Is It Netflix’s Turn in the Barrel?

For a tech giant that delivers TV over the internet, the company hasn’t faced much criticism, but that grace period could be ending.

Netflix's logo on its Hollywood office (Lucy Nicholson / Reuters)

The stock market, at least, values Netflix like a technology company. Its streaming service does send content over the internet after all. But as the tech industry has been publicly flogged for the past several years, Netflix has only burnished its brand, with tech workers, Millennials, and the general public.

Two recent stories suggest that Netflix may not stay outside the critic zone forever, however. Yesterday, the company admitted that it had pulled an episode of Patriot Act With Hasan Minhaj from its service in Saudi Arabia. In the episode, Minhaj harshly criticizes the Saudi government’s shifting explanations of the murder of the journalist Jamal Khashoggi. He also suggests that the United States is complicit in the ongoing tragedy in Yemen through its support for Saudi Crown Prince Mohammed bin Salman.

Saudi authorities apparently filed the takedown with reference to the country’s anti-cybercrime laws. Netflix, for its part, said, “We strongly support artistic freedom and removed this episode only in Saudi Arabia after we had received a valid legal request—and to comply with local law.”

The Netflix response has a we-can-have-it-both-ways scent that feels distinctly pre-2016 for other tech companies. Even as Netflix bowed to the government pressure, it asks to be seen as a hero of the arts.

In December, The NewYork Times revealed that Netflix had been trading data with Facebook for years. The company’s response again verged on self-righteous. “A spokesman for Netflix said Wednesday that it had used the access only to enable customers to recommend TV shows and movies to their friends,” the Times reported. “‘Beyond these recommendations, we never accessed anyone’s personal messages and would never do that,’ he said.”

In both cases, Netflix responded like most tech companies used to, assuming that they’d be given the benefit of the doubt that their intentions were good. For Amazon, Google, and Facebook, this assumption gave way over the past couple of years.

These are massive corporations that restructure industries and consumer expectations and wield power to maintain their dominance. As Netflix continues to grow, it will not be able to maintain the illusion that it is some start-up. When Netflix was a small auxiliary source of funding for high-quality content, that was great! Now that Netflix is spending many billions of dollars a year for programming and helping squeeze the life out of the cable industry (which funded plenty of great shows), the roles have shifted. Even assuming that people continue to love Netflix’s service, when the disruptor becomes the dominant player, the questions that need to be asked about the company will shift.

Of course, Netflix doesn’t have all of Facebook’s, Google’s, or Amazon’s problems. But it will almost certainly introduce new ones that don’t apply to the other big tech firms that have come under scrutiny.

For example, it’s easy to make friends in the media when you’re spraying many billions of dollars around to content creators. Selling shows to Netflix is the new favored media play, whether you seek the Holy Grail or a Hail Mary toss.

But many of those billions are funded by debt because Netflix’s business does not currently generate enough cash to cover the amount it is spending on content (and marketing) to grow its subscriber base.

“Netflix’s fundamental business model seems unsustainable,” Aswath Damodaran, a New York University finance professor, told The New York Times in October. “I don’t see how it is going to work out.”

But assuming that the numbers all work out somehow and Netflix becomes the TV of the internet, it seems impossible that the company won’t face increasing criticism over time. After all, before critics bashed the internet, they hated TV even more.