Netflix readies for Senate fight to implement Facebook connection

Netflix Inc. (Nasdaq: NFLX), the world's largest online-video subscription service, is girding for a fight to change a federal video-privacy law so its members may automatically share their movie-viewing habits on social networks.

The Los Gatos, Calif.-based company, which boasts of having over 26 million subscribers, wants to amend the Video Privacy Protection Act (VPPA) so to allow its U.S. users to opt-in to share their movie selections with friends on Facebook.

Netflix recently hired the powerhouse law firm Greenberg Traurig to lobby Congress to amend the VPPA (Pub.L. 100-618), signed into law by President Ronald Reagan in 1988.

In September, Netflix vice president of product integration, Tom Willerer, wrote in a company blog posting that VPPA provisions have stymied Netflix's Facebook integration in the United States. "[A] 1980s law," he wrote, "creates some confusion over our ability to allow U.S. members to share what they watch."

Greenberg Traurig lobbyist Edward Barron will work on behalf of Netflix in trying to jumpstart House-approved legislation that has stalled in the Senate. Barron, a former deputy chief counsel to the Senate Judiciary Committee, will be joined on the account by fellow Greenberg shareholders Alan Slomowitz and Michael Williams.

In December, by a 303-116 vote, the House approved H.R. 2471 by Rep. Robert Goodlatte (R-Va.) to amend VPPA's consent provision to allow Netflix members to use the Internet to automatically authorize the sharing of details about movies and other video content they watch.

The Senate Judiciary Subcommittee on Privacy, Technology and the Law considered the bipartisan-backed House measure at a Jan. 31 hearing, but the seven-member subcommittee, led by Sen. Al Franken (D-Minn.), has not acted further. Opening the hearing, Franken said VPPA was crafted carefully and "protects Americans' privacy and civil liberties."

Netflix General Counsel David Hyman told lawmakers that as codified, VPPA's consent provision "places a drag on social video innovation that is not present in any other medium, including music, books and even news articles."

On the other side of the issue, Marc Rotenberg, executive director at the Electronic Privacy Information Center, said H.R. 2471 would weaken VPPA consumer-privacy protections.

"It's not just the friends of that individual to whom the specific movie viewing will be disclosed," Rotenberg said. "It's also to Netflix business partners and it's also potentially to law enforcement."

VPPA, aimed at preventing wrongful disclosure of video rentals or sales records, was passed by Congress after the Washington (D.C.) City Paper published a list of video rentals by Robert Bork, a controversial and ill-fated Reagan nominee to the U.S. Supreme Court.

The consumer-privacy statute bars service providers from sharing video rental information without written consent or a search warrant. VPPA allows for penalties of up to $2,500 in actual damages for instances in which a service provider discloses a customer's rental information outside the ordinary course of business.

During the first quarter of 2012, Netflix reported lobbying expenditures of $100,000, down from $175,000 from the previous quarter. In 2011, the company spent $500,000 on federal lobbying efforts, public-disclosure forms indicate.

On April 23, Netflix reported its first-quarter 2012 financial results. Overall for Q1 2012, Netflix posted a net loss of $5 million, or 8 cents per share. The company generated $870 million in revenue, up 21 percent compared to the same period last year.     

For more:
- see the Senate subcommittee hearing archived webcast
- see H.R. 2471 legislative information