Netflix, Inc.

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Netflix, Inc.

Basic information
Founded	1997
Type	Public
Industry	Media Streaming
Official website	https://www.netflix.com/

Netflix, Inc. is a media streaming service and publisher, founded in 1997 by Reed Hastings and Marc Randolph formerly for remote video rentals, it eventually became the pioneer of the video streaming industry in 2007, eventually turning to more anti-consumer practices in the mid-2010s and later.

Consumer-impact summary

• User Freedom: Extensive history of restricting access to content, including paywalling higher quality content, increasing costs of service, combatting password sharing, and more.
• User Privacy: Extensive history of collecting and selling user data.
• Business Model: Streaming service content, advertising overload
• Market Competition: Extensive, including free platforms like Roku TV and Pluto TV, and premium platforms such as Disney+, Hulu, and HBO Max.

Controversies

Stream-quality controversy

Main article: Netflix stream-quality controversy

Discovered as early as December 2023, Netflix has not clearly defined every restriction for how users are capable of accessing higher quality streaming content, despite 4k content being a specified tier consumers pay for.

Advertising overload

Main article: Advertising overload

Netflix was among one of the first premium streaming services to integrate advertisements on top of having to pay for the service. Since then, the platform has sought progressively more avenues to integrate advertisements, including further ads. These advertisements have also increased the amount of data that Netflix can collect, and by extension, sell.

Due to the amount of data that Netflix has been able to sell due to advertisement integration, it has also encouraged the company to raise the costs of ad-free tiers, so subscribers are forced either paying more to not see ads, or witness an increasing barrage of advertisements.

Additionally, starting from 2025, Netflix will be using generative AI to "serve the right ad to the right member at the right time" to subscribers of the lowest paying tier, meaning the quality of these advertisements will be further put into question, and said advertisements may encourage further user tracking in order to "tailor" the content.

DRM Restrictions

Netflix has historically halted access for certain consumer devices merely due to the fact that these devices cannot support PlayReady DRM. The usage of DRM has also brought forth criticism from organizations such as Defective by Design and the Free Software Foundation.

Previously until October 2014, Linux couldn't support Netflix for streaming strictly due to a lack of DRM support.

Selling identifiable user data

Main article: The Netflix Prize

From 2006 through 2010, Netflix held competitions to improve its recommendation system via 'The Netflix Prize'. These competitions had prizes that were valued at $50k or higher. This has brought several privacy concerns from its userbase, and led to at least 2 lawsuits concerning these competitions which were found to be capable of leaking identifiable information, and especially could have been worsened had their sequel series successfully launched, as data such as renters' ages, gender, ZIP codes, genre ratings and previously chosen movies were provided to these research teams.

Illegal retention of user data

In 2011, Netflix settled a lawsuit regarding the retention of user data that was at least 2 years old.^{[citation needed]}

GDPR violation

On November 26, 2024, the Dutch Data Protection Authority imposed an administrative fine of €4.75 million to Netflix for not properly informing customers about processing their data between the years 2018 and 2020. The lack of transparency and unclear information given by Netflix was in direct violation of several articles of the GDPR.