FTC economists explain two-sided market loyalty discounts in Surescripts case, revealing patterns strikingly similar to how telecom streaming bundles may foreclose competition today.
The Federal Trade Commission today published an economic analysis explaining how loyalty discounts in two-sided markets can eliminate competition. The February 13, 2026 blog post by FTC economists Matthew Chesnes and Ted Rosenbaum dissects the Surescripts antitrust settlement, providing a framework that reveals striking parallels to how companies like Deutsche Telekom, Vodafone, O2, Verizon, T-Mobile, and AT&T currently bundle streaming services with wireless and internet plans.
The FTC analysis focused on Surescripts, which used loyalty contracts requiring customers to route 100% of their transactions through its platform to maintain pricing discounts. The e-prescribing company effectively prevented rivals from gaining traction by creating a "divide and conquer" strategy across both sides of its platform. While the FTC economists did not directly address telecom streaming bundles, the same dynamics appear in how carriers offer Disney+, Netflix, and RTL+ at heavily discounted rates but only when customers commit to specific wireless or home internet plans.
The economic framework matters because it demonstrates how platforms can foreclose competition without explicit exclusivity clauses. Deutsche Telekom customers subscribing to MagentaTV SmartStream receive Netflix Standard with ads, Disney+ Standard with ads, and RTL+ Premium for €12 monthly after a six-month free period - a bundle that would cost €21.98 if purchased separately according to offers valid through February 2, 2026. Vodafone's GigaTV with Netflix costs €25.99 monthly, saving €2.99 compared to separate subscriptions. O2 TV XL packages Netflix Standard with 160 HD channels for €12.99 monthly. These discounts materialize only when customers maintain their telecommunications service, creating economic incentives functionally identical to the loyalty contracts the FTC challenged.
The FTC economists explain that two-sided platforms face a "chicken-and-egg problem" where each side of the market becomes more valuable as the other side grows. Surescripts operated a platform connecting pharmacies and prescribers. Telecoms operate platforms connecting consumers to streaming content providers. In both cases, network effects mean that the platform with the most participants on one side becomes more attractive to the other side.
Chesnes and Rosenbaum provide a quantitative example: if a platform secures loyalty contracts with 90% of buyers and 90% of sellers, the contestable market shrinks to just 1% of total demand. A rival would need to overcome not just price competition but the cumulative value of the established network. When Surescripts controlled 95% of pharmacy routing by 2010, competitors like Emdeon couldn't offer low enough prices to compensate pharmacies and electronic health record vendors for losing their Surescripts discounts.
The streaming bundle landscape shows similar concentration patterns. According to a Verivox analysis from October 2025, Germany's four major telecommunications providers - Deutsche Telekom, Vodafone, 1&1, and O2 - have established dominant positions in bundled streaming distribution. Deutsche Telekom's MagentaTV MegaStream offers the broadest content selection at €30 monthly, bundling Netflix, Disney+, Apple TV+, and RTL+ Premium with a calculated individual value of €53.96, representing 44% savings. This concentration reflects how exclusive partnerships between telecoms and streaming services create self-reinforcing network effects.
The German market demonstrates these dynamics particularly clearly following the July 2024 end of the Nebenkostenprivileg, which previously allowed landlords to include cable television costs in rent. Millions of German households suddenly needed to arrange their own television services, creating market conditions where telecom bundles became the default option for many consumers. Deutsche Telekom positioned MagentaTV SmartStream specifically for this transition, offering six months free followed by €12 monthly pricing.
Verizon's February 27, 2025 announcement of enhanced mobile and home internet bundles demonstrates similar strategic positioning in the United States. Customers combining services unlock entertainment options including Netflix, Max, the Disney Bundle, Apple Music Family, or YouTube Premium included for up to $10 monthly. The value proposition exists entirely within Verizon's ecosystem. Switching carriers means losing not just wireless service but the accumulated streaming discounts.
The FTC analysis includes a mathematical demonstration showing how loyalty contracts create insurmountable barriers. With 90% loyalty coverage on both sides of a two-sided market, a new entrant faces a contestable market of only 1%. The rival would need to charge negative prices to compensate for the discounts customers lose by switching.
