When Netflix finally announced the winners of its three-year, $1 million contest last fall, the buzz was so great that the company wasted no time in announcing a sequel.
That contest gave consumers all over the world the chance to compete to improve the company`s movie-recommendation algorithm. Contestants were given access to members` movie ratings and charged with the task of figuring out a way to more accurately suggest movies that those same users would enjoy. The contest, which ran from October 2006 to September 2009, drew 41,000 teams from 186 countries, and rewarded the winning team -- BellKor`s Pragmatic Chaos -- with a $1 million check.
Given the benefit for Netflix -- Reed Hastings, the company`s CEO, called the contest “a big winner” for the company and noted that he was getting “Ph.D.’s for a dollar an hour” -- it only made sense that the company immediately announced a Round 2 of sorts.
But the sequel was abruptly called off even before a jackpot was announced, after a lawsuit and an FTC investigation raised concerns that the company was endangering consumers` privacy. Those inquiries grew out of a report by researchers at the University of Texas which found that the data used in the contest was actually traceable to specific consumers.
Although Netflix apparently believed the information -- which in many cases included users` subscriber numbers, ZIP codes, gender, and ages -- was anonymized, the report proved that concealing the source of such data can prove more difficult than expected.
Users` sexuality threatened
The consumer suit against Netflix highlighted the extreme consequences that can potentially result from a breach of consumer privacy. The plaintiff, identified as Jane Doe in court papers, is a closeted lesbian who “is a member of a community in which that fact is not a matter of general, public knowledge, including at her children`s schools.”
According to the suit, Doe periodically ordered movies from the website`s “Gay & Lesbian” section, and also “searched for and rented specific titles of movies that would be considered to be `gay-themed.`” The suit chided Netflix for putting Doe`s rental history at risk, and noted that “such data may also reveal a member`s personal struggles with issues such as domestic violence, adultery, alcoholism, or substance abuse.”
Doe`s suit claimed that Netflix`s actions constituted “the largest voluntary privacy breach to date,” and said that confidential information “was given away to the world freely, and with fanfare.”
Netflix is hardly the first company to be humbled by online privacy issues. The proposed settlement of a lawsuit involving Google Books has been tripped up in part because of concerns that it could endanger consumer privacy. Last September, Facebook shut down Beacon, a feature that told users` friends about their activity on other sites. Privacy concerns will only grow as online services become more prevalent.
Netflix, meanwhile, has vowed to find more secure ways to improve its recommendation system.
“With both the FTC and the plaintiffs` lawyers, we`ve had very productive discussions centered on our commitment to protecting our members` privacy,” Netflix CPO Neil Hunt wrote on the company`s blog. “We will continue to explore ways to collaborate with the research community and improve our recommendations system so we can constantly improve the movie recommendations we make for you. So stay tuned.”
