Netflix sued by Texas over user data practices

Texas Attorney General Ken Paxton sued Netflix in a Collin County state court on May 11, alleging the company collected data on children and other users without consent, misled consumers about those practices, and designed its service to keep people hooked.

The complaint says Netflix tracked viewing habits and preferences for years and shared or sold that data to commercial brokers and advertising technology firms.

It also alleges the company’s data practices generated billions of dollars a year. It cites former CEO Reed Hastings, who said in 2020 that Netflix did not collect user data.

🔗 Source: Reuters

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Implications, context, and why it matters.

Netflix’s alleged data collection reached far beyond viewing history

The suit says Netflix logs about 5 petabytes of user behavior data each day 1.
It says the company tracks every click, the devices and home networks in use, app activity, plus location drawn from Internet Protocol (IP) addresses 1.
The filing also challenges the autoplay feature. It says Netflix built it to remove natural stopping points and keep people watching, including children 2.
Netflix has faced similar claims before. Dutch regulators fined the company about US$5 million in 2024 over alleged General Data Protection Regulation (GDPR) breaches from 2018 to 2020, including a failure to give customers enough detail about its handling of personal data 2.

The lawsuit may change how paid tech services add ads

The case questions a wider move by subscription tech companies to add advertising to paid products, which Netflix did in 2022 3.
The suit calls it a years-long bait-and-switch. It says Netflix gathered user data under promises of an ad-free service, then later made money from that data, including through ads 3.
A win for the plaintiffs could set a legal precedent. Other subscription companies could face retroactive liability over data collected before launching ad-supported tiers.
The complaint pushes privacy scrutiny beyond Facebook, Instagram, and TikTok into streaming. It says Netflix sold subscriptions as a break from tracking. The company also built broad data collection systems 2.