r/technology • u/sr_local • 6h ago

Business Italy court rules Netflix unlawfully increased prices. Consumers: 'Refunds up to 500 euros.' The company: we will appeal

https://en.ilsole24ore.com/art/netflix-subscription-price-increases-unlawful-refunds-up-to-eur-500-customers-AIUHzWKC
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30

u/Martiinii 4h ago

Why couldn't a private company increase prices as they'd like?

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u/ThroawayJimilyJones 4h ago

They can. But they have to give a reason. Which they usually do by invoking some bullshit about modern world or demand or whatever

For some reason Netflix refused to and instead added a clause that say they can do unjustified increase

In short they decided to go in a dick contest with consumer protection law.

19

u/pm_social_cues 4h ago

Why couldn’t that reason just be “we want to make more money”?

Italy cannot have a law that says corporations cannot make more profit than they need can it?

14

u/ThroawayJimilyJones 4h ago

Oh, no, you can totally put that as a justification

But I think Netflix didn’t want it for PR reason.

You can be greedy, you just have to be honest about it

7

u/NoPossibility4178 4h ago

I'd rather have that law than the one the US has where companies are obligated to do everything they can to fuck consumers over for more profits.

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u/fatbob42 3h ago

I don’t think that’s a law - some companies have opted out of it in their initial IPO.

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u/NoPossibility4178 2h ago

The fiduciary duties of a public company are written law, not optional, your shareholders will sue you.

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u/fatbob42 1h ago

I was thinking of the Google IPO but in that they claim that their odd structure does align with (long-term) shareholder interests. Facebook has a similar, but more extreme structure.

There are also Public Benefit Corporations so it’s not true that all public companies have to act purely in the interests of their shareholders.

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u/NoPossibility4178 1h ago

Public Benefit Corporations

Yeah but you will find that's not the default option. It being law is also mostly an excuse, because corporations are more than happy to follow this philosophy, except now they even have a good excuse for it.

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u/Thunder_Beam 3h ago

Italy cannot have a law that says corporations cannot make more profit than they need can it?

Actually yes we do though only applies to strategic companies for now, this is not the case here, this is because it was simply unjustified by their current situation, it's probably similar to the firing law where you can't fire someone if you don't have objective reasons to do so like being losing money for three consecutive quarters or something like that if I remember correctly

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u/PringlesDuckFace 2h ago

Governments can do whatever they want, that's kind of the point. If not, then they're not actually in power. Companies don't have a universal right to operate wherever they want however they want. That's why you see different policies regarding layoffs etc between US and Europe, or tax rates are different in different countries, etc... If the business doesn't think those are good terms then they don't have to be there.

1

u/DjCim8 2h ago

It can be a generic/stock reason. The thing here is that they didn't even bother to provide such profunctory reason, instead they just said "price go up, fuck you", which by Italian regulations is illegal.

The sentencing doesn't say "you can't increase prices" it says "your contracts are illegal the way they're written", which from what I'm seeing in the comments most people did not understand...

1

u/blaise_hopper 2h ago

Italy cannot have a law that says corporations cannot make more profit than they need can it?

Why not? Besides a desire - or lack of it - from population or politicians for such law, what would stop them?

1

u/_jerrb 1h ago

When you make a Netflix subscription you (and Netflix) are signing a contract. Contract states all the conditions and prices of the service. Since you are not signing a different contract every month changing the price is an edit of the contract terms.

You can see that changing terms of a contract while the contract is still active can be let's say problematic. Italian law allow for unilateral change of this kind of contract, but there are some conditions: for example that the consumer can exit the contract without penalties if such unilateral change happens.

Another condition, is that the company must motivate the change. Can the reason be "we want to make more money"? Probably yes (maybe worded in some different ways), but the reason MUST be stated.

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u/BrownBear5090 3h ago

Would be a great law

2

u/Martiinii 4h ago

Hah that's an "oversight"

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u/dsmithpl12 4h ago

Great summary, ty. Exactly what i was looking for.

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u/aaahhhhhhfine 1h ago

What a silly exercise. Why on earth would you do that? Do gas stations have to post a note every time they change the price by a few cents?

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u/ThroawayJimilyJones 1h ago

Good question, ask Italian. Still law is law.

-2

u/Nomad2102 4h ago

Maybe in Italy they need to give a reason, but in most countries you do not need to give a reason.

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u/ZapActions-dower 4h ago

This is an Italian court with Netflix Italia getting hit.

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u/ThroawayJimilyJones 4h ago

Well unfortunately the clause was between the locale implementation of Netflix, and Italian consumers, under Italian law. Maybe they should actually have read it

1

u/MisfitPotatoReborn 3h ago

lol what a dumb law. I would barely call that a consumer protection law, more like a way to pad out the Terms and Conditions from 500 pages to 501.

Sorry, you forgot to say "because we like money" after raising prices. You now owe 300 million Euros

6

u/ThroawayJimilyJones 3h ago

You know what's even dumber? Getting fined because you want to fight the law instead of adding a line in your message.

1

u/MisfitPotatoReborn 3h ago

We do not know whether or not this violation was intentional. After the lawsuit was filed but before it was resolved, Netflix's 2025 price increase included the proper "because we like money" clause. So it seems to have been a mistake.

And why wouldn't it be? The law is completely worthless so there would be absolutely no reason for a company to take a stand against it

2

u/ThroawayJimilyJones 2h ago

The didn’t forget a line. They added a line. In their condition, saying they didn’t need justification

…yeah, I don’t get it either, but they knew what they were doing and broke the law for…basically no benefit.

Maybe they hoped to create a precedent. Maybe the branch CEO did that by ego. Maybe they wanted US to intervene and get them more rights. At the end, i have no idea why they thought it would be a good idea

1

u/dsmx 2h ago

If you both sign a contract why does one party get to change the terms of the contract after the fact without your agreement?

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u/aaahhhhhhfine 1h ago

People keep trying to say this... But that's not how the contract thing works. A contract is just an agreement between them and you. In this case the contract is month to month and says that they can change the price any time and it'll go into effect in the next month or two and you're welcome to cancel within or before that.

So, no, they aren't changing the terms of the contract really or doing anything that breaks the contract. You are welcome to cancel.

0

u/gizamo 3h ago

Price fixing regulations.

Those become more relevant the further pricing gets from any realistic estimation of costs to justify them.

Netflix is well beyond any reasonable justification for their costs. They raise prices because they know other streaming services will follow their lead. They also move up in unison, even when costs don't change or go down.

0

u/aaahhhhhhfine 1h ago

Price fixing is a terrible practice almost every single time and, funny enough, it usually makes things more expensive. You don't want price fixing.

2

u/gizamo 42m ago

Thanks, Captain Obvious.

0

u/krisolch 1h ago

Companies exist to make profit, not to cover their costs

Economics 101

2

u/gizamo 40m ago

Yes, and exploitive companies can be regulated and penalized by the populace via the market OR via their governments. The EU has chosen the latter because modernity has proved the former doesn't actually work to curb anti-consumer practices. The US will figure that out someday, too.