Big Is Not Bad: Why Netflix–Warner Bros. Deal Fails the Antitrust Panic Test

As Congress and regulators scrutinize Netflix’s proposed acquisition of Warner Bros. Discovery (WBD), a familiar antitrust reflex has reemerged: the idea that corporate scale is inherently suspect. That instinct—rooted in a long-debunked Progressive-era view of “bigness” rather than consumer harm—now threatens to distort the review of a merger that would likely benefit consumers through lower costs, greater efficiency, and expanded choice. As economists Donald J. Boudreaux and Phil Gramm have warned, “no bad idea ever dies”—especially in antitrust.

In a rare moment of bipartisan alignment, members of Congress are warning––as Senator Mike Lee (R-Utah) put it––of “the end of the Golden Age of streaming for content creators and consumers.” Moreover, after Netflix co-CEO Ted Sarandos personally met with the President to discuss the bid, President Donald Trump weighed in, worrying about the resulting “very big market share” and declaring his intent to be “involved” in the decision-making process.

Opponents of the deal have invoked an assortment of concerns calling for antitrust intervention to prevent the merger––ranging from potential job and wage cuts to a loss of Hollywood’s pluralism and big-screen cinema to the rise of monopsony power––but all ultimately hinge on Netflix–WBD’s combined scale. Nevertheless, none of these claims, however politically or culturally potent, should tip the scale against the acquisition’s approval, which would benefit consumers, even if Netflix–WBD’s competition might face new challenges.

As Robert Bork articulated in The Antitrust Paradox, antitrust law should be guided exclusively by consumer welfare—through prices, output, and efficiency—and not by populist concerns about bigness, market concentration, or protecting competitors. In a world of limited resources and unlimited wants––the world we live in––consumer welfare ought to be the endgame.

The approach that dominated much of American antitrust’s first eight decades—which Bork did much to overthrow—demonstrated that antitrust mission creep, untethered from rigorous economic analysis and consumer welfare, leads to reduced competition and harms consumers. Nonetheless, left-wing Neo-Brandeisians and their right-wing fellow travelers have dismissed these warnings and sought to revive this old, discredited approach.

If anything, Netflix–WBD’s vertical integration is likely, consistent with prevailing economic theory, to generate economies of scale that improve efficiency and reduce costs, not least by eliminating double marginalization. The merger would also likely expand consumer choice rather than foreclose competition by complementing Netflix’s distribution platform with WBD’s programming.

Horizontal integration with WBD’s HBO Max could likewise generate consumer savings while broadening access. If structured along the lines of Disney’s acquisition of Hulu in 2019, such integration would allow for bundled pricing that lowers effective subscription costs. Disney’s streaming bundle reduced the combined monthly price of Disney+, Hulu, and ESPN+ from nearly $18 to $13. There is no reason to think a Netflix–HBO Max bundle would operate differently.

Nor would the deal create an uncompetitive or overly consolidated industry. The burden of proof must be borne by antitrust enforcers. Even under a narrow market definition, the subscription-video-streaming market includes at least six major rivals. More realistically, platforms such as YouTube also vie for consumers’ television screen time, leaving Netflix–WBD with roughly 14 percent of total TV viewing. Similarly, critics worried about Netflix holding exclusive intellectual property rights to WBD’s content can take comfort in the fact that nine other major movie studios produce original content—including the industry leader, Universal Pictures—for which competing streaming services actively bid. Competition is set to remain fierce.

The effects of antitrust enforcement severed from consumer welfare have borne rotten fruit. For example, iRobot, the Massachusetts company that pioneered the robotic vacuum, has filed for bankruptcy and will soon be acquired by its Chinese manufacturer, Picea Robotics. In 2022, Amazon sought to acquire iRobot, offering the world-class AI, software, and logistics needed to compete with lower-cost global rivals. Meanwhile, consumers stood to gain from faster innovation and lower prices. After European regulators (applauded by the Federal Trade Commission) moved to block the deal on the basis of familiar charges of endangering competition, the companies abandoned the transaction, and iRobot subsequently collapsed, laying off hundreds of American workers. In another case, JetBlue’s blocked acquisition of Spirit Airlines offers a parallel cautionary tale. Regulators made sure Spirit remained independently owned––and forced it into bankruptcy.

By fundamentally misunderstanding market dynamism—the way innovation disciplines competition—regulators often fight the wrong battles. Netflix disrupted a more-than-century-old industry when it introduced consumers to on-demand streaming and the binge-watching model. Its data-driven algorithms reduced the risk associated with original content ownership, enabling it to bypass movie theaters.

Moreover, consumers voted with their dollars to make Netflix the world’s streaming powerhouse, not the other way around. And Netflix delivered by saving them the cost and time of going to theaters. Regulators should not override consumer sovereignty, especially not in the name of protecting it.

While a lengthy regulatory review is inevitable, consumer welfare should remain at the forefront of the Trump administration’s calculus.

Vladlena Klymova is a policy analyst at the Taxpayers Protection Alliance.