Facebook‘s history of sharing user data with external entities is no secret. In 2012, the social media giant faced scrutiny for sharing data with Cambridge Analytica, resulting in a hefty $5 billion fine. Now, a new court document filed in an antitrust lawsuit against Meta reveals another surprising partnership formed between Facebook and Netflix spanning from 2011 to 2019.
The lawsuit alleges that over nearly a decade, Facebook and Netflix maintained a close and mutually beneficial partnership. During this period, Netflix invested heavily in Facebook ads, engaged in data-sharing agreements, gained access to exclusive Facebook APIs, and participated in custom partnerships and integrations. These collaborations notably enhanced Facebook’s ad targeting and ranking models.
The document asserts that this close partnership was cultivated under the guidance of Netflix’s then-CEO Hastings, who served on Facebook’s board from 2011 to 2019. Hastings played a pivotal role in overseeing various aspects of the relationship, including advertising expenditure, data-sharing agreements, and discussions aimed at addressing competition in the streaming video market. His direct communication with Facebook executives, particularly Mark Zuckerberg and Sheryl Sandberg, facilitated the management and evolution of this strategic alliance.
Facebook Netflix Data Sharing Partnership: A Decade-Long Affair
- The partnership between Netflix and Meta traces back to June 2011 when Reed Hastings, Netflix’s CEO, joined Meta’s board. Shortly after Hastings’ appointment, Netflix announced a Facebook integration aimed at sharing user data internationally. Concurrently, Netflix initiated lobbying efforts in Congress to enable similar data-sharing practices in the United States.
- By 2013, Netflix had entered into a series of “Facebook Extended API” agreements, granting it access to Facebook’s private message inboxes and other user data through the “Inbox API” and “Titan API.” These agreements required Netflix to provide regular reports to Facebook on recommendation sends and recipient clicks, ensuring reciprocity in data exchange. Throughout this period, Hastings maintained direct communication with Zuckerberg, advocating for transparency and oversight regarding data-sharing practices.
- Despite Netflix’s substantial investment in Facebook advertising, reaching $40 million per year by February 2015, Hastings sought a custom deal to restrict Facebook’s use of its data for targeting.
- In March 2018, Zuckerberg surprised Meta’s content executives with a drastic budget cut for Watch’s original programming and sports content. This decision signalled Meta’s abrupt withdrawal from direct competition with Netflix in the streaming sector.
- Between August 2017 and April 2018, Netflix and Facebook entered into new data-sharing agreements. These agreements enriched Facebook’s ad targeting systems with valuable insights from Netflix, while deliberately excluding Watch from these benefits. Additionally, Netflix further increased its ad spending on Facebook, committing to a guaranteed ad spend of $150 million in 2017. Hastings played a pivotal role in facilitating these agreements, signalling his continued involvement in steering the partnership.
Meta, Facebook’s parent company, has responded to the allegations raised in the lawsuit by asserting that its agreements and relationships with Netflix adhere to common industry practices. However, Meta did not directly address whether competition with Netflix influenced the decision to shut down Facebook Watch.
Financial Growth
By the end of 2019, Facebook had over 2.3 billion monthly users, and Netflix had more than 167 million streaming paid memberships worldwide. Both platforms had amassed a vast wealth of user data, which serves as a valuable resource, enabling them to refine their advertising strategies and generate billions in revenue from targeted ads.
As a result, Facebook’s advertising revenue surged dramatically from $4.28 billion in 2012 to an astounding $69.66 billion in 2019. Similarly, Netflix experienced significant streaming revenue growth, increasing from $2.47 billion to $19.86 billion during the same period. The strong growth in revenues indicates the pivotal role of user data in driving the financial success of these tech giants.
This isn’t the first instance of Facebook being implicated in such data-sharing practices. In 2018, The New York Times reported that Facebook permitted Microsoft’s Bing search engine to access the names of virtually all Facebook users’ friends without their consent, as evidenced by records. Moreover, Facebook granted Netflix and Spotify the capability to read the private messages of Facebook users. The social media giant, however, has denied all allegations.
The revelation of the Facebook-Netflix partnership and the subsequent sharing of user data without explicit consent signifies a significant breach of trust. Users entrust these platforms with their most intimate information and expect nothing less than the utmost confidentiality and respect for their privacy. However, the exploitation of this trust for the sake of generating billions in revenue not only showcases a flagrant disregard for ethical principles but also undermines the very foundation of trust upon which these platforms are built.
To address these concerns and rebuild trust, stringent regulatory measures must be implemented to govern data practices and hold companies accountable for their actions. Additionally, tech companies must prioritize transparency, accountability, and ethical stewardship in their operations, empowering users with greater control over their data.
Do you still perceive Facebook as a trusted social media platform, given the emergence of multiple cases related to its data-sharing practices with Netflix, Spotify and Cambridge Analytics, in recent years?
