A Netflix shareholder is seeking class action status for a lawsuit accusing the streaming television titan of not making it clear that subscriber numbers were in peril.
A disclosed drop of just 200,000 users — less than 0.1 percent of its total customer base — was enough to send shares plunging after Netflix announced quarterly earnings in April.
The company anticipates a much larger drop in the current quarter — of around two million net subscribers.
The suit filed Tuesday in federal court in San Francisco accuses top executives at Netflix of not telling investors that subscriber growth was slowing due to people sharing accounts and competition ramping up in the market.
“Defendants’ positive statements about the company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis,” read the suit filed by lawyers at Glancy Prongay & Murray on behalf of a shareholder.
Netflix did not immediately reply to a request for comment.
Executives at the company said on an earnings call that they are focused on combating the 100 million households who watch Netflix for free thanks to shared passwords.
“When we were growing fast, it wasn’t the high priority to work on,” co-founder Reed Hastings admitted. “And now we’re working super hard on it.”
Chief operating officer Gregory Peters said Netflix wasn’t trying to shut down sharing, “but we’re going to ask you to pay a bit more to be able to share.”
In March, Netflix put out word that it is testing charging a fee to subscribers who share their accounts with people who don’t live in the same home.
Competition in the streaming television market meanwhile has intensified, particularly from Disney+, with the cost of producing coveted original shows climbing as well.
To attract viewers, Netflix is preparing cheaper subscriptions that include advertisements — which it expects to roll out in the next couple years.
The Los Gatos, California-based company has long defended its no-ads model, which set it apart from competitors such as Disney+, HBO Max and Apple.
For Pivotal analyst Jeff Wlodarczak, streaming “appears nearly fully penetrated globally post-Covid,” and the companies now must set their sights on converting pirates into subscribers, gaining greater market share from each other and driving up prices.”
The suit filed Tuesday is seeking to represent everyone who owned Netflix shares in the six months ending April 19, 2022, and is asking for unspecified cash damages as well as compensation for financial losses.
Spain eyes crackdown on video game ‘loot boxes’
Spain’s government will within days present a draft bill to regulate video game “loot boxes” for which users must pay, a minister said Friday, warning of the addiction risks for youngsters.
An increasingly common feature in many video games, “loot boxes” are caches of virtual weapons and equipment which a player can buy to increase their prowess or status within the game.
But not all boxes contain useful tools and gamers can only see what’s inside after paying, prompting widespread criticism for encouraging behaviour similar to that associated with gambling.
“We have drawn up a very specific law which we will present in the coming days” that will regulate the sale of such content, Spain’s Consumer Affairs Minister Alberto Garzon told Radiocable.
“It is like gambling… because it involves compulsive consumption behaviour which provokes a series of issues for players, from stress to financial bankruptcy,” he told the independent radio station.
“At the end of the day, these are sums which pile up and can lead to gambling addiction,” Garzon said.
Such features were aimed above all “at the under-18 age group, where in 2021, up to 30 percent admitted they had paid significant amounts of money to obtain such rewards” within a game, he said, citing health ministry statistics.
The age ratings for such games “don’t take into account the danger posed by this feature, so parents could buy a game for a 13-year-old, for example, without being aware it includes an element which, in real life, could not be bought by anyone under 18,” he explained.
– ‘Predatory’ –
In April, PEGI, the European body that issues age ratings for video games, introduced a labelling change that requires gaming companies to say if a game includes “paid random items” — a form of optional in-game purchases.
Many other countries have also been struggling with the controversial question of “loot boxes” although few have taken steps to regulate them.
On Tuesday, 20 European consumer groups threw their weight behind a Norwegian Consumer Council (NCC) report on loot boxes that described them as “exploitative and predatory”, with the groups demanding better regulation of the video game industry.
“The sale and presentation of loot boxes often involve exploiting consumers through predatory mechanisms, fostering addiction, targeting vulnerable consumer groups and more,” the NCC’s head of digital policy Finn Myrstad said in a statement.
Gaming companies often used “highly problematic practises to increase their own revenue” through features that “manipulate consumers to spend large sums of money through aggressive marketing, exploitation of cognitive biases, and misleading probabilities”, the report found.
In Europe, only Belgium and the Netherlands have banned loot boxes after directly associating them with gambling.
In a statement issued in response to the government’s move, the Spanish Association of Video Games (AEVI) said it “rejects any association with gambling” and insisted on the sector’s right to “self-regulation”.
