Topline
Texas Attorney General Ken Paxton sued Netflix on Monday, alleging the streaming service was “spying” on customers, including children, and misleading them about how much data it was collecting and addicting customers with “dark pattern” features like autoplay.
Texas Attorney General Ken Paxton claimed the streaming service’s data collection and targeted ads amounted to “spying” on customers.
Getty Images
Key Facts
The suit, filed in a court in Collin County, alleges the company violated the Texas Deceptive Trade Practices Act, which bars companies from using “false, misleading, or deceptive acts or practices,” by allegedly misrepresenting that it did not collect data from users with paid accounts.
The suit quotes Netflix leadership claiming it had “zero interest” in pursuing advertising in the past, before changing their minds years later in 2022 once it had already “stockpiled user data under those promises.”
It also accuses the company of telling “half the truth” regarding its kids profiles—alleging that even though it does not show children targeted ads, Netflix still “collects and analyzes a child’s behavioral interactions through the same surveillance programs it uses for adults.”
The suit also claims Netflix misrepresents how it shares user data and that it uses “dark patterns” to addict customers to its platform, directly quoting marketing material from years past promoting “binge-watching” Netflix shows.
The suit claims Netflix conducted a “years-long bait-and-switch,” first addicting customers to the platform, “mining” them for personal data, then finally selling that data back to advertisers to make “billions” per year.
Crucial Quote
Paxton accused Netflix of building an illegal “surveillance program” to collect and profit from its users’ data. “Netflix is not the ad-free and kid-friendly platform it claims to be. Instead, it has misled consumers while exploiting their private data to make billions,” Paxton said in a statement on Monday. Netflix did not immediately respond to a request for comment from Forbes.
Key Background
Netflix exploded in popularity after launching its streaming video service in 2007, creating a tech and entertainment company now with a market cap of over $350 billion and turning co-founder and former CEO Reed Hastings into a billionaire. The streaming service was ad-free for years, which Hastings previously touted as CEO. “We don’t collect anything. We’re really focused on just making our members happy, and we’re not tied up with all that controversy around advertising,” the lawsuit quotes Hastings saying during a January 2020 earnings call. Netflix finally did begin displaying ads in 2022, when Paxton’s lawsuit claims it could start “leveraging the mountains of data it quietly extracted from the children and families it kept fixated on their screens.” Hastings stepped down as CEO in 2023, but served as the company’s chair until April 2026.
Tangent
Santa Clara County, California, sued Meta, the owner of Facebook, Instagram and WhatsApp, on Monday, alleging the company made about $7 billion in revenue from what prosecutors called fraudulent scam ads, Reuters reported.