DOJ probes Netflix Warner deal

The US Justice Department has opened a review of Netflix’s proposed deal with Warner, framing the inquiry around whether the streaming giant has amassed gatekeeper power over filmmakers, according to Fortune.

On the surface, this looks like another antitrust skirmish in a sector where consolidation has been a constant for decades. But the question is what the government is actually trying to protect. If the standard is consumer welfare—prices, output, and quality—streaming has largely delivered more choice at lower marginal cost, with price increases arriving mainly when platforms run out of subsidised growth capital.

If, instead, the standard is the protection of a politically defined “cultural infrastructure” (legacy studios, unions, favoured distribution channels, and the informal power of established intermediaries), then the target becomes Netflix’s ability to rewire bargaining power. Vertical integration—financing, production, marketing, distribution, and increasingly even theatre windows—lets a platform internalise coordination that used to be negotiated among many firms. That reduces transaction costs, but it also compresses the leverage of independent producers who previously played studios against distributors.

A streaming platform’s strongest weapon is not a monopoly price; it’s a monopsony-like position in talent and projects. Exclusive output deals, first-look contracts, and data-driven greenlighting can turn creators into suppliers bidding for access to a single demand aggregator. The platform also controls audience discovery: recommendation systems and homepage placement function like private zoning laws for attention. In game-theory terms, Netflix can shift the industry from a repeated bargaining game among many buyers to a tournament for a few slots, where suppliers accept harsher terms because the alternative is irrelevance.

This resembles the old studio system—except the scarce resource is no longer theatre screens and physical distribution, but subscriber relationships, global marketing pipes, and behavioural data. Hollywood spent decades lobbying and litigating against old-style vertical control, only to discover that the new gatekeeper is a software company with a balance sheet.

Government scrutiny arrives precisely when a new intermediary becomes efficient enough to make legacy arrangements obsolete. The incentive for incumbents is to re-label business-model competition as “market power,” hoping regulators will freeze the market structure at a moment that preserves their rents. The incentive for the state is different: once cultural distribution is centralised, it becomes legible. A handful of platforms are easier to pressure—quietly or publicly—than thousands of small producers.

Whether DOJ can translate this into a legally coherent case is another matter. But the review signals a shift: antitrust is increasingly asked to police not just prices, but who gets to be the bottleneck—and who gets to lean on it.