Netflix Has Replaced Google as the Face of Net Neutrality

Google got burned by both sides after engaging in 2010’s open-Internet fight. Will Netflix suffer the same fate?

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Brendan Sasso
Sept. 15, 2014, 6:01 p.m.

Net­flix is rel­ish­ing its role as the cor­por­ate lead­er in the fight for net neut­ral­ity, and why wouldn’t it? By fight­ing for an open In­ter­net, the video-stream­ing site is not only ad­voc­at­ing a po­s­i­tion that would pro­tect its profits, it’s also earn­ing good­will from Web act­iv­ists and lib­er­als.

But by tak­ing a high-pro­file role, Net­flix risks learn­ing a pain­ful polit­ic­al les­son: In Wash­ing­ton, friends are fickle, and en­emies have long memor­ies.

That was the fate that be­fell Google after it car­ried the net-neut­ral­ity mantle in 2010, push­ing for an open In­ter­net at the same time Pres­id­ent Obama was mak­ing it a policy pri­or­ity. The po­s­i­tion ali­en­ated Re­pub­lic­ans, and in the end, it won Google pre­cious little good­will on the left — the com­pany was ac­cused of selling out the cause when it com­prom­ised on a fi­nal deal.

In this year’s fight, Google has kept largely quiet. The switch in roles comes as the Fed­er­al Com­mu­nic­a­tions Com­mis­sion is try­ing to craft new net-neut­ral­ity reg­u­la­tions after a fed­er­al court struck down the old ones earli­er this year. The agency’s new pro­pos­al has sparked a massive back­lash from lib­er­als be­cause it could al­low broad­band pro­viders like Com­cast to charge web­sites for ac­cess to spe­cial In­ter­net “fast lanes.”

And as Net­flix wades in­to the fray, it has drawn the ire of the same forces that went after Google in 2010. Con­ser­vat­ives and in­dustry groups are already be­gin­ning to tar­get Net­flix, claim­ing it wants all In­ter­net users to bear the costs of its data-heavy videos.

“Now that Google has stepped back, the fire is go­ing to be dir­ec­ted at Net­flix,” said Har­old Feld, the seni­or vice pres­id­ent of con­sumer group Pub­lic Know­ledge and a sup­port­er of net neut­ral­ity. “You can tell the people who haven’t up­dated their talk­ing points from 2010 to 2014 by the fact that they still say ‘Google’ in­stead of ‘Net­flix.’ “

Google paid a price for its sup­port of net neut­ral­ity in 2010. Sid­ing with Demo­crats in a par­tis­an fight helped to ce­ment Google’s repu­ta­tion in Wash­ing­ton as a Demo­crat­ic com­pany.

Lib­er­als ar­gue that net neut­ral­ity is cru­cial for pro­tect­ing on­line free­dom, and that without it, gi­ant cor­por­a­tions could dis­tort the In­ter­net for their own pur­poses. Re­pub­lic­ans, however, see it as a gov­ern­ment power grab. Reg­u­lat­ing In­ter­net traffic un­ne­ces­sar­ily re­stricts the busi­ness choices of broad­band pro­viders, slow­ing eco­nom­ic growth, Re­pub­lic­ans claim.

After the Fed­er­al Trade Com­mis­sion hit Google with an an­ti­trust in­vest­ig­a­tion in 2011, that Demo­crat­ic af­fil­i­ation was a mill­stone when the com­pany came to Con­gress for pro­tec­tion. Re­pub­lic­ans largely turned their backs or even cheered the FTC on.

Sen. Mike Lee of Utah — the top Re­pub­lic­an on the Ju­di­ciary An­ti­trust Sub­com­mit­tee and rarely a pro­ponent of gov­ern­ment in­ter­ven­tion — praised reg­u­lat­ors at a 2011 hear­ing for prob­ing Google, warn­ing that the com­pany had be­come so massive that it could “help de­term­ine who will suc­ceed and who will fail on the In­ter­net.”

Google ul­ti­mately es­caped the an­ti­trust in­vest­ig­a­tion without too much dam­age. But the com­pany learned its les­son. It now em­ploys teams of Re­pub­lic­an lob­by­ists, and its head lob­by­ist, Susan Mo­lin­ari, is a former GOP con­gress­wo­man.

Al­though it hurt the com­pany’s repu­ta­tion with Re­pub­lic­ans, Google’s stand for net neut­ral­ity did little to win it friends on the left.

