The U.S. Department of Justice has initiated a sweeping Section 2 investigation into Netflix as part of its examination of the company’s planned takeover of Warner Bros. Discovery, signaling potential antitrust exposure that could extend beyond the merger itself.

According to a civil investigative demand reviewed by Bloomberg and sent to an independent movie studio, federal regulators are assessing whether the transaction “may substantially lessen competition or tend to create a monopoly” under both Section 7 of the Clayton Act and Section 2 of the Sherman Act. While merger reviews typically fall under the Clayton Act, invoking Section 2, the federal government’s primary monopolization statute, indicates the DOJ is evaluating Netflix’s broader market conduct.

A separate DOJ source told Newsmax that Netflix has already been informed that a Section 2 probe into its business practices is underway, operating parallel to the merger review. That distinction is significant. A Clayton Act challenge would focus strictly on whether the acquisition harms competition. A Sherman Act Section 2 case could target monopolization or attempted monopolization even if the merger ultimately collapses.

Investigators are reportedly examining whether Netflix leverages its market position in negotiations with independent studios and filmmakers. As the world’s largest paid streaming service and one of the biggest buyers of film and television programming, Netflix plans to spend roughly $20 billion this year on original and licensed content. Many of its top programs, including “Wednesday,” are produced by third-party studios.

If completed, the deal would combine the largest streaming platform with HBO and Warner Bros.’ extensive content library, potentially reshaping competitive dynamics in the subscription video market. Estimates suggest the combined company could control approximately 42% of the U.S. streaming sector.

Netflix Chief Legal Officer David Hyman denied the allegations, stating the company operates in a competitive market and does not hold monopoly power. Attorney Steve Sunshine of Skadden, Arps, Slate, Meagher & Flom LLP, representing Netflix, said the company has not received notice of a monopolization investigation. The DOJ and Warner Bros. Discovery declined to comment.

The review could stretch for months, complicating Netflix’s bid as rival suitor Paramount Skydance continues to pursue its own acquisition proposal. Paramount has argued Netflix’s offer faces steep regulatory hurdles and has moved forward with its own process after clearing a DOJ second-request review, though European regulators are still evaluating its deal.

President Donald Trump has publicly warned that the Netflix-Warner Bros. merger may present antitrust concerns, adding political weight to the department’s expanded inquiry.