Consider the German telecom streaming bundle economics. MagentaTV SmartStream includes three major streaming services that individually cost €4.99 (Netflix Standard with ads), €6.99 (Disney+ Standard with ads), and €8.99 (RTL+ Premium) - totaling €20.97 monthly. The bundle price of €12 monthly after the promotional period saves customers €8.97. A rival carrier attempting to win these customers would need to offer not just competitive telecommunications service but offset these streaming discounts. Vodafone's approach bundles GigaTV with Netflix for €25.99 monthly starting in month seven, saving €2.99 compared to separate purchases. O2 offers Netflix Standard bundled with 160 HD television channels for €12.99 monthly.
The August 9, 2023 stipulated order in the Surescripts case prohibited contracts requiring more than 50% exclusivity. Judge James Boasberg's order banned Majority Share Requirements, defined as contracts conditioning pricing advantages on customers routing more than 50% of transactions through Surescripts. The settlement recognized that all-unit discounts - where the discount applies to all units once a threshold is met - create particularly strong loyalty incentives.
Telecom streaming bundles employ the same all-unit discount structure. Deutsche Telekom's benefits apply to the customer's entire account once they subscribe to qualifying plans. MagentaTV customers can upgrade from the included ad-supported tiers to premium versions: Disney+ Standard without ads adds €4 monthly, Disney+ Premium adds €8 monthly, Netflix Standard without ads adds €9 monthly, and Netflix Premium adds €15 monthly. The accumulated discounts create substantial switching costs even for customers willing to pay for ad-free experiences.
In the United States, Verizon's benefits apply similarly across the customer's account. Customers with Unlimited Ultimate can access various $10 monthly perks plus a $15 monthly credit for additional subscriptions through Verizon's +play platform. T-Mobile includes Netflix Standard with ads free on certain Unlimited plans. AT&T previously bundled HBO Max with premium unlimited plans but discontinued this after parting ways with WarnerMedia, demonstrating how corporate ownership changes can disrupt bundling strategies.
The Surescripts complaint filed April 17, 2019 detailed how the company used reciprocal dealing to force customers to accept bundled services. Electronic health record vendor Allscripts faced threats described internally at Surescripts as "nuclear missiles" if it didn't accept exclusive routing contracts. Surescripts required Allscripts to terminate connections with competitor Emdeon by June 2013 and prohibited renewing pharmacy benefit manager direct connections for eligibility services.
Telecom companies employ similar integration tactics through technical and billing mechanisms. According to industry analysis, integrated billing allows customers to pay for streaming services through their existing telecom bills. This circumvents common issues with traditional streaming subscriptions like credit card expiration or insufficient funds. The convenience creates dependency beyond just price savings.
Deutsche Telekom's partnership with VIDAA and Hisense announced September 5, 2025 demonstrates the deepening integration. MagentaTV service will launch as a native application on VIDAA-powered Hisense Smart TVs by end of 2025 in Germany, with full Operator TV integration planned for 2026. The collaboration eliminates external hardware requirements by integrating television programming and streaming services directly into smart TV operating systems. This technical architecture makes it difficult to separate telecommunications services from content consumption.
VIDAA CEO Guy Edri characterized the partnership as delivering "seamless access to the best content without complexity." The timing aligned with the Connected TV advertising market's rapid expansion, with smart TV ads showing 73% growth in helping holiday shoppers make decisions according to industry data. Traditional telecommunications operators have relied on external set-top boxes to deliver television services alongside internet connections. The VIDAA integration eliminates this hardware layer, embedding Deutsche Telekom's services directly into the television interface.
Vodafone Germany launched its latest GigaTV box powered by Android TV in May 2025, combining cable and internet TV with access to streaming services, media libraries, and video-on-demand content. The platform features cloud PVR functionality offering up to 200 hours of storage. On February 5, 2026, Vodafone began supplying customers with GigaTV Home 4, adding Dolby Vision HDR support and a redesigned remote control with illuminated buttons. Pricing remains €9.99 monthly for the first six months of a 24-month contract, rising to €14.99 thereafter.
The FTC economists emphasize that in two-sided markets, each exclusive contract imposes externalities on non-contracting parties. When Surescripts signed an exclusive deal with one pharmacy chain, it reduced the likelihood that a rival platform could achieve the scale necessary to attract electronic health record vendors. Similarly, when Deutsche Telekom bundles Netflix and Disney+ exclusively with MagentaTV plans, it reduces the potential customer base that rival carriers or standalone streaming subscriptions can address.
