Texas AG Sues Netflix Over Ad 'Bait-and-Switch' and Data Use
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- Texas Attorney General Ken Paxton filed a lawsuit on Monday accusing Netflix of breaking its promise to remain ad-free and kid-friendly, claiming the streamer once marketed itself as an 'escape from Big Tech surveillance' to drive subscriptions.
- Netflix's ad-supported Basic tier more than doubled to 70 million subscribers from 2024 to 2025, and Netflix reported earning $1.5 billion from ads in 2025 — growth Paxton calls a 'bait-and-switch' that reverses co-founder Reed Hastings' prior pledge never to introduce advertising.
- The complaint alleges Netflix built a 'behavior-surveillance program' that collects user location, device info, search terms, and content ratings, then shares that data with brokers including Experian and Acxiom.
- Paxton is also targeting Netflix's autoplay feature, which he says is enabled by default across both adult and kids' profiles and amounts to misleading subscribers about how child-safe the platform actually is.
- The lawsuit invokes the Texas Deceptive Trade Practices Act and asks the court to block Netflix's 'unlawful collection and disclosure' of user data and to disable autoplay by default on children's profiles.
- Netflix spokesperson Jamil Walker rejected the claims as meritless and 'based on inaccurate and distorted information,' saying the company complies with privacy and data-protection laws in every market and offers industry-leading parental controls.
- Texas previously indicted Netflix over its 2020 film Cuties in Tyler County, making this the second time the streamer has faced legal action in the state.
Why it matters: Netflix pulled in $1.5 billion from advertising in 2025 while its Basic tier doubled to 70 million subscribers — the very growth Paxton cites as evidence of a 'bait-and-switch.' If a Texas court blocks Netflix's data flows to brokers like Experian and Acxiom or forces changes to default autoplay on kids' profiles, it could structurally constrain the ad business that is now a meaningful revenue line, and it adds a state-level Deceptive Trade Practices Act enforcement layer on top of Netflix's national ad push.
