Go to your local seafood restaurant, and you can let everyone on Facebook (NASDAQ: FB ) know you're eating sushi tonight. Score some hay for your cow playing Zynga's FarmVille, and you can spam your friend's list with the find -- and invite them to join you. But run out and rent Piranha 3DD from Netflix (NASDAQ: NFLX ) and no one can know how lowbrow your movie tastes really are.
In the late 1980s, legal scholar Robert Bork was being considered for an appointment to the U.S. Supreme Court. Many of his opponents were upset by his strict constructionist belief that the Constitution didn't guarantee you a right to privacy, so a news reporter sought to embarrass him by finding out what kind of movies he rented. He went to Bork's local video store, and was given what turned out to be an innocuous list of movies, which was then published in a column in what became know as "The Bork Tapes."
No doubt Congress became concerned about what people would think if their own predilections in movies became public, because they ended up passing the so-called "Bork Bill," which makes it a crime to share a person's video rental history. (Judge Bork also gave birth to the term "borking," to describe underhanded, bare-knuckle attempts at maligning someone's character. The great jurist, whose nomination to the court was ultimately defeated, passed away just yesterday.)
Netflix would be founded a decade later, in 1997, and Facebook a few years after that, so that Congress could never have guessed at the explosion and popularity of social media websites, or that people might want everyone to know that, while eating a Domino's pizza, they were also streaming the Ben Affleck and J-Lo star turn, Gigli.
A beacon in the dark
Facebook ran afoul of the Bork Bill a few years ago when it launched its Beacon advertising platform, which broadcast to its news feed list certain activities conducted at partner websites. It created a firestorm of controversy over privacy issues, but that's often been the case in how Facebook operates its business. Most recently, its photo-sharing website Instagram angered users because it said it had the right now and in perpetuity to sell the pictures you posted, without your permission, and without compensating you for them.
While they quickly backtracked after the controversy blew up, many accounts were canceled in the process, and allowed rival services like Google's (NASDAQ: GOOGL ) Picasa sharing platform to tout its own privacy protection policies (something the Big G isn't well-known for).
Evil Dead 2
But Netflix's sharing capabilities, and the fact that similar sharing isn't possible on Facebook -- at least in the U.S, although it's possible that it is in many foreign countries -- has been in the news since Congress passed a bill that would allow individuals to share their video-viewing history. Unfortunately, the House of Representatives has passed similar legislation in the past, which have never gained traction in the Senate.
With more streaming competition coming from Coinstar's Redbook service, as well as existing options from Amazon.com, Hulu, Vudu, and even YouTube, Netflix needs to be able to make itself stickier with subscribers. Rental history sharing would be one way it could do so and, as long as it was an opt-in app, there should be no concern that privacy will be invaded.
So get ready to kick back, relax, and let the world know you've got Waterworld in the DVD player -- and you're proud of it!
More expert advice from The Motley Fool
The precipitous drop in Netflix shares since the summer of 2011 has caused many shareholders to lose hope. While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why we've released a brand-new premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. We're also offering a full year of updates as key news hits, so make sure to click here and claim a copy today.