GM unit Cruise to deploy driverless taxis in US first
General Motor’s autonomous vehicle unit Cruise says it will deploy driverless taxis in San Francisco in a first for a major US city.
Cruise announced the plans for a ride hailing service using self-driving electric cars after the California Public Utilities Commission (CPUC) issued it a permit to give rides without anyone in the driver’s seat.
“This means that Cruise will be the first and only company to operate a commercial, driverless ride-hail service in a major US city,” chief operating officer Gil West said in a blog post late Thursday.
“We’ll begin rolling out fared rides gradually.”
The permit allows Cruise to use its fleet of 30 electric, autonomous cars in a taxi service in some parts of San Francisco.
The robotaxis are not to go faster than 30 miles per hour (48 kilometers per hour) and have a green light to only operate between late morning and early evening, barring foul weather such as thick fog or heavy rain, the CPUC permit states.
“Crossing the threshold into commercial operations isn’t just big news for Cruise alone,” West said.
“It is a major milestone for the shared mission of the (autonomous vehicle) industry to improve life in our cities.”
Self-driving, electric car services promise to reduce pollution, and save people time and money, West added.
San Francisco police earlier this year faced an unprecedented problem when an officer stopped a car that was driving at night with no headlights on, only to discover there was no one inside.
The vehicle, it turned out, was a self-driving Cruise car, and the police officer’s encounter was captured by a passerby, who posted video on social media.
Cruise took to Twitter to say that the self-driving car “yielded to the police vehicle, then pulled over to the nearest safe location for the traffic stop, as intended. An officer contacted Cruise personnel and no citation was issued.”
Cruise explained that the headlights were turned off due to human error.
Founded in 2013, Cruise has developed software that allows cars to drive themselves completely autonomously.
General Motors owns the majority of shares in the company, valued at more than $30 billion thanks to investments by companies such as Microsoft, Honda and Walmart.
Cruise rival Waymo last year expanded its robotaxi service to riders in San Francisco, but has “specialists” at the steering wheels to take over driving if needed.
The move expanded a Waymo ride-hailing program which has been operating in Phoenix, Arizona since 2017.
Campaign launched to stop Musk buying Twitter
Advocacy groups on Friday launched a campaign to stop Elon Musk from buying Twitter as the proposed purchase cleared review by US antitrust authorities.
Twitter said that the deal for Musk to acquire the company was a step closer to being sealed with the passing of a deadline for it to be challenged under a US antitrust law.
The Tesla chief’s $44 billion deal to take the one-to-many messaging platform private still faces review by other regulators and must be approved by shareholders.
A “Stop The Deal” campaign launched by a coalition of nonprofit groups aims to stop the takeover.
“Elon Musk is a wolf in expensive sheep’s clothing whose Twitter takeover is motivated by ego and grievance,” Accountable Tech executive director Nicole Gill said in a release.
“If we don’t stop this deal, he’ll hand a megaphone to demagogues and extremists, who will cheer him as they incite more hate, harm, and harassment.”
The campaign will involve pressing the Securities and Exchange Commission (SEC) and other agencies to closely scrutinize everything about the takeover deal.
The coalition will also work to convince Twitter shareholders and advertisers to oppose Musk buying the San Francisco-based tech firm.
The list of more than a dozen organizations involved in the campaign includes MoveOn, SumOfUs, Media Matters for America, and the Center for Countering Digital Hate.
Musk became a major Twitter stockholder following his purchase of 73.5 million shares in early April, and less than two weeks later he launched a hostile takeover bid.
The SEC has asked Musk to explain why he didn’t disclose within a required 10-day time period his increased stake in Twitter, especially if he planned to buy the company.
“Your response should address, among other things, your recent public statements on the Twitter platform regarding Twitter, including statements questioning whether Twitter rigorously adheres to free speech principles,” regulators said in a letter.
Musk also faces a lawsuit filed by shareholders accusing him of pushing down Twitter’s stock price in order to either give himself an escape hatch from his buyout bid or room to negotiate a discount.
The suit alleges the billionaire Tesla boss tweeted and made statements intended to create doubt about the deal.
The claim seeks class action status and calls on a federal court in San Francisco to back the validity of the deal and award shareholders any damages allowed by law.
Musk is a frequent Twitter user, regularly firing off inflammatory and controversial statements about current events or other public figures with remarks that are whimsical or business-focused.
He has sparred repeatedly with federal securities regulators, who cracked down on his social media use after a purported effort to take Tesla private in 2018 fell apart.
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