Why Facebook Watch Was Scrapped: Keeping Netflix Happy, Lawsuit Says

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A newly unsealed document in a potential class-action lawsuit alleges that Facebook shut down Facebook Watch to keep Netflix among its top advertisers — and to keep ads for Netflix series and films off of emerging competitors like Snapchat, a person with knowledge of the lawsuit tells IndieWire. And along the way, the two traded lots and lots of your data — allegedly.

The suit, filed by attorney Brian J. Dunne on behalf of other (scorned, non-Netflix) Facebook advertisers, seeks billions in damages. If they win at trial or settle, the exact dollar amount would come down to a percentage of Facebook’s overall advertising revenue from 2016-2019.

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Before Facebook launched streaming-video platform Facebook Watch in August 2017, Netflix spent about $40 million per year on Facebook ads, per the letter from Dunne to a Judge Donato. Shortly after Mark Zuckerberg doomed Facebook Watch by decimating its budget in 2018 (it would limp on until the app was officially sunsetted in April 2023, but was never again a serious bidder for content), the spend increased to $150 million; two years later, it was about $200 million.

Sounds hinky, but circumstantial. The alleged quid pro quo is not explicitly stated — at least not in the millions of documents produced by the discovery phase, which is now complete, our source says.

“For nearly a decade, Netflix and Facebook enjoyed a special relationship,” reads the Dunne letter. Facebook and Netflix also shared a lot of in-depth user data as well as a board member, Netflix co-founder (and co-CEO at the time) Reed Hastings. Dunne’s letter to Donato explicitly requested that Hastings turn over documents requested via subpoena months earlier.

Hastings “personally directed” the relationship between Facebook and Netflix from 2011-2018, Dunne alleged. This included “communications about and negotiations to end competition in streaming video,” the attorneys contend, with Zuckerberg and Sheryl Sandberg on the other end.

The data relationship was so deep it allowed Netflix “programmatic access to Facebook’s user’s private message inboxes” and to their “messaging app and non-app friends,” the document reads. In exchange, Netflix would provide a written report every two weeks that “shows daily counts of recommendation sends and recipient clicks by interface, initiation surface, and/or implementation variant (e.g., Facebook vs. non-Facebook recommendation recipients).”