Netflix is facing legal action in Texas after Attorney General Ken Paxton accused the streaming giant of misleading customers about privacy protections and child-friendly features while expanding its advertising business.

The lawsuit, filed this week, claims Netflix abandoned earlier promises to remain free from targeted advertising and extensive user tracking after launching its ad-supported subscription tier in 2022.

According to the complaint, Netflix originally attracted subscribers by positioning itself as an alternative to large technology platforms that relied heavily on collecting user data for advertising purposes. Texas officials now argue the company reversed that stance once it entered the digital advertising market.

The case alleges Netflix created what Paxton described as a “behaviour-surveillance” system that gathers extensive information about viewers, including location details, device usage, search activity, viewing habits, and content ratings. The lawsuit also accuses Netflix of sharing or exposing data to major data brokerage companies such as Experian and Acxiom.

Texas claims the streaming platform used information collected from families and children to help build a lucrative advertising business, despite earlier branding itself as a safer and more privacy-focused alternative to other digital platforms.

The lawsuit also targets Netflix’s autoplay function, which is enabled by default on both adult and children’s profiles. Paxton argues the feature encourages excessive viewing and undermines the company’s public image as a child-friendly streaming service.

Netflix’s advertising-supported subscription model has become a major growth driver for the company since its launch. Subscriber numbers on the lower-cost tier reportedly surged from 2024 to 2025, with the platform announcing advertising revenue of around A$2.3 billion during 2025 alone.

Texas officials are seeking court orders that would force Netflix to stop what the state describes as unlawful data collection and disclosure practices. The lawsuit also requests changes to the platform’s autoplay settings for children’s accounts.

The company has denied wrongdoing and said it complies with privacy and data protection laws in every market where it operates. Netflix also defended its parental control systems and privacy policies, stating it intends to challenge the allegations in court.

This is not the first time Netflix has faced legal scrutiny in Texas. In 2020, the company was indicted by a grand jury in Tyler County over its distribution of the controversial film Cuties.

The latest lawsuit adds further pressure on streaming companies and technology platforms facing growing scrutiny from regulators over advertising practices, user privacy, and the handling of children’s data online.