Netflix Facebook app is one step closer to reality

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Netflix’s efforts to launch a U.S. Facebook application that would make recommendations based on friends’ preferences passed a major hurdle in Congress on Tuesday.

The House of Representatives passed H.R. 2471, a bill that would allow companies such as Netflix to access certain consumer data from the Internet with their consent.

Netflix Chief Executive Reed Hastings had said his company’s Facebook app would launch this fall in all 44 countries where it operates except the U.S., because of restrictions under the 1988 Video Privacy Protection Act.

That law was passed in response to the disclosure video rental records of Supreme Court nominee Robert Bork during his confirmation hearings in 1987. It forbids the disclosure of people’s video rental information. When Blockbuster attempted to share a woman’s rental history with Facebook in 2008, it was sued for violating the law. In 2009, a suit citing the Video Privacy Protection Act was filed against Netflix.

If the new law, which received overwhelming approval in the House with a 303-116 vote, passes the Senate and is signed into law by President Obama, it will give Netflix a powerful new tool to retain customers who are active on the Internet’s most popular social network.

That could be useful to the company, as it lost 800,000 subscribers during the three-month period that ended Sept. 30 after a surprise price hike of up to 60% and an aborted plan to separate its DVD rentals into a new service called Qwikster. Netflix is looking to make up ground among customers and also on Wall Street, where its stock has plunged 76% since July.

Perhaps because of the good news from Capitol Hill, Netflix shares rose 5.6% to $71.96 on Wednesday even though the overall Nasdaq index was down slightly.

-- Ben Fritz

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