It appears that the recent Netflix settlement might not be so quickly approved. The proposed class-action settlement, which is supposed to be approved on the 18th, allows current customers to receive one month upgraded service free. So if you currently subscribe to the standard 3-DVD-at-a-time program, you would be bumped to the 4-at-a-time program if you opt in. Those who were customers prior to 15 January 2005 would get a free month of service. The problem is that if you must explicitly downgrade/cancel your service, otherwise you will be automatically billed for the higher/new service after the month is over. Well, somewhat surprisingly, the FTC has filed a brief in the case.
“In addition, even if the terms of the negative option plan were fully and clearly disclosed to class members before they chose to accept the benefit, the use of negative option features poses special problems in class action settlements. In the instant case, the Commission believes that the negative option aspect of the proposed settlement appears dangerously close to being a promotional gimmick. Specifically, the value of the benefit offered each class member is very low, both because those members who accept the benefit receive very little of value and because it is reasonably foreseeable that many class members will forgo any benefit altogether to avoid the negative option. This apparently small benefit to class members, however, provides a larger benefit to Netflix if members inadvertently either continue service at higher prices or re-enroll in the plan and continue beyond the free month based on the negative option. While the Commission has no knowledge of the strength of plaintiff’s case, it nonetheless questions whether any settlement in which a defendant benefits potentially at consumers’ expense would be appropriate.”
Finally, the FTC is looking out for consumers.
In other news, Maryland is considering a bill that would require “firms with more than 10,000 employees spend at least 8 percent of payroll on health-care insurance” is being discussed in the state’s General Assembly (Gov. Ehrlich has vetoed the bill; the debate is whether to override that veto). Guess how many companies this would currently affect. That’s right, only one: Wal-Mart.
I’m all for forcing Wal-Mart to engage in more ethical business practices, but I have concerns about writing and passing legislation targeted at one company. The fact of the matter is that this legislation would never have passed if any other companies would be affected by it. While its great to force Wal-Mart to give their employees sufficient healthcare, its also important for other large companies to hold the same responsibility. I’d be interested to see the next five or ten largest firms by employee base in Maryland to see how soon they may be impacted by this legislation and what percent of payroll goes toward healthcare in those companies.
This article brings up a couple of interesting points: a later drop in that threshold and interstate competition. The former isn’t of great concern in my opinion; legislatures generally need impetus to amend these kinds of things, and I doubt they will get any. The latter is more interesting from a more general perspective. How does mandating minimum spending on healthcare (or higher minimum wage) affect competition with other states? I’ll conveniently bypass the economic efficiency arguments by saying that I don’t think the employee threshold will drop in the near future or that another company will be soon affected by it. And since this is only going to matter to Wal-Mart, I doubt other businesses will be worried that Maryland is unfriendly to business. So I doubt that Maryland will lose any businesses as a result if the governor’s veto is overriden.
Oh, and as of today, Google is worth as much as Berkshire Hathaway. All $140 billion of it.