Big Tech companies are battling to control the future of American entertainment — and their efforts extend far beyond the high-profile nearly $100 billion bidding war to buy out Warner Bros. Discovery and its media portfolio.
While Paramount may have won the battle for Warner Bros., Netflix is working with dozens of other large tech companies — from device makers like Samsung to social media platforms like Meta — to seize control of the underlying standardized technologies that enable Americans to stream movies, shows and videos seamlessly across their TVs, laptops and phones.
If these companies get their way, they’ll be able to snuff out smaller competitors working on new and better video streaming technologies — including companies that helped invent the technologies that make streaming possible today. Over time, that decline in competition means less innovation, lower-quality devices and services for American consumers — and fewer jobs for American workers.
As a lifelong advocate for small businesses, I’ve seen how smaller innovators can create better products and services, beat out incumbents, and become new industry leaders. But once that happens, those companies often face an irresistible urge to cement their lead — not by sustaining the pace of innovation, but by working to tie down the next generation of potential competitors with red tape.
This anticompetitive instinct is inevitable among incumbents in all industries. But it’s particularly prominent among Big Tech companies.
Just consider the Alliance for Open Media, a consortium backed by Google, Amazon, Apple and other leading technology firms. In deference to the Washington tradition of coalitions whose names bear little resemblance to their aims, AOM develops its own proprietary video technologies to stream content across phones, TVs and other devices. The goal: to replace widely used industry standards that have for decades been developed in open, meritocratic processes at international standards.
AOM’s technology offerings are marketed as “open” and “royalty-free.” But there’s a catch. Companies that want to use them must license their own related innovations back to AOM members for free. This deal makes sense for Big Tech companies, which gain access to a range of technologies while only forfeiting licensing revenue on a few of their own innovations — a drop in the bucket for Big Tech firms.
But for companies that specialize in technologies used to stream videos, the terms are disastrous. Those companies’ entire future revenue could depend on licensing these innovations. Even if they reject the AOM terms, they end up competing with technologies that Big Tech is subsidizing and offering for free.
The harm doesn’t stop there. Big Tech companies can also use their market power to push AOM technologies as the default option, pushing out alternatives. When dominant platforms steer adoption toward in-house solutions, other innovators aren’t just underpaid; they’re excluded altogether.
In other words, Big Tech companies use the AOM model to extract startups’ most valuable assets for nothing and to lock in their own technologies as the industry standard, leaving smaller innovators with no path to compete. The result: less competition, less innovation and a worse experience for consumers.
Once AOM’s competitors are gone, the terms could change. We’ve seen variations of this pattern play out across the digital economy — from app stores to social media. Big companies lure in consumers and developers with “free” access, and then raise prices or change terms of service once everyone has grown dependent.
Markets work best when companies compete on the merits of their products, not when a few powerful players work together to lock others out.
For example, Apple has spent years encouraging developers to build businesses on its iOS platform under relatively open rules, only to tighten those rules later by imposing new fees, restricting tracking and limiting alternative options once developers and users were fully locked in.
These sorts of practices violate a basic principle of American capitalism: Markets work best when companies compete on the merits of their products, not when a few powerful players work together to lock others out.
Encouragingly, regulators are beginning to take a closer look. The Trump administration’s antitrust officials have warned that some arrangements touted as “open” or “royalty-free” can, in practice, entrench dominance and push rivals aside.
The solution is simple. No group of companies should be able to decide — using effectively closed processes — who gets to compete and who doesn’t. Fortunately, we already have a mechanism to ensure that happens. Standard-setting bodies have for decades brought together dozens, if not hundreds, of companies from all over the globe in an open forum to determine industry standards. The result is a meritocracy where the best ideas win out, where innovators can be rewarded for their advances and where safeguards ensure fairness for all parties — and ultimately for consumers. We should continue to support this model.
Protecting startups’ ability to patent and license their inventions is ultimately the best way to protect consumers. We can’t allow the short-term siren song of “free” to distract us from Big Tech’s AOM power play — or from our long-term need to ensure consumers enjoy higher-quality, continued innovation and more choice in their entertainment experiences.