QuestionAugust 4, 2025

Netflix keeps track of everything you watch to better recommend new titles to you. While this obviously encourages you to use Netflix and keep the service.how does it help Netflix's bottom line? It lowers the average total cost. It constrains contestability. It discourages antitrust action. It aids in Netflix's standard war.

Netflix keeps track of everything you watch to better recommend new titles to you. While this obviously encourages you to use Netflix and keep the service.how does it help Netflix's bottom line? It lowers the average total cost. It constrains contestability. It discourages antitrust action. It aids in Netflix's standard war.
Netflix keeps track of everything you watch to better recommend new titles to you. While this obviously encourages you to use Netflix and keep the service.how does it help Netflix's bottom line? It lowers the average total cost. It constrains contestability. It discourages antitrust action. It aids in Netflix's standard war.

Solution
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Answer

It lowers the average total cost. Explanation 1. Analyze the impact on costs By tracking user preferences, Netflix can optimize content recommendations, increasing user engagement and retention. This efficiency in retaining customers helps spread fixed costs over a larger subscriber base, effectively lowering the average total cost. 2. Evaluate contestability Tracking user data does not directly constrain market entry or exit (contestability) for competitors, so this option is less relevant. 3. Consider antitrust implications Personalized recommendations based on user data are unlikely to discourage antitrust action, as they do not inherently reduce competition or create monopolistic practices. 4. Assess standard war relevance In a "standard war," companies compete to establish a dominant platform. While personalized recommendations enhance user experience, they do not directly contribute to winning a standard war.

Explanation

1. Analyze the impact on costs<br /> By tracking user preferences, Netflix can optimize content recommendations, increasing user engagement and retention. This efficiency in retaining customers helps spread fixed costs over a larger subscriber base, effectively lowering the average total cost.<br /><br />2. Evaluate contestability<br /> Tracking user data does not directly constrain market entry or exit (contestability) for competitors, so this option is less relevant.<br /><br />3. Consider antitrust implications<br /> Personalized recommendations based on user data are unlikely to discourage antitrust action, as they do not inherently reduce competition or create monopolistic practices.<br /><br />4. Assess standard war relevance<br /> In a "standard war," companies compete to establish a dominant platform. While personalized recommendations enhance user experience, they do not directly contribute to winning a standard war.
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