Netflix Cancels Recommendation Engine Contest, Settles Privacy Lawsuit

There won’t be a second edition of the Netflix (s NFLX) Prize contest any time soon: The company announced today on its blog that it has canceled the next round of its competition to improve its algorithms in light of an FCC investigation of potential privacy issues. It also said that it settled a lawsuit alleging privacy violations, but didn’t provide any details about the settlement. From the blog post:

“In light of all this, we have decided to not pursue the Netflix Prize sequel that we announced on August 6, 2009. We will continue to explore ways to collaborate with the research community and improve our recommendations system so we can constantly improve the movie recommendations we make for you. So stay tuned.”

Netflix had pitted teams of researchers and hobbyists against each other with its first Netflix prize contest, promising one million dollars to the team that would be able to improve the company’s recommendation algorithms by 10 percent. The competition went on for three years, but Netflix eventually awarded the prize last September to a group that dubbed itself “BellKor’s Pragmatic Chaos.” The second iteration of the prize contest was supposed to take advantage of demographic and behavioral data, but it became quickly clear that the use of this data would have huge privacy implications.
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