On July 25, 2011, Netflix stated that it will hold off on the launch of its Facebook integration in the U.S. due to legal issues related to the Video Privacy Protection Act (“VPPA”).  The new Facebook feature would allow Netflix subscribers to share their movie viewing information with friends online.  Netflix indicated in its second quarter shareholder letter that it supports House Bill 2471 (“H.B. 2471”), a proposed bi-partisan amendment to the VPPA intended to clarify the consent requirement for sharing consumer video viewing information.  The letter states that “[u]nder the VPPA, it is ambiguous when and how a user can give permission for his or her video viewing data to be shared” and that the VPPA “discourages us from launching our Facebook integration domestically.”  As a result, the company plans to limit the campaign to Canada and Latin America until questions concerning the VPPA are resolved.

During Netflix’s second quarter earnings Q&A conference call, CEO Reed Hastings characterized the VPPA as “ambiguous” and “poorly drafted.”  The VPPA provides that a “video tape service provider” may disclose a consumer’s personally identifiable information to parties who have the consumer’s informed, written consent at the time the disclosure is sought.  H.B. 2471, which was introduced by Representatives Bob Goodlatte (R-VA), Howard Coble (R-NC), Jim Sensenbrenner (R-WI) and Linda Sánchez (D-CA), would amend the VPPA to also allow video tape service providers to obtain consumers’ informed, written consent “[i]n advance for a set period of time or until consent is withdrawn.”  In addition, H.B. 2471 enables consumers to give their “informed written consent” electronically over the Internet.  Netflix expressed in its shareholder letter that it hopes H.B. 2471 will pass, enabling the company to offer Facebook integration to interested subscribers.

As we previously reported, Netflix has been hit with class action suits brought by customers alleging violations of both the VPPA and state law, and the Federal Trade Commission has inquired about Netflix’s practices with respect to the release of subscriber movie viewing information.