When Netflix Inc. (NFLX) announced its plan to acquire Warner Bros. Discovery (WBD) assets in December, it set off what's shaping up to be one of the more interesting antitrust battles in streaming. Now the Justice Department is asking pointed questions about whether Netflix is playing fair, or whether it's using its market position to squeeze out competitors before this deal even closes.

What the DOJ Wants to Know

According to the Wall Street Journal, the Justice Department sent a civil subpoena to another entertainment company asking about Netflix's competitive behavior. The key phrase regulators used? "Exclusionary conduct." That's antitrust-speak for behavior that could help a company entrench or expand monopoly power by shutting rivals out of the market.

The subpoena suggests regulators aren't just looking at whether this particular deal is too big. They're examining Netflix's broader competitive tactics and whether the company has been engaging in anticompetitive practices that would make the Warner Bros. acquisition even more problematic.

The Deal That Started It All

In December, Netflix agreed to acquire Warner Bros. Discovery at $27.75 per share, valuing the transaction at about $72 billion in equity and roughly $82.7 billion in total enterprise value. The deal would bring Warner Bros.' film studios and the HBO Max streaming service under Netflix's control, creating a streaming behemoth with a massive content library and subscriber base.

Things got more interesting when Paramount Skydance (PSKY) jumped in with a rival hostile bid worth $77.9 billion for all of Warner Bros. Discovery. Now regulators have to review both proposed deals, and they're clearly taking their time to get it right.

Under U.S. law, regulators can block transactions that substantially reduce competition or increase the risk of monopoly power. That's the framework the DOJ is working within here.

Netflix Says Don't Worry

Steven Sunshine, a lawyer representing Netflix, said the company hasn't received any notice or indication that the Justice Department is conducting a separate monopolization investigation. In other words, Netflix's position is that this is routine deal scrutiny, not a broader probe into the company's business practices.

The 30% Question

Here's where the math gets interesting. Estimates suggest that Netflix and HBO Max together would control roughly 30% of the U.S. subscription streaming market. That's a threshold that tends to make antitrust regulators sit up and pay attention under DOJ guidelines.

But Netflix argues the figure is misleading. About 80% of HBO Max subscribers also subscribe to Netflix, the company points out. So it's not like the deal is combining two entirely separate customer bases. There's massive overlap, which Netflix says means the competitive impact is smaller than the raw numbers suggest.

Netflix also argues it's not just competing with other paid streaming services. The company says it faces competition from YouTube, a subsidiary of Alphabet Inc. (GOOG) (GOOGL), and other free video platforms that people watch on their TVs. If you define the market broadly enough to include free video content, Netflix's share looks a lot smaller.

Trump Stays Out of It

In an interview with NBC News this week, President Donald Trump said he wouldn't intervene in the proposed deal and that the Justice Department should handle the matter. That's noteworthy because it suggests the White House isn't planning to put a thumb on the scale one way or another.

Market Reaction

Netflix shares closed up 1.64% at $82.20 on Friday and slipped slightly to $82.06 in after-hours trading. The modest gain suggests investors aren't particularly worried about the DOJ scrutiny derailing the deal, or at least they're not pricing in much risk yet.

According to market data, NFLX shows a weak price trend across the short, medium and long-term periods, with low momentum and value scores.