Can Microsoft Buy Netflix?

Microsoft could technically afford Netflix, but an acquisition is highly unlikely in 2025. The streaming giant’s $466 billion market cap requires regulatory approval Microsoft won’t easily get, especially while facing antitrust scrutiny over cloud computing practices.

This question gained traction in 2022 when Netflix lost subscribers and Microsoft partnered with the streamer for advertising. Since then, the landscape has shifted dramatically.

The Financial Equation Has Changed

When analysts first floated this idea in 2022, Netflix’s market cap had tumbled to roughly $100 billion after losing subscribers for the first time. Microsoft, sitting on approximately $105 billion in cash, appeared positioned to strike.

Fast forward to 2025, and Netflix’s valuation has more than quadrupled to $466-520 billion. Microsoft’s cash reserves stand at $94.6 billion as of 2025, meaning the tech giant would need to finance a significant portion of any deal. With a 30% acquisition premium, the price tag would approach $650 billion—making it roughly 10 times larger than Microsoft’s $69 billion Activision Blizzard purchase.

The return on investment looks questionable. Netflix projects $8 billion in operating profit for 2024, which would yield only half of Microsoft’s 8% weighted average cost of capital after taxation, according to Morningstar analysts.

Netflix No Longer Needs Saving

The narrative has flipped. Netflix rebounded from its 2022 subscriber losses with aggressive tactics: cracking down on password sharing and launching an ad-supported tier. The results speak clearly.

Netflix added 41.3 million subscribers throughout 2024, reaching 301.6 million globally by year’s end. Revenue climbed 15.7% to $39 billion in 2024, with net income hitting $8.7 billion. The company’s ad-supported tier now accounts for 40% of new signups in markets where it’s available, and ad revenue doubled in 2024 with expectations to double again in 2025.

These aren’t the metrics of a company looking for an exit. Netflix is expanding into live sports, securing NFL games for Christmas 2025, signing a deal with WWE, and investing $18 billion in content for 2025.

The Regulatory Wall

Microsoft faces growing antitrust pressure from the Federal Trade Commission. In late 2024, the FTC launched a comprehensive investigation into Microsoft’s cloud computing, AI partnerships, and software licensing practices. The agency is examining whether Microsoft bundles products in ways that harm competition—echoing concerns from the 1990s antitrust case.

The Activision Blizzard acquisition required 20 months of regulatory battles across multiple countries. The FTC opposed the deal and continues litigation even after it closed in October 2023. That merger triggered intense scrutiny from regulators in the U.S., U.K., and EU over concerns about gaming market concentration.

A Netflix acquisition would dwarf that complexity. It would give Microsoft control over the world’s largest streaming service while the company is under investigation for anticompetitive practices in cloud services. The FTC’s current leadership has shown little tolerance for Big Tech consolidation, blocking dozens of mergers under Chair Lina Khan.

Strategic Misalignment

The business logic that seemed compelling in 2022 has weakened. Microsoft’s partnership with Netflix for advertising technology hasn’t evolved into deeper integration. In fact, Netflix explored building or buying its own ad tech capabilities when its initial two-year contract with Microsoft approached renewal in 2024.

More problematic is infrastructure. Netflix runs entirely on Amazon Web Services. Shifting hundreds of petabytes of content and user data to Microsoft’s Azure cloud would be extraordinarily expensive and risky. The migration alone could take years and add billions to the acquisition cost with no guarantee of success.

Microsoft also learned painful lessons from Activision. The company laid off 1,900 gaming employees just three months after closing that deal, representing 8.6% of Microsoft Gaming’s headcount. Additional cuts followed throughout 2024. These actions drew criticism from the FTC and damaged Microsoft’s credibility when arguing future acquisitions won’t harm workers.

What Microsoft’s Actually Prioritizing

Microsoft’s acquisition strategy has focused on gaming and enterprise software, not consumer entertainment. Since Satya Nadella became CEO in 2014, major purchases have included LinkedIn ($26 billion), Nuance Communications ($19.7 billion for AI-powered speech recognition), and GitHub ($7.5 billion).

The company’s current focus centers on artificial intelligence. Microsoft invested heavily in OpenAI and integrated AI capabilities across its product suite. The company faces competitive pressure from Google, Amazon, and emerging AI startups—not from streaming video services where it has no meaningful presence.

Buying Netflix would force Microsoft into competition with Amazon Prime Video, Disney+, Apple TV+, and other well-funded rivals. It would be a distraction from Microsoft’s core strengths in cloud computing, productivity software, and enterprise services.

The Partnership Alternative

Microsoft and Netflix maintain a business relationship that serves both parties without the complications of ownership. Microsoft provides advertising technology for Netflix’s ad-supported tier, giving Microsoft access to tens of millions of potential ad viewers. This partnership allows Microsoft to expand its advertising capabilities without the regulatory headaches and integration challenges of an acquisition.

Netflix benefits by working with a partner that doesn’t compete directly in streaming. When Netflix chose Microsoft over Google or Amazon for advertising, it specifically cited Microsoft’s lack of channel conflict. Peacock (owned by Comcast) and YouTube (owned by Google) compete directly with Netflix, but Microsoft has no similar streaming platform.

Market Reality Check

Both companies’ stock valuations reflect market skepticism about this combination. Despite speculation in 2022, neither company’s share price has moved as if an acquisition were imminent. Investors appear unconvinced that Microsoft needs Netflix or that Netflix needs Microsoft.

Microsoft’s $3.8 trillion market cap makes it the world’s third most valuable company. That valuation is built on Azure cloud services, Office 365, Windows, and gaming—not streaming video. Adding Netflix would likely dilute rather than enhance Microsoft’s strategic focus.

Frequently Asked Questions

Could Microsoft afford to buy Netflix?

Technically yes, but it would require significant financing. Microsoft has $94.6 billion in cash but would need roughly $650 billion including a typical acquisition premium. This would be Microsoft’s largest deal ever by a factor of 10.

Why did analysts predict this acquisition in 2022?

Netflix was struggling with subscriber losses and its stock had crashed. Microsoft had just announced an advertising partnership with Netflix, leading some analysts to speculate it was a prelude to acquisition. Those conditions no longer exist.

Has Microsoft tried to buy other streaming services?

There’s no public evidence Microsoft has pursued any streaming video service acquisition. The company’s focus has been on gaming (Xbox Game Pass) rather than TV and film streaming.

What would regulators say about a Microsoft-Netflix merger?

Given current FTC scrutiny of Microsoft’s business practices, regulatory approval would be extremely difficult. The agency is already investigating Microsoft for anticompetitive behavior in cloud computing and is unlikely to approve a deal that would give Microsoft dominance in another major consumer market.

The Verdict

Can Microsoft buy Netflix? Legally, nothing prevents it. Financially, the numbers work if Microsoft secures favorable financing. But practically, the obstacles are formidable.

Netflix’s valuation has climbed to levels that make the acquisition far less attractive than when speculation began. Microsoft faces regulatory hurdles that would make approval uncertain at best. The strategic fit is questionable when Microsoft has more pressing priorities in AI and cloud services.

Most telling is what hasn’t happened. Despite years of speculation and an existing business relationship, neither company has made moves suggesting acquisition interest. Microsoft completed its Activision deal and is digesting that integration. Netflix is thriving independently with strong subscriber growth and expanding revenue streams.

The partnership model serves both companies better than ownership would. It avoids regulatory battles, preserves strategic flexibility, and allows each company to focus on its core strengths. That’s likely the relationship that will continue into 2026 and beyond.