The U.S. Department of Justice is conducting a wide-ranging antitrust investigation into Netflix, examining whether the streaming giant has engaged in exclusionary practices that entrench monopolistic power—an inquiry that extends far beyond the company’s proposed acquisition of Warner Bros. Discovery’s studios and HBO Max.

Broader Investigation Signals Aggressive Scrutiny

The DOJ’s investigation represents a significant escalation in regulatory oversight. Rather than limiting its review to whether the $82.7 billion Warner Bros. Discovery deal would harm competition, the department is asking entertainment companies to describe “any other exclusionary conduct on the part of Netflix” that could entrench market or monopoly power. This approach suggests regulators are pursuing a more aggressive theory of harm than a standard merger review.

The civil subpoena revealed three distinct lines of inquiry beyond typical merger examination:

• Exclusionary Conduct: Whether Netflix engages in practices that entrench market power through existing operations
• Content Licensing: How Netflix structures content licensing agreements with studios and creators
• Talent Contracts: Whether a combined Netflix-WBD could leverage its scale to disadvantage writers, directors, and actors in negotiations

The Market Power Question

Netflix co-CEO Ted Sarandos testified before the Senate that the combined company would hold approximately 21% of the U.S. streaming video-on-demand market—below the 30% threshold that typically triggers presumptive antitrust concern under DOJ guidelines. However, the DOJ’s investigation into Netflix’s existing conduct introduces a new layer of risk that extends beyond market share metrics alone.

Political and Competitive Pressures

The investigation occurs amid competing bids for Warner Bros. Discovery. Paramount and Skydance have launched a parallel $108 billion hostile bid for the entire company, backed by Larry Ellison, who maintains close ties with President Trump. Additionally, the Heritage Foundation has distributed reports to the White House attacking Netflix as a “propaganda state,” introducing potential political considerations into the regulatory review.

Timeline and Deal Risks

The transaction was originally expected to close 12-18 months after the December 2025 announcement, targeting late 2026 or early 2027. Netflix faces a $5.8 billion reverse termination fee if the deal fails due to regulatory issues. If the DOJ pursues its theory that Netflix’s pre-merger conduct is anticompetitive, the regulatory battle could extend well into 2028.

What Happens Next

Key developments to monitor include whether the DOJ issues a formal “second request”—the clearest signal of a deep-dive investigation—testimony from entertainment industry talent about Netflix’s negotiating practices, and the European Commission’s parallel competition inquiry. The WBD shareholder vote, expected in April 2026, could also influence the deal’s trajectory as the Paramount-Skydance hostile bid pressures WBD shareholders.

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