In December, The NewYork Times revealed that Netflix was trading data with Facebook for years. The company’s response again verged on self-righteous. “A spokesman for Netflix said Wednesday that it had used the access only to enable customers to recommend TV shows and movies to their friends,” the Times reported. “‘Beyond these recommendations, we never accessed anyone’s personal messages and would never do that,’ he said.”
In both cases, Netflix responded like most tech companies used to, assuming that they’d be given the benefit of the doubt that their intentions were good. For Amazon, Google, and Facebook, this assumption gave way over the last couple of years.
These are massive corporations that restructure industries and consumer expectations, and wield power to maintain their dominance. As Netflix continues to grow, it will not be able to maintain the illusion that it is some startup. When Netflix was a small auxiliary source of funding for high-quality content, that was great! Now that Netflix is spending many billions of dollars a year for programming and helping squeeze the life out of the cable industry (which funded plenty of great shows), the roles have shifted. Even assuming that people continue to love Netflix’s service, when the disruptor becomes the dominant player the questions that need to be asked about the company will shift.
Of course, Netflix doesn’t have all Facebook, Google, or Amazon’s problems. But they’ll almost certainly introduce new ones that don’t apply to the other big tech firms that have come under scrutiny.
For example, it’s easy to make friends in the media when you’re spraying many billions of dollars around to content creators. Selling shows to Netflix is the new favored media play, whether you seek the holy grail or a Hail Mary toss.
But many of those billions are funded by debt, because Netflix’s business does not currently generate enough cash to cover the amount it is spending on content (and marketing) to grow its subscriber base.
“Netflix’s fundamental business model seems unsustainable,” Aswath Damodaran, a New York University finance professor, told The New York Times in October. “I don’t see how it is going to work out.”
But assuming that the numbers all work out somehow, and Netflix becomes the TV of the internet, it seems impossible that the company will face increasing criticism over time. After all, before critics bashed the internet, they hated TV even more.
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