The Surescripts settlement established specific remedies designed to prevent loyalty discount abuse in two-sided markets. Beyond the 50% exclusivity prohibition, the order banned non-compete provisions with employees, prevented contracts that conditioned sales on exclusivity, and required 20-year compliance monitoring. These remedies recognize that restoring competition in platform markets requires ongoing oversight.
No comparable regulatory framework currently governs telecom streaming bundles. In the United States, the Federal Communications Commission regulates telecommunications services. In Germany, the Bundesnetzagentur (Federal Network Agency) oversees telecommunications infrastructure and pricing. At the European level, the Body of European Regulators for Electronic Communications (BEREC) coordinates national regulatory authorities across member states. However, none of these agencies comprehensively examines how bundling streaming content with telecommunications services affects competition. The Federal Trade Commission in the United States and national competition authorities in Europe oversee consumer protection and antitrust enforcement. Streaming services fall under content distribution regulations managed by separate media authorities - the Landesmedienanstalten (state media authorities) in Germany and national audiovisual regulators across Europe. The fragmented regulatory landscape means no single agency comprehensively examines how bundling across these sectors affects competition.
Court proceedings in the Google antitrust case demonstrate evolving judicial attitudes toward platform competition. Judge Amit Mehta's September 2, 2025 ruling ordered Google to share its Glue data system with competitors, recognizing that access to user behavior data represents the essential facility for search competition. The FTC economists' analysis suggests similar logic should apply to platform markets where loyalty contracts foreclose competition.
The distinction between legitimate business practices and anticompetitive conduct depends on market structure and competitive effects. The Surescripts settlement didn't prohibit all discounts or all long-term contracts. It targeted specific practices that foreclosed competition in markets where indirect network effects created winner-take-all dynamics.
Telecom streaming bundles exist in markets with somewhat more competition than Surescripts faced. Multiple major carriers compete for customers in both Germany and the United States. Consumers can theoretically switch carriers or purchase streaming services directly. However, the FTC analysis reveals that even modest loyalty contract coverage can dramatically reduce effective competition when network effects are present.
The streaming industry has undergone substantial consolidation since 2024, driven by subscription fatigue and profitability pressures. According to coverage from November 2024, streaming service prices increased up to 43% over the previous year. The cost to subscribe to nine major streaming services in the United States reached over $120 monthly, approaching traditional cable television costs of approximately $83 monthly.
This price pressure has made telecom bundles increasingly attractive to both consumers and streaming providers. Streaming companies gain distribution through telecom customer bases while telecoms enhance their value propositions. Deutsche Telekom TV-Chef Arnim Butzen stated in November 2024 that the company's goal "is to be the best content aggregator for all target groups." The MagentaTV MegaStream launch with Apple TV+ addition created what Butzen called "an unparalleled offer for everyone who wants to avoid the cumbersome switching between different streaming services."
Verizon's Plus Play marketplace launched earlier in 2023, positioning the carrier as an aggregator for subscription streaming services. Charter Communications' deal with Disney established new Spectrum TV packages including Disney's streaming services, creating what industry observers called a potential template for other telecoms and streamers. Fox Corporation launched FOX One streaming service on August 21, 2025 at $19.99 monthly, then immediately offered a bundle with ESPN for $39.99 monthly starting October 2, 2025.
The bundling trend has intensified competition for consumer relationships. According to a January 2025 Bango survey, executives identified securing additional customers and reducing user churn as their top priorities for bundling services. Broadband and cellular services have among the lowest churn rates of any subscription services, making them ideal anchors for streaming bundles.
German market analysis from Verivox in October 2025 demonstrated the competitive dynamics. Jörg Schamberg, telecommunications expert at Verivox, stated: "Our market analysis shows: heavy streamers fare best with Deutsche Telekom's offer." The analysis noted that while Vodafone and O2 offer competitive Netflix bundles, the breadth of Deutsche Telekom's streaming portfolio - encompassing Netflix, Disney+, Apple TV+, and RTL+ Premium in MagentaTV MegaStream - exceeds competitors. Vodafone bundles GigaTV with Netflix and can add Apple TV+ separately. O2 bundles include WOW and Netflix in various configurations.
