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It’s the first guess, I get that, but if the root is detected, the Netflix app shows Widevine L3. So I don’t think that’s it.
My best guess is that it may be that for 2K-ish devices (as most even flagship phones are, including my Pixel 7 Pro), there is no 2K-quality stream option on Netflix’s back end, and Netflix may not stream 4K unless the full resolution can be used.