Netflix announced it has canceled its second $1 million Netflix Prize contest due to a class action lawsuit and FTC inquiry over customer privacy. The contest was designed to improve the company’s movie recommendation system by challenging independent researchers to come up with new ways to improve their system by 10 percent.

The problem with the contest, according to the lawsuit, is that Netflix inadvertently violated customer privacy laws by providing researchers “anonymous” customer data that could easily be traced to specific customers. By settling the lawsuit and canceling the contest, Netflix avoids further action from the FTC. Netflix says they remain committed to protecting their customers’ privacy and will improve the way they use Netflix data in any future research programs.