Senator Mike Lee is raising a red flag about Netflix and asking the questions that need to be asked. The Utah Republican, who leads the Senate Judiciary antitrust subcommittee, sent a scorching letter to the heads of Netflix and Warner Bros. last week.
He isn’t just worried about a monopoly; he is worried that Netflix might be pulling a fast one to hurt a competitor on purpose.
Lee calls it a “killer non-acquisition.” It sounds like a movie plot, but the concept is very real and very dangerous for fair business. The idea is simple but ruthless.
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A big company proposes to buy a rival, knowing the government review will take a long time. During that time, the rival company gets stuck in limbo. They can’t make big decisions or react to the market because they are waiting to be bought.
Meanwhile, the big buyer—in this case, Netflix—keeps growing stronger. If the deal falls apart later, it doesn’t matter. The damage is already done. The rival is weaker, and the big guy wins without spending a dime.
In his letter, Senator Lee wrote that this process could be an “abuse of the merger review process.” He warned that dragging this out allows an acquiring firm to “tie up a rival for an extended period” and “weaken that rival as a competitive constraint.”
He is absolutely right to be suspicious. If Netflix ties up Warner Bros.—which owns HBO Max—for a year or two, who benefits? Netflix does.
The Senator also pointed out another huge issue: information sharing. When companies talk about merging, they share secrets. Lee is demanding to know if Netflix is getting a look at Warner Bros.’ private data right now.
He noted that access to this kind of “competitively sensitive information” could be misused. Imagine if Netflix knew exactly what HBO was planning next year and used that to beat them, even if the merger never happens.
The timing makes this look even worse for Netflix. Just last week, they struck a massive deal with Sony Pictures to stream their movies. Lee said we have to look at the Warner Bros. buyout with that Sony deal in mind. It shows Netflix is already gobbling up huge amounts of content. If they add the massive Warner Bros. library to that, they would have unbelievable power over what we watch and how much we pay for it.
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Netflix has tried to brush this off. They claim buying Warner Bros. would give people “more choice” and “greater value.” But usually, when one company controls everything, prices go up, not down.
We won’t have to wait long for answers. Ted Sarandos from Netflix and Bruce Campbell from Warner Bros. are scheduled to face Senator Lee’s committee on Tuesday, February 3. They will have to explain why this deal isn’t just a trap to kill off competition.
Lee has asked them to confirm if anyone at their companies has ever talked about using a long review to weaken Warner Bros., giving them just two weeks to answer. It is a tough stance, but considering how big streaming has become in our daily lives, it is the protection consumers need.
Florida Senator Ashley Moody serves on the Senate Judiciary antitrust subcommittee. Senator Cory Booker (D-NJ) is the ranking member.
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