Specialty streaming services formed the Beyond Mainstream alliance on November 4, 2025, uniting 15 platforms to advocate for regulatory frameworks recognizing operational differences between mainstream platforms and niche services. The coalition expressed concern that regulations developed for major platforms create disproportionate burdens for smaller services. Specialized platforms face distinct challenges accessing advertising infrastructure and establishing distribution partnerships compared to larger competitors bundled with major telecommunications carriers.
The FTC economists cite research by David Evans demonstrating that exclusive contracts have magnified anticompetitive effects in two-sided markets. When platforms compete for exclusive relationships, the winner can foreclose rivals by controlling access to both sides of the market. The Surescripts case exemplifies this dynamic.
By 2010-2011, Surescripts had loyalty contracts covering 78% of pharmacies, 74% of pharmacy benefit managers, and 81% of electronic health record vendors according to the FTC complaint. These contracts included penalty pricing where non-exclusive customers paid routing prices 600% higher and eligibility prices 200% higher than exclusive customers. Some contracts included clawback provisions requiring customers to repay all historical discounts if they terminated exclusivity.
Telecom streaming bundles don't employ the same explicit penalty pricing, but the economic effect resembles it. German customers subscribing to Netflix directly pay €4.99 monthly for Standard with ads, €13.99 for Standard without ads, or €19.99 for Premium. Through Deutsche Telekom's MagentaTV SmartStream bundle at €12 monthly total, the Netflix Standard with ads component represents substantial savings. Upgrading to ad-free versions through Deutsche Telekom costs less than standalone subscriptions - Netflix Standard without ads adds €9 monthly to the bundle rather than €13.99 standalone.
Disney+ pricing shows similar patterns. Standalone Disney+ Standard with ads costs €6.99 monthly in Germany, while Disney+ Standard without ads costs €10.99 monthly and Disney+ Premium costs €14.99 monthly. Through MagentaTV bundles, customers receive Disney+ Standard with ads included, with upgrade options of €4 monthly for ad-free Standard or €8 monthly for Premium - cheaper than standalone premium tiers.
In the United States, customers subscribing to Disney+ directly pay $9.99 monthly with ads or $15.99 without ads. Through Verizon's bundle, the cost drops to $10 monthly for the complete Disney Bundle including Disney+, Hulu, and ESPN+. The implicit "penalty" for not using telecommunications bundles reaches $10-15 monthly per streaming service. Customers using multiple bundled services face cumulative penalties of $30-50 monthly for switching carriers.
The Surescripts settlement required the company to allow customers with all-unit discounts to maintain their existing average prices for 12 months after the order. This provision recognized that immediately removing discounts would harm customers while failing to restore competition. The order focused on preventing new anticompetitive contracts rather than disrupting existing arrangements.
No similar protections exist for consumers locked into telecom streaming bundles. Deutsche Telekom's promotional MagentaTV SmartStream offer valid through February 2, 2026 provides six months free followed by €12 monthly for 24 months, then €17 monthly thereafter. Vodafone's GigaTV pricing increases from €9.99 monthly in months 1-6 to €14.99 monthly thereafter, with Netflix bundles adding promotional pricing layers. The temporary nature of promotions creates uncertainty that further entrenches customer relationships with specific carriers.
The Surescripts case reveals how lack of transparency enables anticompetitive conduct. The FTC complaint detailed internal Surescripts communications describing RelayHealth's value solely as preventing competition. Executives acknowledged that the relationship existed to foreclose rivals, not to provide superior services.
Telecom streaming bundle arrangements operate with similar opacity. Specific financial terms between carriers and streaming services remain undisclosed. Consumers cannot easily compare the true value of bundled offers against standalone subscriptions because promotional pricing, feature limitations, and service tiers vary across distribution channels.
Streaming measurement capabilities have improved with Nielsen integrating connected TV coverage into advertising intelligence platforms. Roku-powered devices captured 21.4% of total television viewing time compared to broadcast's 18.4% share in July 2025 according to Nielsen data. However, these metrics track viewership patterns, not the economic relationships between platforms and content providers.
The lack of transparency about exclusive partnership terms makes it difficult for regulators to assess competitive effects. Unlike Surescripts where the FTC could examine contracts and internal communications through litigation discovery, telecom streaming bundle arrangements remain largely private commercial agreements.
