A lawsuit seeking class-action status accuses Meta of backing away from its now-closed Facebook Watch live video streaming service to give Netflix a clear path as part of a deal to split the spoils of a new digital landscape.
An antitrust lawsuit filed in the U.S. District Court for the Northern District of Illinois by two state residents (and Netflix subscribers) said recently unsealed documents from a previous lawsuit against Meta show that the two companies agreed to collude shortly after “starting… Facebook is set to compete directly with Netflix in the video streaming services market by launching Watch, a video streaming platform that offers consumers the same kind of TV-like offerings that have been Netflix's bread and butter.
Netflix CEO Reed Hastings was a member of Facebook's board at the time, and the lawsuit alleges that conversations with Facebook (now known as Meta) CEO Mark Zuckerberg “ultimately led to a conspiracy against the public when Zuckerberg and Hastings privatized markets through… The agreement was that Facebook would cede the streaming video market to Netflix by blocking the viewing platform. “In return, Netflix would continue to turn over its customer data and ad spending to Facebook (which used Netflix data to fuel its targeted ad algorithms profitable).”
“The anticompetitive agreement between Facebook and Netflix reduced consumers’ choices in streaming video services while simultaneously increasing consumer costs because Netflix was able to charge subscribers more than it would have charged had Facebook not ceded the streaming video market to Netflix,” the suit says. .
It cited documents from the previous case, Klein v. Meta Platforms, saying it “revealed for the first time that Facebook “deprived the Facebook Watch video service in order to appease Netflix and maintain its advertising monopoly.”
“Shortly after Facebook and Netflix confirmed their agreement not to compete in the video streaming market, Netflix for the first time raised prices for all Netflix subscriptions,” the company said, demanding a jury trial on behalf of the class that includes any Netflix subscribers. Starting August 7, 2017.
Netflix declined to comment on the lawsuit. Meta did not immediately respond to a request for comment.
Facebook Watch was launched in 2017 and started buying the rights to episodes of TV series like Buffy the Vampire Slayer, angel and fireflyThe lawsuit said, also identifying her House of cardsthe popular Netflix series, and scandal “As examples of premium software that Watch may be interested in purchasing.”
In May 2018, Zuckerberg cut nearly $1 billion from Watch's original content and sports budgets for the following year, according to the lawsuit. In early 2019, Facebook said it “would not renew most of the 21 news programs that recently premiered as Watch Originals.” By early 2020, “Facebook announced that it would not renew the majority of its original programming.”
Zuckerberg then pointed out that the purpose of Watch was always just a way to “market” Facebook, the lawsuit said. But “Facebook has never offered a convincing — or even coherent — explanation for Watch's demise.”
The reason is that it was a “quid pro quo.”
“In exchange for Facebook removing Watch as a serious competitor in the video streaming market, Netflix will continue to transfer its subscribers’ data to Facebook and, of course, buy hundreds of millions of dollars in targeted advertising on the social media platform.”
The lawsuit said Facebook shared subscribers' information about videos that users recommended to their friends. It said Netflix paid Facebook roughly $40 million annually to run ads for its series and movies in the year before Facebook announced Watch, a figure that rose to roughly $150 million to $200 million annually “after Facebook voluntarily neutralized Watch as a threat.” Competitively. “
Facebook and Netflix entered into an agreement to build a dynamic advertising model that specifically targets users with Netflix content, the lawsuit claims.
“This model was exactly the kind of targeting that Facebook should have been doing in order to promote its Watch product, but instead it was making efforts to promote Netflix's streaming product in exchange for user data to boost and train its advertising systems.”
