Netflix co-CEO Greg Peters is pushing back on European efforts to continue imposing a tax on streaming services to offset increasing high-speed internet costs required to deliver their content into consumer homes and devices.
In 2018, the European Commission (EC) proposed a temporary digital services tax on 3% of a streaming service and tech companies’ European revenue, a rule that partially ended in 2021 after the U.S. Dept. of Treasury reached an agreement with France, Austria, Italy, Spain and Britain.
Regardless, speaking Feb. 28 at the Mobile World Congress in Barcelona, Peters said the tax is unfair considering the service’s investment in local content, which he said drives consumers to spend more on broadband in the home.
Netflix has spent more than $60 billion on content over the past five years, which Peters said is equivalent to about 50% of Netflix’s total revenue over the time period.
“It is the part we play in creating a virtuous flywheel: Better, more-varied content, leading to more people willing to pay for better broadband services,” Peters said.
The executive contends any additional streaming tax would result in a reduced investment in content, which he said would hurt the creative community, undermine higher-priced broadband packages to consumers, and ultimately hurt consumers.
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“ISPs claim that these taxes would only apply to Netflix, but this will inevitably change over time as broadcasters shift from linear to streaming,” Peters said.
Citing data from the consumer group BEUC that suggests the taxes do not result in lower broadband prices and better infrastructure to consumers, Peters added that Netlfix’s operating margins are significantly lower than major ISP’s British Telecom or Deutsche Telekom.
“So, we could just as easily argue that network operators should compensate entertainment companies for the cost of our content — exactly as happened under the old pay-TV model,” he said. “But, we aren’t asking for that. I believe the better approach is for entertainment companies and operators to focus on what we each do best — creating a rising tide that will lift all boats.”