Facebook "Watch" looked like a Netflix killer in 2017, but antitrust prosecutors say it was shut down to protect advertising deals
Do you remember Facebook $META Watch? Me neither. Mark Zuckerberg’s short-lived streaming service never really got off the ground, but court filings unsealed in Meta’s antitrust lawsuit claim “Watch” was kneecapped starting in 2018 to protect Zuckerberg’s advertising relationship with Netflix $NFLX CEO Reed Hastings.
“For nearly a decade, Netflix and Facebook enjoyed a special relationship,” said plaintiffs in filings made public on Saturday. “It is no great mystery how this close partnership developed, and who was its steward: from 2011-2019, Netflix’s then-CEO Hastings sat on Facebook’s board and personally directed the companies’ relationship…”
The filings detail Hastings’ uncomfortably close relationship with Meta’s upper management, including Zuckerberg and Sheryl Sandberg. During these years, Netflix was allegedly granted special access to Facebook users’ private message inboxes, among other privileged analytics tools, in exchange for hundred-million-dollar advertising deals. This gave Facebook greater dominance in its all-important ad division, plaintiffs allege, so the company was fine to retreat from Netflix’s streaming territory by shuttering Watch.
In 2017, Facebook Watch began signing deals to populate its streaming service with original TV Shows from movie stars such as Bill Murray. A year later, the service attempted to license the popular ‘90s TV show Dawson’s Creek. Facebook Watch had meaningful reach on the home screen of the social media platform, and an impressive budget as well. Facebook and Netflix appeared ready to butt heads in the streaming world, and the Netflix cofounder found himself in the middle as a Facebook board member.
“There’s not a big conflict yet,” Hastings said onstage at the 2017 Recode conference when asked about Facebook Watch. “We’re not bidding on the same shows,” he said, though Hastings later regretted these words in an email.
“Let me know if you think there was a better way to handle,” Hastings wrote in an email to Zuckerberg unsealed in this case. “In hindsight, I wish I added a materiality qualifier like ‘not generally bidding on the same content.’”
These unsealed court filings stem from a class action antitrust case against Meta, first spotted on X $TWTR by Jason Kint. The lawsuit, filed on behalf of consumers and advertisers, alleges Meta is a monopoly in the social media market.
Netflix was a large advertiser to Facebook, and plaintiffs allege Zuckerberg shuttered its promising Watch platform for the sake of the greater advertising business. Zuckerberg personally emailed the head of Facebook Watch in May of 2018, Fidji Simo, to tell her their budget was being slashed by $750 million, just two years after Watch’s launch, according to court filings. The sudden pivot meant Facebook was now dismantling the streaming business it had spent the last two years growing.
During this time period, Netflix increased its ad spend on Facebook to roughly $150 million a year and allegedly entered into agreements for increased data analytics. By early 2019, the ad spend increased to roughly $200 million a year. Hastings left Facebook’s board later in 2019.
Meta said its agreements and relationships with Netflix are commonplace in a statement to Gizmodo. However, the spokesperson did not answer our questions about whether competition with Netflix was a reason for Facebook Watch being shuttered.
“We are confident the facts will show this complaint is meritless,” said a Meta spokesperson.
It’s entirely possible that Facebook Watch was shuttered for other reasons, though Netflix is certainly an important partner to Meta. Tech companies shutter projects for all kinds of reasons. However, Hastings found himself squarely in the middle of this conflict, as a Facebook board member and CEO of Netflix, and it seems Watch was never really given a chance to shine.
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