Netflix Is No Longer Worried About Net Neutrality Now That It's Massive And Successful

from the sorry,-I-got-mine dept

Once upon a time, Netflix was among the fiercest supporters of net neutrality, and a consistent critic of arbitrary and unnecessary broadband usage caps. So much so that the company effectively became public enemy number one at many of the nation's broadband providers, resulting in a steady stream of bizarre policy and lobbying attacks on the company. Netflix, we were told by a rotating crop of ISP-tied mouthpieces (even by current FCC boss Ajit Pai), was a dirty freeloader, and a nasty company responsible for most of the internet's ills.

But as Netflix has grown larger and more powerful, the company's positions on usage caps and net neutrality has, well, softened.

Back in January, a company letter to shareholders downplayed the looming death of net neutrality, suggesting that Netflix was so popular -- any attack on it would be seppuku:

"Weakening of US net neutrality laws, should that occur, is unlikely to materially affect our domestic margins or service quality because we are now popular enough with consumers to keep our relationships with ISPs stable."

Of course, what Netflix actually meant was that it's now powerful and wealthy enough to go toe to toe with giant ISPs on interconnection and other disputes. The problem: while Netflix may now be strong enough to survive a world without net neutrality, that's not necessarily going to be true for the next Netflix. Smaller companies will absolutely be hampered by the rising spread of usage caps and zero rating, which as we've long noted are increasingly being used as anti-competitive weapons against them. And the current government has made it very clear that's perfectly ok.

Netflix CEO Reed Hastings reiterated the company's confidence on this subject in a meeting with reporters last week at the company's headquarters, where he insisted the company was "not too worried" about the government's plans to gut net neutrality:

"Netflix CEO Reed Hastings says he’s “not too worried” about what will happen if new FCC chairman Ajit Pai eliminates the Title II regulations that have guaranteed a neutral internet experience for US consumers in recent years. Speaking to a group of journalists at Netflix’s headquarters in Los Gatos, California, earlier today, Hastings said he believes “the culture around net neutrality is very strong. The expectations of consumers are very strong. So even if the formal framework gets weakened,” he continued, “we don’t see a big risk actualizing, because consumers know they’re entitled to getting all of the web services."

Hastings believes that Netflix is just so damn popular, consumer outrage will magically keep ISPs on their best behavior even if Pai, Trump and the GOP kill all telecom consumer protections. But as we saw during recent interconnection feuds, ISPs have become clever at dodging blame for the congestion they intentionally caused in order to kill settlement-free peering and extract additional funds from transit and content companies (detailed in the New York AG's recent lawsuit against Charter). You'd be hard pressed to think that 10% of the population actually understood what was happening during these feuds.

That said, consumers, startups and people that care about a healthy, open internet should worry.

The new FCC has already killed an inquiry into zero rating, which means incumbent ISPs are now free to use caps to hamper competing streaming services. And with AT&T, Verizon, Comcast and Charter now effectively dictating government internet policy, you can be sure broadband competition issues will be placed on a far back burner -- resulting in a steady expansion of usage caps and overage fees. And Congress is cooking up one or more bills that will not only kill net neutrality and consumer privacy protections, but gut regulatory oversight of one of the least competitive industries in America.

But gosh, now that Netflix is large and successful (with 94 million subscribers worldwide), this is all just something that's apparently going to work itself out. We've tracked a similar trajectory at Google, where net neutrality principles slowly but surely disappeared as the company jumped into the wireless industry. With net neutrality's two biggest and wealthiest proponents wavering on net neutrality now that they've got theirs, the idea of an internet free of incumbent ISP control needs all the help it can damn well get.

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Filed Under: competition, fcc, innovation, monpolies, net neutrality, open internet, reed hastings

Companies: netflix