🌊 Should Netflix Be Allowed to Own HBO?

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Three years later, the Federal Trade Commission Act established the FTC. With a slogan of “protecting America’s consumers,” its task was twofold: Enforcing antitrust laws and consumer protection. 

Since 1998, the FTC has increasingly clashed with Big Tech. 

That year, the FTC sued Bill Gates’ Microsoft for allegedly illegally monopolizing web browsing by making it next to impossible to uninstall Internet Explorer in favor of other browsers like Netscape. In that instance, the federal district court sided with the FTC, only to have an appeals court overturn much of the case and produce a weaker settlement. The resulting back-and-forth between trust busters and tech giants has continued right up until today. 

In recent years, and particularly under the Biden Administration, the FTC has become more aggressive in trying to stop mergers and acquisitions that it considers anti-competitive. This has typically produced a left/right divide: People on the left want a more aggressive FTC, fearing that merged corporate power harms competition and consumers; people on the right have traditionally wanted a freer market, believing that a hands-off FTC enables investment in new companies and helps their growth. 

Debates around Big Tech exemplify this. Consider Meta. 

Many FTC hawks believe that Meta has too much power and faces insufficient competition, and therefore want it broken up. Creating a competitor is effectively impossible, they say, because Meta will just buy it up or beat it. FTC critics would argue that Meta will lose its power if it abuses it or allows its products to deteriorate. Just look at the rise of TikTok and YouTube Shorts to see that competition remains.

Increasingly, though, this isn’t a left-right divide. 

Biden-era FTC Chair Lina Khan was one of the most aggressive FTC chairs in decades and spearheaded numerous antitrust efforts, including successful attempts to quash planned mergers between grocery giants Kroger and Albertsons and design software companies Adobe and Figma. Khan’s presence had a chilling effect on mergers, with her telling The Wall Street Journal in January, “Certainly what we heard from those in Silicon Valley and executives was that there was greater awareness that there was now a cop on the beat.”

Many populist, anti-corporate Republicans supported her. 

“You are a brilliant woman with a tremendous ability to impact how consumers are going to interface with the digital world for a long time to come,” former Congressman Matt Gaetz (R-FL) told Khan in a 2023 House Judiciary Committee hearing.

Steve Bannon, Trump’s former chief strategist and a leader of the MAGA movement, has been effusive about Khan: “I think Lina Khan is one of the more important political figures in this country, and I think if she had been listed to more by Democrats they would actually have been more competitive against us in November of 2024,” he said in April.

“There's no competition for Google. There's no competition for Facebook. There's no competition. Amazon destroyed half the small business of this country, flooding the zone with Chinese Communist Party product. There's really no competition to X or to Twitter because we let 'em go,” Bannon said. 

Yet to date, those pro-Khan views have held limited sway in Trump’s administration, which has thus far been anti-regulation and has abandoned the hawkish antitrust policies of the Biden Administration.  

Trump hasn’t yet commented on this deal. On Friday, though, CNBC reported that the White House has “heavy skepticism” about the Netflix deal. 

Netflix co-CEO Ted Sarandos, meanwhile, said he is “highly confident in the regulatory process.” 

“This deal is pro-consumer, pro-innovation, pro-worker, it’s pro-creator, it’s pro-growth. And our plans here are to work really closely with all the appropriate governments and regulators, but [we are] really confident that we’re going to get all the necessary approvals that we need,” he said upon announcing the deal. 

There are many people who will certainly try to get Trump to stop the deal. 

Potential opponents include Hollywood studios, who fear competition with Netflix, and other streamers, who fear Netflix pulling ahead. Some conservatives may oppose the media power that Netflix could possess; many liberals are certain to fear that Netflix will use this to weaken workers and raise prices. 

Until Netflix announced the deal, the frontrunner to buy Warner Bros. was Paramount Skydance, the recently-formed media company owned by the Trump-supporting Oracle heir David Ellison. Ellison had said that Paramount’s acquisition of Warner Bros. was necessary to create a company that could compete with Netflix. Now, Netflix is pulling ahead. 

Yet many believe the deal presents a risk not to society or competition, but to Netflix itself: The company’s stock dropped 3% the day after announcing the deal, as investors worried about Netflix’s ability to integrate a massive Hollywood studio whose operations will be very different from its own. Netflix’s co-CEO said himself this October that media mergers “don’t have an amazing track record over the history of time.” For context, Netflix has never paid more than $700M for a company, saying it prefers to “build, not buy.” This deal is valued at $83B.

For a warning sign, Netflix investors need look back only to 2018, when AT&T took over Time Warner, including HBO and Warner Bros., after an antitrust uproar. The merger failed, and AT&T ultimately spun off the media assets into Warner Bros. Discovery in 2022.

So perhaps the merger will be blocked; perhaps it’ll be allowed and tighten Netflix’s grasp on our media diets and budget; or perhaps it’ll be allowed and fail. Whatever happens, expect the FTC to play a part.