Politicians have voiced concerns about the AT&T–Time Warner union for months. In June, 11 Democratic senators signed a letter urging the Justice Department to reject the deal if it could prove that a merger would hurt competition and consumers. “In my view, the merger is potentially anticompetitive,” said Steven Salop, a professor of economics and law at Georgetown Law. Since the 1970s, the federal government has typically allowed “vertical mergers” between companies that do not have competing divisions. AT&T is a telecom company that specializes in distribution, and Time Warner is a media company that specializes in content. So, this looks a vertical merger.
But it doesn’t take much creativity to see how their combination could lead to anticompetitive practices. AT&T or DirecTV could make it cheaper for consumers to watch Time Warner content, like HBO, which would hurt competitors, like Disney. More subtly, AT&T could collect data about Time Warner and share it with its own advertisers, but not with its competitors, which would put other entertainment companies at a disadvantage. “I don’t see how anyone can know right now whether this is Trump trying to punish CNN,” Salop says. “But it does not matter. Retaliation or not, this is just good vertical-merger enforcement.“