5 Similarities Between Visa/Plaid and Netflix/Warner
The second Trump administration is currently debating whether or not to approve a merger between Netflix and Warner Bros. The president, in his public comments, has seemed skeptical of the deal (he’s right to be). But as the administration decides, it should take inspiration from the first Trump administration, which rejected a very similar merger between Visa and Plaid.
Here are five reasons why the two are too alike:
Entrenching a “decisive market position”: Both Visa and Netflix dominate their respective fields. Allowing Visa to purchase Plaid would have given it too much power — just as Netflix’s purchase would allow it to dominate American entertainment.
Price increases: What does a monopoly do when it comes into being? It raises prices. That’s what Visa would have done, and it’s what Netflix will do too.
Increased entry barriers: Both companies would have/will make it virtually impossible for new competitors to emerge.
Restrictive licensing: Visa’s purchase of Plaid would have let it dominate the issuance of debit cards. Netflix gaining control over Warner Bros. immense portfolio likewise would let it dominate streaming.
Due diligence = competitive advantage: Due diligence is supposed to make sure that a purchasing company knows what it’s getting. But it also allows it to snoop through its competitors and find out what they’re up to. Visa did it to Plaid — and as Senator Mike Lee laid out, Netflix could be doing it to Warner Bros.
