This was confirmed by the Next Web, (via Gizmodo) which received a statement from Netflix saying that the tracking was "part of a test to see how [it] can improve video playback quality when a member is on the go". Some users started noticing this "strange" behavior from the video streaming app but apparently, it's a test that they're doing to better improve the video playback quality.
At this point in time, Netflix says it doesn't have any plans to rollout the feature to all of its users, indicating the company may only be interested in the data it is now gathering. A few years ago, according to Gizmodo, Netflix had introduced its Make It series that featured DIY projects like socks that could tell when you fell asleep while binge watching to automatically pause the streaming.
It seems like the company is taking advantage of new activity recognition permission on Android Q which lets the developer understand whether you're in motion while using their apps. This feature allows Android phones to feed data to apps like Google Fit and track their movement and steps.
Of course, not everyone may feel comfortable letting Netflix access such data.
But does anyone really watch Netflix while they're walking? However, if that is the case, it's not clear how Netflix would be able to do anything about this, as it doesn't control smartphone connection hardware nor does it control cell towers. It can't be said with confirmation, but this freakish testing could be a part of Netflix's effort to bring its streaming service to Elon Musk's EVs.