A class-action lawsuit has been filed accusing Meta of discontinuing its Facebook Watch streaming video service to benefit Netflix, alleging the two companies made a deal to divide the advantages of the evolving digital landscape.
An antitrust lawsuit filed by two Illinois residents, in the U.S. District Court for the Northern District of Illinois, claims that newly unsealed documents from a previous lawsuit against Meta suggest the two companies conspired shortly after Facebook launched its Watch service. The lawsuit alleges that Facebook’s move to compete directly with Netflix in the video-streaming market by offering similar TV-like content led to the alleged agreement.
The suit says the “anticompetitive agreement between Facebook and Netflix decreased consumer choices in video-streaming services while at the same time increasing consumer costs because Netflix was able to charge subscribers more than it would have but for Facebook’s relinquishing the video-streaming market to Netflix.”
According to the lawsuit, Facebook launched its Watch service in 2017 and began acquiring rights to TV series such as Angel, Buffy the Vampire Slayer, and Firefly. The suit also mentions that Facebook Watch expressed interest in acquiring premium content like House of Cards, a popular Netflix series, and Scandal for its platform.
The lawsuit further states that in May 2018, Mark Zuckerberg reduced Facebook Watch’s budgets for original content and sports by nearly $1 billion for the following year. By early 2019, Facebook announced it would not renew most of the 21 news shows it had recently launched as Watch Originals. By early 2020, Facebook revealed that it would not continue the majority of its original programming.
Zuckerberg reportedly stated that the primary purpose of Watch had always been to serve as a marketing tool for Facebook. However, the suit claims that Facebook has not provided a clear or convincing explanation for the platform’s decline, suggesting it was the result of a “quid pro quo” arrangement.
Additionally, the lawsuit alleges that in return for Facebook discontinuing Watch as a competitor in the video-streaming market, Netflix would continue sharing its subscriber data with Facebook and, in addition, spend hundreds of millions of dollars on targeted advertising on the platform.