The Netflix streaming service is not allowed to raise subscription prices without further ado. The clause in the contract with the users is invalid in its previous form, the Berlin Regional Court has now decided following a lawsuit by consumer protection groups.
“Unilateral price changes are only allowed for current contracts if they follow fair and transparent rules,” said Jana Brockfeld, legal officer at the Federal Association of Consumer Organizations (VZBV), explaining her organization’s point of view. “At Netflix, on the other hand, the conditions are formulated so unclearly that they give the group scope for arbitrary price increases.”
It’s not exactly fair and transparent when Netflix grants itself the right to change subscription prices “from time to time” and “at its reasonable discretion” in the terms of the contract. Suffice it to say “to reflect the impact of changes in the overall costs associated with our service”. According to the company, this includes production and license costs, costs for personnel, marketing, financing or IT systems.
Price reductions not planned
However, according to the Berlin court, these are not clear criteria by which the consumer can understand whether the price change is justified. In view of the fact that the defendant belongs to a global group, it is unclear which costs influence the prices charged in Germany. It is not clear that only those costs may be taken into account that have a specific connection to the costs of providing the service in Germany, it said.
In addition, the clause also lacks balance. Because for the prices, the only way up is basically provided. Instead, it would be necessary to be able to pass on at least some of the falling costs, for example in licensing, to the users. Netflix, of course, sees it differently – and has appealed the verdict directly.