Deutsche Telekom, Vodafone, and O2 negotiate separate terms with each streaming provider. Netflix announced a long-term cooperation with O2 Telefónica Germany in September 2023 covering various sales and marketing schemes. The scope and exclusivity provisions of such partnerships remain undisclosed beyond promotional materials. Whether Deutsche Telekom receives preferential rates from Netflix compared to Vodafone or O2, and whether streaming services grant territorial or customer segment exclusivity, remains opaque to regulators and competitors.
The FTC's dismissal of its Meta antitrust case on November 18, 2025 illustrates the challenge of proving monopolization in dynamic platform markets. Judge James Boasberg concluded that TikTok and YouTube compete directly with Facebook and Instagram, giving Meta a market share too small to constitute monopoly power. The ruling emphasized that social media markets have changed markedly over five years.
The telecom streaming bundle market differs from social media in critical ways. Wireless and home internet services face higher barriers to entry than social media platforms. Infrastructure costs and spectrum licensing create natural constraints on competition. While multiple carriers compete nationally in both Germany and the United States, many consumers face limited choices for high-speed home internet due to geographic monopolies or duopolies.
Germany's telecommunications market demonstrates this structure. Deutsche Telekom operates the largest network infrastructure inherited from the former state monopoly. Vodafone acquired Unitymedia's cable networks in 2019, consolidating cable television and internet infrastructure. O2 Telefónica merged E-Plus in 2014, reducing the number of major mobile network operators. The resulting market structure features three primary network operators plus MVNOs (mobile virtual network operators) that lease capacity.
This market structure amplifies the competitive concerns that the FTC economists identify. When consumers have limited choices for essential infrastructure services, bundling non-essential entertainment services with those infrastructure services transfers market power across markets. The practice resembles what antitrust law calls monopoly leveraging - using dominance in one market to gain advantages in adjacent markets.
The Surescripts settlement specifically prohibited the company from conditioning sales or pricing advantages on customers routing more than 50% of transactions exclusively through its platform. The order recognized that even partial exclusivity requirements can foreclose competition when network effects are present. Telecom streaming bundles don't contain explicit exclusivity requirements, but the economic incentives achieve similar results.
O2 Telefónica Germany launched its new O2 TV platform in September 2024, replacing its previous television offering. The updated service functions as a bundled OTT platform with signups available only to customers on O2's broadband and mobile tariffs. This structural requirement - that customers must subscribe to O2 telecommunications services to access O2 TV streaming bundles - represents a form of tying that links separate product markets.
The FTC economists explain that exclusive contracts in two-sided markets can harm both sides of the platform. Surescripts' loyalty contracts harmed pharmacies through higher prices, harmed patients through reduced innovation in e-prescribing services, and harmed prescribers through inferior service quality. The complaint alleged that Surescripts delayed implementing real-time benefit check features for years because it faced no competitive pressure to innovate.
Telecom streaming bundles create more ambiguous welfare effects. Consumers benefit from reduced costs when accessing streaming services through carrier bundles. Industry data shows Deutsche Telekom's MagentaTV SmartStream saves customers €8.97 monthly compared to purchasing Netflix, Disney+, and RTL+ separately. Vodafone's GigaTV with Netflix bundle saves €2.99 monthly. O2 TV XL bundles Netflix with television channels for €12.99 monthly, competitive with standalone Netflix Standard pricing. These savings represent genuine consumer benefits.
However, the FTC analysis reveals that short-term consumer benefits don't preclude long-term competitive harm. Loyalty discounts can appear pro-competitive in the moment while foreclosing competition that would deliver greater innovation and lower prices over time. The Surescripts case demonstrates that exclusive arrangements can persist for years, preventing rivals from achieving the scale necessary to compete effectively.
The streaming industry's consolidation around telecom distribution channels may reduce competition among streaming services themselves. When carriers determine which streaming services receive bundling privileges, they effectively act as gatekeepers controlling consumer access. Deutsche Telekom selected Netflix, Disney+, Apple TV+, and RTL+ Premium for MagentaTV bundles. Vodafone bundles Netflix and offers Apple TV+ separately. O2 bundles Netflix and WOW (Sky's streaming service). Streaming services not selected for major carrier bundles face disadvantages reaching consumers who increasingly default to bundled offerings.