In Au­gust 2010, Google worked with Ve­r­i­zon to de­vel­op a frame­work for what net-neut­ral­ity reg­u­la­tions should look like. It’s not un­usu­al for lead­ing stake­hold­ers to sit down and ham­mer out an agree­ment that every­one can live with.

But lib­er­al ad­voc­ates were out­raged that Google had agreed to a weak pro­pos­al that wouldn’t even cov­er In­ter­net ser­vice on cell phones. Google and Ve­r­i­zon were “at­tack­ing the In­ter­net while claim­ing to pre­serve it,” a co­ali­tion of ad­vocacy groups said in a state­ment.

Later that year, the FCC en­acted net-neut­ral­ity reg­u­la­tions that largely mirrored the Google-Ve­r­i­zon agree­ment. It was hard for lib­er­als to press the FCC for any­thing stronger when the lead cor­por­ate sup­port­er for net neut­ral­ity had already signed on to a weak­er pro­pos­al. Google had vi­ol­ated its own “Don’t Be Evil” motto, act­iv­ists felt.

An­oth­er reas­on that Google is quieter on net neut­ral­ity this time might be that the is­sue is just less im­port­ant to its busi­ness. It’s no longer as vul­ner­able to broad­band pro­viders ma­nip­u­lat­ing In­ter­net traffic be­cause it’s in­volved in more than just on­line ser­vices. Google now makes phones, tab­lets, smoke de­tect­ors, and — even­tu­ally — self-driv­ing cars and com­pu­ter­ized glasses. The com­pany has even be­come its own broad­band pro­vider in a few areas with Google Fiber.

The com­pany is also so large that pay­ing off a broad­band pro­vider for faster ser­vice would prob­ably not make much of a dent in its bot­tom line.

Google still sup­ports net neut­ral­ity — just not as loudly as it did in 2010. It was one of dozens of com­pan­ies to sign a let­ter in May warn­ing that the FCC’s new pro­pos­al posed “a grave threat to the In­ter­net.” It’s a mem­ber of the In­ter­net As­so­ci­ation, a lob­by­ing group that filed com­ments ur­ging the FCC to ad­opt strong rules.

When act­iv­ists and web­sites (in­clud­ing Net­flix) launched a protest last week over the is­sue, Google offered tep­id sup­port. The com­pany sent an email em­phas­iz­ing the im­port­ance of net neut­ral­ity to people who had signed up for its ad­vocacy alerts. But while oth­er web­sites dir­ec­ted users to a cent­ral protest page to help them con­tact the FCC and mem­bers of Con­gress, Google just sent users to its own Face­book page.

This year, Net­flix has re­placed Google as the lead­ing cor­por­ate voice on net neut­ral­ity.

Un­like Google, Net­flix is en­tirely de­pend­ent on its on­line videos. If a broad­band pro­vider slowed down Net­flix traffic, videos could be­come grainy and un­watch­able, and the com­pany could lose sub­scribers in droves.

Ac­cord­ing to FCC of­fi­cials who have met with Net­flix’s lob­by­ists, the com­pany has been among the most ag­gress­ive ad­voc­ates for ex­pans­ive net-neut­ral­ity rules. “They’re scream­ing their heads off,” one of­fi­cial said.

Google, however, has rarely dis­cussed the is­sue at the agency, ac­cord­ing to a re­view of pub­lic re­cords.

Net­flix is also try­ing to mo­bil­ize its massive user base to push the is­sue. As part of last week’s protest, the com­pany dis­played a sym­bol­ic load­ing icon on its site to warn users what the In­ter­net would be like without net neut­ral­ity.

Net­flix CEO Reed Hast­ings has been par­tic­u­larly out­spoken on the is­sue. “To en­sure the In­ter­net re­mains hu­man­ity’s most im­port­ant plat­form for pro­gress, net neut­ral­ity must be de­fen­ded and strengthened,” Hast­ings wrote in a blog post earli­er this year.

While Google and oth­er com­pan­ies sup­port net neut­ral­ity rules, Net­flix is one of the few that is ac­tu­ally push­ing the FCC to reg­u­late broad­band pro­viders us­ing the same leg­al clas­si­fic­a­tion it uses for phone com­pan­ies. The FCC needs to rely on a stronger leg­al au­thor­ity if it wants to en­sure the rules don’t just get struck down in court again, Net­flix and the In­ter­net act­iv­ists ar­gue. Re­pub­lic­ans and broad­band pro­viders, however, fear that util­ity-style reg­u­la­tion would stifle the in­dustry.

