After winning the "epic" streaming media acquisition battle, Netflix (NFLX.US) is facing a global anti-monopoly "encirclement."

After successfully winning a fierce acquisition battle against Warner Brothers' Discovery Channel (WBD.US), Netflix (NFLX.US) is now facing antitrust challenges. The company must prove to global regulatory agencies that this deal will not give it an unfair competitive advantage in the streaming market. This $82.7 billion merger will connect the world's leading paid streaming service with Hollywood's most iconic movie studio. The merger will reshape the online video content market by combining the top-ranked streaming platform with the fourth-ranked HBO Max service and its popular series (such as "Game of Thrones," "Friends," and DC Comics character series). The vast content library may raise concerns among global antitrust regulators, as they fear Netflix may have too much control over the streaming market. Analysts say the company is facing lengthy Justice Department scrutiny, and if it does not take some remedial measures to obtain approval, it could face litigation in U.S. courts to block the deal. Analysts point out that unless Netflix agrees to divest HBO Max and make more commitments in terms of behavior, especially in content licensing, it will face a tough challenge; the scale of overlap in the streaming business is quite significant, and it is hard to argue market viewpoints from a broader perspective. By choosing Netflix, Warner Brothers turned down another bidder - Paramount Sky (PSKY.US). This move could trigger a political showdown in Washington, as Paramount is controlled by the world's second-richest person, Larry Ellison, and his son David Ellison, who have long emphasized their close ties to Trump. Their acquisition of Paramount in August received public praise from Trump. Comcast Corporation Class A (CMCSA.US) also made a bid for Warner Brothers, aiming to merge it with its NBC Universal division. The Justice Department's antitrust division will review the deal, and it may argue that on the surface, it is illegal, because the post-merger market share will put Netflix well above the 30% threshold. U.S. lawmakers from both parties, including Republican Congressman Darrell Issa and Democratic Senator Elizabeth Warren, have criticized the deal - which will create a global streaming giant with 450 million users, and they believe it is not in the best interest of consumers. Warren said after the announcement of the news: "This deal is a complete antitrust nightmare." Utah Republican Senator Mike Lee said in a social media post earlier this week that the Warner Brothers-Netflix collaboration will raise more serious competition issues than any deal he had seen in the past decade. EU regulators may also scrutinize Netflix's proposal rigorously due to legislative pressure. In the UK, the deal had already attracted attention before it was announced; Baroness Lucy Neville urged the government to explain how the deal would affect market competition and consumer prices. Andreas Schwab, a senior MEP on competition issues in the European Parliament, said that the merged company would raise prices and have a broad impact on "cultural, film, cinema, and theater screening activities." Paramount tried to portray the deal with Netflix as an unattainable agreement. Paramount's antitrust lawyer wrote to Warner Brothers' antitrust lawyer on December 1 stating, "The fact is simple: the agreement reached with Netflix as the buyer is highly unlikely to be completed, as there are antitrust and regulatory obstacles in the US and most other countries and regions." A report from New Street Research suggests that showing favor to Trump directly could help Netflix avoid intense antitrust scrutiny. Trump may realize that supporting Netflix instead of Paramount could be beneficial, and if he does, the Justice Department may follow suit. Netflix co-CEO Ted Sarandos had dinner with Trump at the Mar-a-Lago resort in Florida in December of last year, a move other business executives made after the election in an attempt to win government support. In a call with investors on Friday morning, Sarandos said, "I am very confident in the regulatory process," claiming the deal benefits consumers, workers, and innovation. He said, "Our plan is to work closely with all relevant governments and regulatory agencies, and we are very confident we will obtain all necessary approvals." Netflix is likely to argue to regulators that services such as YouTube under Alphabet Inc. Class C (GOOGL.US) and TikTok under ByteDance should also be included in the analysis of the market. This way, the company's perceived market dominance will be significantly reduced. The Federal Communications Commission, responsible for regulating broadcast television license transfers, is not expected to be involved in the deal as it does not hold such licenses itself. Warner Brothers plans to spin off its cable television division before the sale, which includes channels like CNN, TBS, and TNT. Even if the antitrust scrutiny focuses only on the streaming business, Netflix is confident it will prevail. Insiders familiar with the company's thinking reveal that Netflix will argue that over 75% of HBO Max users already subscribe to Netflix, making these two complementary products rather than competitive products; the company is expected to argue that by acquiring Warner Brothers, it can lower content costs, eliminate redundant back-end technology, and bundle Netflix with Max, thus lowering prices.