The news: A lawsuit from Texas Attorney General Ken Paxton loomed over Netflix’s Wednesday Upfront presentation.

Two days before the event, Paxton alleged that Netflix “[spies] on Texas kids and consumers by illegally collecting users’ data without their knowledge or consent.” The suit created an awkward framing as Netflix tried to convince advertisers of its improved capabilities—which rely on the kind of data collection Paxton is targeting.

Netflix called the claim “meritless” and “based on inaccurate and distorted information.”

Zooming out: The lawsuit is part of a litigious streak from the Texas AG, who has launched a flurry of lawsuits and investigations against companies across industries. A centerpiece of Paxton’s actions against Big Tech and entertainment companies is data privacy, particularly regarding children.

Does it hold water? Paxton’s allegations against Netflix are a mixed bag. Some claims are exaggerated, and while others have some merit, Paxton is targeting Netflix for behaviors its much larger ad rivals also partake in—suggesting more litigation on the horizon.

• Netflix doesn’t make “billions of dollars every year” from secretly selling consumer data. Netflix ad revenues passed $1.5 billion in 2025, its first time crossing the $1 billion threshold. That’s a semantic point, but one that highlights the disparity between Netflix’s and its rivals’ ad businesses.
• “Addictive” design practices exist across streaming services. The announcement highlights video autoplay as an addictive feature designed to capture user attention, but services like Prime Video or Hulu have used autoplay for years.
• Netflix has fewer data signals to pull from than competitors. Paxton claims that Netflix collects user data to inform advertising and content suggestions. While true, competitors like Prime Video and YouTube that pull user data from shopping, search, viewing habits, and more, could be considered far more invasive. Both also have significantly larger ads businesses than Netflix.

Implications for marketers: Paxton’s claims hold up to some scrutiny, but targeting a comparatively small ads business could signal that Netflix is simply the first in a campaign that will include other streamers and CTV providers.

Regardless, the suit is part of a nationwide crackdown on data privacy and companies’ ability to collect user data for ad targeting and content recommendations.

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