Net­flix also wants the FCC to ex­pand the defin­i­tion of net neut­ral­ity to in­clude a re­quire­ment that broad­band pro­viders al­low it to con­nect dir­ectly to their net­works for free. Web­sites have tra­di­tion­ally re­lied on third parties to carry their traffic to In­ter­net pro­viders, but Net­flix has be­gun ask­ing pro­viders for dir­ect ac­cess to their net­works to en­sure the smoothest video stream­ing pos­sible for its cus­tom­ers.

The old net-neut­ral­ity rules only re­stric­ted how broad­band pro­viders could handle traffic once it was on their net­works, but Net­flix is out­raged that some broad­band pro­viders are for­cing it to pay for the right to de­liv­er its traffic to their wires.

Hast­ings has bashed Com­cast, Ve­r­i­zon, and oth­er pro­viders for de­mand­ing an “ar­bit­rary tax” to reach sub­scribers. The Net­flix ex­ec­ut­ive’s at­tacks have irked the pro­viders, who re­sent be­ing ac­cused of hurt­ing on­line free­dom. There’s noth­ing wrong with in­ter­con­nec­tion fees un­der the tra­di­tion­al un­der­stand­ing of net neut­ral­ity, the In­ter­net pro­viders ar­gue.

Net­flix is es­tim­ated to ac­count for a third of all In­ter­net traffic, and broad­band pro­viders grumble that the com­pany should pay for some of their in­fra­struc­ture costs.

More than 3 mil­lion people have sent com­ments to the FCC, the vast ma­jor­ity of them call­ing for stricter net-neut­ral­ity reg­u­la­tions. So why does it mat­ter what Google or Net­flix says?

“Be­ing right is not enough,” said Feld, a net-neut­ral­ity ad­voc­ate. “If there were no com­pan­ies that were will­ing to stand up prom­in­ently, it would be a lot harder to get folks in Wash­ing­ton to pay at­ten­tion.”

Net­flix is the biggest com­pany to come out in sup­port of us­ing a stronger leg­al au­thor­ity to en­act net-neut­ral­ity rules. Moz­illa, Red­dit, Etsy, Spo­ti­fy, and oth­er smal­ler com­pan­ies have also en­dorsed the con­tro­ver­sial op­tion, but Net­flix’s sup­port provides a ma­jor boost to the ef­fort.

But Net­flix’s lob­by­ing team is tiny com­pared with Google’s Wash­ing­ton army. Net­flix only has two re­gistered lob­by­ists and spent $600,000 on lob­by­ing in the first half of this year, ac­cord­ing to pub­lic re­cords. Even in the first half of 2010, Google spent $2.72 mil­lion.

So while Net­flix’s sup­port is cru­cial to the net-neut­ral­ity ad­voc­ates, they still miss Google’s lead­er­ship on the is­sue.

Net­flix’s ag­gress­ive ad­vocacy for net neut­ral­ity has already made it a tar­get for con­ser­vat­ives.

Tech­Free­dom, a liber­tari­an group fun­ded by tele­com com­pan­ies and oth­ers, singled out Net­flix on aweb­site it cre­ated to counter the push for net neut­ral­ity. “Net­flix is try­ing to game the sys­tem to lower its costs,” the group wrote. “That means all broad­band sub­scribers would have to pay, wheth­er they use Net­flix or not.”

Ber­in Szoka, the pres­id­ent of Tech­Free­dom, said Net­flix is mak­ing a stra­tegic er­ror by try­ing to force util­ity-style reg­u­la­tions on broad­band pro­viders.

“They’ve poisoned all of their re­la­tion­ships with Re­pub­lic­ans and mod­er­ate Demo­crats,” Szoka claimed.

For now, Net­flix isn’t show­ing any signs of re­gret­ting its po­s­i­tion. It’s be­come a fa­vor­ite com­pany of many In­ter­net act­iv­ists, and it’s try­ing to use pub­lic pres­sure to shame broad­band pro­viders in­to of­fer­ing dir­ect ac­cess to their net­works for free.

Feld said he doesn’t be­grudge Google for mak­ing a stra­tegic de­cision not to be­come a light­ning rod in the net-neut­ral­ity battle again. And Net­flix may one day make the same cal­cu­la­tion it­self.

“It in­vari­ably hap­pens that when suc­cess­ful com­pan­ies get big­ger, they get more cau­tious,” Feld said. “It’s all part of the nat­ur­al life cycle.”


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