be freezing out other competitors. When you get Netflix and HBO together, my stat said that they’d have around 30-35 percent of the content that is out there. That’s to a point where the government gets a little uncomfortable.
Do you think that the current administration will pursue an antitrust case? Why or why not?
I kind of doubt it. This is the most Wall Street-sensitive administration I’ve seen in a long time. So unless Wall Street freaks out about this, I don’t think they’re going to do anything.
