Netflix is facing the music in Texas, and it’s for allegedly spying on children and adults

Netflix is currently facing a legal challenge in Texas over allegations that it has been secretly collecting data from both children and adults without their consent. Texas Attorney General Ken Paxton filed the lawsuit on Monday, accusing the streaming giant of spying on its users while simultaneously utilizing addictive design elements to keep them engaged with the platform. This legal action marks a significant shift in how the state is scrutinizing major tech companies and their internal data practices.

The core of the issue stems from the argument that Netflix built its reputation and subscriber base on the promise of being an ad-free, private alternative to other big tech platforms. According to the filing, the company allegedly marketed itself as a safe space where paying a monthly subscription meant avoiding the invasive tracking found elsewhere. The lawsuit claims that Texans trusted this bargain, but that Netflix effectively broke it by constructing a sophisticated data-collection system that subscribers were specifically trying to avoid.

The attorney general’s office claims that Netflix records and monetizes billions of pieces of information regarding how users behave on the platform. The complaint states, “Every interaction on the platform became a data point revealing information about the user,” and further notes that “When you watch Netflix, Netflix watches you.” The filing highlights that the company records technical events, including what users click, what they linger on, and the specific duration of those interactions.

Attorney General Paxton is specifically targeting Netflix under the Texas Deceptive Trade Practices Act, which prohibits misleading or deceptive acts in commerce

The state is seeking a court order to force Netflix to delete any data it allegedly collected in a deceptive manner from residents of the state. Furthermore, the lawsuit requests that the court mandate the company cease processing user data for targeted advertising and require that auto-play features be disabled by default for all children’s profiles.

This scrutiny comes at a time when many platforms are under fire for design features like infinite scroll and auto-play, which critics argue contribute to unhealthy, addictive habits. The state’s filing points out that Netflix began leveraging data extracted from children and families in 2022 to raise billions of dollars in revenue.

According to the lawsuit, this data is shared with commercial brokers like Experian and Acxiom, as well as ad-tech platforms such as Google’s Display & Video 360 and The Trade Desk. Paxton noted in a statement that “Netflix users’ data is essentially shopped across Big Ad Tech’s shadowy network. The company earns billions of dollars every year from secretly selling consumer data.”

The lawsuit also references comments made by former Netflix boss Reed Hastings in 2019 and 2020, where he suggested the company would not collect or monetize user data for advertising purposes. While Netflix introduced an ad-supported tier in 2022, the state claims that the company failed to disclose the true scope of its behavioral logging. The filing suggests that a 2025 privacy policy update implies the company collects and leverages data from non-ad-tier subscribers for advertising purposes as well.

On the topic of children’s profiles, which do not display ads, the complaint alleges that the company’s privacy statement fails to notify parents that their children’s playback patterns are still being tracked to train recommendation algorithms. The attorney general argues that the auto-play feature is designed to keep children fixated on their screens, contradicting the image of a kid-friendly platform. “Netflix promised Texans entertainment and delivered surveillance,” the complaint says.

Netflix has officially rejected these allegations and intends to challenge the lawsuit in court. A spokesperson for the company stated, “Respectfully to the great state of Texas and Attorney General Paxton, this lawsuit lacks merit and is based on inaccurate and distorted information.”

The company also maintained that it takes member privacy seriously and complies with all applicable privacy and data protection laws in the regions where it operates. In a separate response, the company emphasized its commitment to what it describes as industry-leading parental controls and transparent privacy practices.

As this legal battle unfolds, it may signal a broader trend in how states approach the oversight of streaming services. Experts have noted that recent successes in similar lawsuits against other tech giants regarding addictive design could pave the way for more legal challenges. For now, the outcome remains uncertain as the case moves through the court system, leaving users to wait and see if these claims will lead to changes in how their viewing habits are tracked and utilized by the streaming service.