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 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.’ ”
WHY GOOGLE WENT QUIET
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 directed users to its own Facebook page.
NETFLIX TAKES UP THE MANTLE
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 carried Netflix content at less-than-optimum speeds, videos would become grainy and unwatchable, and the company would 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 different 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.
WHY CORPORATE ADVOCACY MATTERS
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.
THE NETFLIX BACKLASH BEGINS
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 a website 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.”