According to a ruling by a Berlin court, past price increases by Netflix and Spotify are ineffective.
Munich – Previous price increases by Netflix and Spotify are ineffective according to two rulings by the Berlin Court of Appeal. The reason is price adjustment clauses in the terms of use, which do not depend on the consent of customers Federal Association of Consumer Organizations (vzbv) in a statement declared on Friday (November 24, 2023).
This was preceded by a lawsuit by the Federal Association of Consumer Organizations against Spotify and Netflix before the Berlin regional court. The Chamber Court has now confirmed the previous judgment in two appeal rulings. According to Spotify, the current price increases are not affected by the ruling.
“The judgments are a strong signal,” said Jana Brockfeld, a consultant in the legal enforcement team at vzbv. “The Spotify and Netflix price change clauses attacked by vzbv are therefore not only inadmissible. The ruling could fundamentally mean the end of future unilateral price increases by streaming services in Germany.”
Ruling strengthens consumers: price increases at Netflix and Spotify ineffective
The streaming providers Netflix and Spotify are not allowed to unilaterally adjust their prices without the consent of customers, Brockfeld summarizes the court’s assessment. The verdict is not yet legally binding. It is likely that the companies will also take action against this ruling.
According to the assessment of Stiftung Warentest Netflix could take it to the Federal Court of Justice, but the chances of success are hopeless. In the case of Netflix, the consumer advice center’s lawsuit concerns the following language in the terms of use: “We are entitled to change the price of our subscription offers from time to time in our reasonable discretion to reflect the effects of changes in the overall costs associated with our service .”
Price adjustment clauses in Netflix’s terms of service
According to the Berlin Regional Court’s ruling of December 16, 2021, this wording is unclear and does not indicate that consumers can have a court examine whether the company fairly took the interests of its customers into account in such a unilateral price increase. According to Netflix, the price increases were not based on the price adjustment clause and customers were expressly asked for their consent.
“It’s a lot of money for the company,” he said Stiftung Warentest. The consumer portal has calculated that customers who started a Netflix Premium subscription by the end of 2016 have now paid up to 426 euros just for price increases. In Germany, Netflix is the second most used streaming provider for films and series after Amazon Prime.
According to the company, the ruling has no impact on Spotify’s current price increases. “The possibility of adjusting our prices is not in question and the recent court decision has no influence on the price increase that is currently being carried out in Germany, as we are not relying on the challenged clause,” the company informed IPPEN.MEDIA. According to the company, existing subscribers would have received an email with the new prices for their account and would have three months to review it and decide on the new price. (sne)
*Transparency note: We added Spotify’s statement later.