Netflix stands up to regulatory pressure from Canada, France, and the Netherlands

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Standing tough! Despite having the screws put to it, Netflix is refusing to buckle to pressure from French, Dutch and Canadian regulators.

The streaming media service has refused to sign any VOD tax agreements with the French and Dutch governments. Netflix has also rebelled against the French government’s demand not to screen movies that have been in theatrical distribution for three years or less, in compliance with France’s Cultural Exception rules.

As for the Canadian Radio-Television and Telecommunications Commission’s (CRTC) ordering Netflix to submit its Canadian subscriber numbers, as part of this regulator’s hearing into the Canadian TV industry? “Yeah, right,” sums up the streaming service’s more polite response to this demand. (Factoid: Netflix’s 50 million-plus global subscriber base exceeds Canada’s total population of 35 million.)

Why this matters: Netflix’s defiance means that Internet content distributors may be getting big enough to overwhelm national broadcast regulators, which is huge. The only thing that can limit them is their deals with content creators—a point Netflix made to the CRTC—but not national regulations enforced by governments.

Can’t talk, won’t talk

“Specific information requested by the commission… remains confidential and competitively sensitive, the disclosure of which to third parties would be highly prejudicial to Netflix,” wrote Netflix director of global public policy Corie Wright in a September 22 letter to the Commission. (During the hearing, Wright has been single-handedly fielding a range of irate challenges from a panel of politician-appointed CRTC commissioners.) “Accordingly, Netflix is not in a position to produce this information,” she wrote. “Moreover, the orders are not applicable to Netflix under Canadian broadcasting law.”

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What would Frank do?

Ironically, the information about Netflix’s standing up to the Dutch and French governments was released to the CRTC by Netflix, as part of a package of nonconfidential information that the company was willing to provide. Netflix also gave the CRTC screenshots of its Canadian programming, and a copy of its Privacy Policy as the Commission demanded, but not its subscriber numbers.

It is not known how the Dutch and French governments will react to Netflix’s defiance. As for Canada? Although the CRTC could take the streaming media service to court, the odds are seriously stacked against the Commission winning such a battle.

For one thing, the Broadcasting Act that gives the CRTC its legal authority exempts it from regulating the Web. For another, the federal government is on the record as being against Web regulating, in line with Canadian public sentiment. With a tightly-contested federal election coming next year, the feds are not likely to change their stripes and suddenly back the CRTC.

The bottom line: Barring a miracle, Netflix is likely to get away with refusing to reveal its Canadian subscriber numbers to the CRTC. In doing so, the streaming media company will preserve its competitive advantage, by keeping CRTC-sanctioned competitors like the new made-in-Canada Netflix clone Shomi in the dark as to Netflix’s actual strengths and weaknesses.

As Francis Underwood, protagonist of the Netflix hit House of Cards once said, “After all, we are nothing more or less than what we choose to reveal.”

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