How Netflix Got "Borked"

July was a rough month for Netflix, all things considered. First the film-subscription service announced a radical change to its pricing structure, which by September could hike some subscribers’ monthly payments by nearly 60 percent. The company’s July 12 blog post sparked enough bourgeois Internet outrage that FunnyOrDie.com created a parody “Relief Fund” with celebrity spokesman Jason Alexander.

Then came the corporation’s July 25 quarterly letter to its shareholders (PDF), which described plans for a “Facebook integration” tool which will soon launch in Canada and Latin America. But what’s the holdup in Netflix’s home country? The shareholder report explains:

At this point, we plan to launch this initiative only in Canada and Latin America, as the VPPA (Video Privacy Protection Act) discourages us from launching our Facebook integration domestically. Under the VPPA, it is ambiguous when and how a user can give permission for his or her video viewing data to be shared. A bipartisan group of lawmakers has introduced a simple clarification, HR2471, which says when and how a user can give such permission. We’re hoping HR2471 passes, enabling us to offer our Facebook integration to our U.S. subscribers who desire it.

Suddenly, the mainstream media was re-examining a long-forgotten privacy law from 1988, and legislative history was a hot topic of discussion. So what is the VPPA? The Electronic Privacy Information Center (EPIC) maintains a helpful backgrounder, which explains the law’s unlikely origin in a Supreme Court nomination hearing: while the Senate considered President Reagan’s unsuccessful nomination of then-D.C. Circuit Court Judge Robert Bork, a local paper obtained and published the judge’s video rental records (reprinted at author Michael Dolan’s website). The Washington City Paper found nothing scandalous in Bork’s video rentals (aside from the sheer number, which prompted Dolan to quip that “if anything, Robert Bork ought to be nominated for Supreme Couch Potato”), but Congress responded with Public Law 100-618, which prohibits the disclosure of a consumer’s video rental or sales records without “informed, written consent of the consumer given at the time the disclosure is sought” (view 18 U.S.C. 2710 at the new U.S. Code beta site).

Certainly, the 1988 Congress did not anticipate the possibility of Internet-based DVD rentals and streaming services, and if Netflix were a web-only service, it is likely that the VPPA would not apply (as Inside Facebook points out, the web-only Hulu was able to successfully launch a Facebook app without concern). Netflix’s letter to shareholders notes a pending bill in the House of Representatives, H.R. 2471 (bill tracking report), which would enable sites like Netflix to obtain ongoing consumer consent to records disclosure on an opt-in basis, rather than requiring consent each and every time a disclosure is sought.

Certainly, Congress has had its hands a bit full with debt ceiling negotations in the weeks since H.R. 2471 was introduced, so only time will tell if the VPPA amendment will pave the way for a Facebook-Netflix union in the USA. But if you’d like to research the history of the VPPA, or track the pending bill’s progress, check out the resources listed in our Federal Legislative History research guide or Ask a Librarian.