This mirrors the concerns that specialty streaming services raised about regulatory frameworks favoring mainstream platforms over niche services. When telecommunications carriers bundle only the largest streaming services, smaller platforms struggle to achieve the distribution necessary for sustainable operations. The Beyond Mainstream alliance representing 15 specialized platforms explicitly addressed this competitive imbalance.
Beyond pricing mechanisms, technical integration between telecoms and streaming services creates additional barriers to switching. Deutsche Telekom's integration allows customers to activate Netflix and Disney+ through their MagentaTV account, synchronizing billing and access management. Customers receive email notifications with activation links that connect existing streaming accounts to the Deutsche Telekom bundle, automatically pausing direct subscriptions and redirecting billing through the telecommunications provider.
Deutsche Telekom's MagentaTV integration with VIDAA smart TVs eliminates separate set-top boxes by embedding television services directly into smart TV operating systems. This technical architecture makes it difficult to separate telecommunications services from content consumption. Switching telecommunications providers would require consumers to reconfigure their entertainment systems entirely, re-establishing separate streaming subscriptions and potentially losing accumulated watch history and personalized recommendations.
The Surescripts complaint described similar technical integration tactics. The company required electronic health record vendors to use Surescripts' Application Programming Interfaces and technical specifications, creating switching costs beyond simple pricing. When EHR vendors considered connecting to rival platforms, they faced substantial redevelopment costs to support alternative technical standards.
Streaming bundle integrations don't yet approach the technical lock-in that Surescripts achieved, but the trajectory points toward deeper integration. Smart TV manufacturers, telecommunications companies, and streaming services are collaborating on unified platforms that embed services across multiple layers of technology infrastructure. Vodafone's Android TV-based GigaTV platform integrates third-party streaming apps through the Google Play Store while maintaining Vodafone's unified billing and interface.
Consumer forums discussing Deutsche Telekom's MagentaTV bundles reveal the practical implications of technical integration. Customers report that activating bundled subscriptions requires using Deutsche Telekom-issued access credentials rather than existing streaming service logins. The process links telecommunications accounts to streaming profiles at a technical level that complicates subsequent separation. While customers can theoretically cancel MagentaTV and revert to standalone streaming subscriptions, doing so requires contacting multiple services and reconfiguring payment methods.
The Surescripts settlement required the company to implement an antitrust compliance program including employee training, policy development, and annual compliance reminders. The order mandates compliance reporting for 20 years, with interim reports at 30 days and six months, then annual reports thereafter. This extensive monitoring reflects the difficulty of ensuring sustained compliance in markets prone to anticompetitive conduct.
No comparable oversight framework exists for telecom streaming bundles. European telecommunications regulation falls under national regulatory authorities coordinated by the Body of European Regulators for Electronic Communications (BEREC), but content bundling arrangements receive limited scrutiny. Germany's Bundesnetzagentur (Federal Network Agency) regulates telecommunications infrastructure and pricing, enforcing obligations inherited from Deutsche Telekom's former state monopoly status including network access requirements and wholesale pricing controls. However, streaming service bundles fall into a regulatory gap between telecommunications oversight and media regulation handled by Germany's Landesmedienanstalten (state media authorities).
In the United States, the Federal Communications Commission's authority extends to telecommunications services but not to content bundling arrangements. The Federal Trade Commission can challenge specific anticompetitive conduct but lacks ongoing monitoring authority absent litigation. The fragmented regulatory structure creates gaps where potentially harmful practices can develop without scrutiny across both continents.
Google faces multiple antitrust enforcement actions demonstrating how platform competition issues can span multiple markets and regulatory proceedings simultaneously. The search monopolization case, advertising technology monopolization case, and app store monopolization case each address different aspects of Google's integrated business model. Similar comprehensive examination may eventually be necessary for telecom streaming bundle arrangements.
The challenge for regulators is distinguishing legitimate business innovation from anticompetitive foreclosure. Bundling products can create efficiencies and consumer benefits. The question is whether the bundling forecloses competition in ways that harm long-term innovation and consumer welfare.
European competition authorities have historically taken more aggressive stances on bundling practices than United States regulators. The European Commission blocked dominant operators from establishing joint ventures combining analogue transmission infrastructure and content provision in the 1990s, citing concerns about vertical positive feedback effects that would give entities unassailable positions. The Commission argued that bringing together large operators from television and telecommunications services would leverage dominance in analogue markets to foreclose digital platform competition.
