I think the discussion misses the most important part:
The goal of the Netflix prize wasn't to come up with the best algorithm - it was to make the Netflix brand exciting and legitimate to engineers. At the time, Netflix wasn't super high-tech and I'm sure it was hard for them to get the top talent they needed. It seems silly in retrospect now, but I'm certain the reason this was approved was because they wanted the free advertising this would provide within graduate classes and academia in general.
The goal of the Netflix prize wasn't to come up with the best algorithm - it was to make the Netflix brand exciting and legitimate to engineers. At the time, Netflix wasn't super high-tech and I'm sure it was hard for them to get the top talent they needed. It seems silly in retrospect now, but I'm certain the reason this was approved was because they wanted the free advertising this would provide within graduate classes and academia in general.