The streaming industry continues evolving rapidly. Netflix expanded programmatic advertising capabilities throughout 2024 and 2025, adding Amazon DSP to existing relationships with The Trade Desk, Google Display & Video 360, Microsoft, and Yahoo DSP. Amazon launched Complete TV on March 4, 2025, providing tools for advertisers to manage streaming television campaigns across multiple platforms.
These developments suggest that streaming platforms are pursuing multiple distribution strategies simultaneously. Direct consumer subscriptions, advertising-supported tiers, telecom bundles, and retail partnerships all coexist. The diversity of distribution channels may provide some competitive constraint on telecom bundle dominance.
However, the FTC economists' analysis warns against assuming that multiple distribution channels alone ensure competition. Surescripts faced competition from Emdeon and other potential rivals, yet its loyalty contracts successfully foreclosed that competition for over a decade. The existence of alternative distribution channels matters less than whether those channels can achieve the scale necessary to compete effectively given network effects.
Telecom streaming bundles may follow similar competitive dynamics. As long as standalone streaming subscriptions and alternative carrier bundles remain viable, competition persists. But if network effects and loyalty incentives consolidate the market around a few dominant carrier bundles, effective competition could diminish even while multiple options nominally exist.
The German telecommunications industry has experience with bundling creating competitive concerns. The end of the Nebenkostenprivileg in July 2024 eliminated the previous system where landlords included cable television costs in rent, affecting millions of households. This regulatory change created market conditions where telecommunications companies could capture television distribution relationships directly. Deutsche Telekom, Vodafone, and O2 positioned their streaming bundles specifically to capture consumers transitioning from mandatory cable television to voluntary streaming subscriptions.
Streaming bundles represent the latest iteration of longstanding tensions between bundling efficiency and consumer choice. The digital nature of streaming services and the platform economics of telecommunications networks create new variations on familiar competitive dynamics. The FTC economists' analysis of Surescripts provides a framework for understanding how loyalty mechanisms can foreclose competition in platform markets regardless of specific industry or technology.
Who: Federal Trade Commission economists Matthew Chesnes and Ted Rosenbaum analyzed the settled Surescripts antitrust case, with implications for telecommunications companies including Deutsche Telekom, Vodafone, O2, Verizon, T-Mobile, and AT&T that bundle streaming services like Disney+, Netflix, RTL+ Premium, and Apple TV+ with wireless and internet plans across Germany, the United States, and other markets.
What: The FTC analysis explains how loyalty discounts in two-sided platform markets can eliminate competition through mechanisms similar to current telecom streaming bundle practices, where carriers offer heavily discounted streaming services exclusively to customers maintaining specific service plans - Deutsche Telekom's MagentaTV SmartStream at €12 monthly saves €8.97 compared to separate purchases, Vodafone's GigaTV with Netflix saves €2.99 monthly, and O2 TV XL bundles Netflix with television for €12.99 monthly - creating switching costs and network effects that foreclose competition.
When: The February 13, 2026 blog post examined the August 9, 2023 settlement that resolved the FTC's April 17, 2019 complaint against Surescripts, with ongoing relevance to telecommunications bundling practices that intensified following Germany's July 2024 end of the Nebenkostenprivileg cable television privilege and continued expansion of carrier streaming bundles through promotional offers valid through February 2026 and beyond.
Where: The analysis applies to platform markets with indirect network effects, specifically addressing the e-prescribing market where Surescripts achieved 95% market share by 2010, with direct parallels to telecommunications markets where Deutsche Telekom, Vodafone, and O2 control consumer access to streaming content in Germany while Verizon, AT&T, and T-Mobile dominate United States distribution through bundled subscription offerings that create dependencies across interconnected infrastructure and content markets.
Why: According to the FTC economists, loyalty contracts in two-sided markets create externalities where each exclusive arrangement reduces the likelihood of rival entry, with quantitative analysis showing that 90% loyalty coverage on both sides of a platform reduces contestable market to just 1%, forcing rivals to charge negative prices to compensate customers for lost discounts - dynamics that apply equally to e-prescribing platforms and telecom streaming bundles where carriers leverage essential telecommunications infrastructure to gain advantages in adjacent entertainment distribution markets through integrated billing, technical platform lock-in, and promotional pricing that creates substantial barriers to switching providers.
