Netflix and net neutrality
June 14, 2016, will go down in history as either a victorious or disastrous day for the free and open Internet.
In a nutshell, it is the day a Washington, D.C., appeals court upheld the so-called “net neutrality” rules, passed by the Federal Communications Commission in 2015. The mandate, which imposes utility-like regulations on broadband services, was challenged by Internet providers that claimed the rules exceed the agency’s power (not to mention were an unnecessary burden and could, in fact, lead to increased costs for consumers). The court disagreed, announcing Tuesday morning that it would uphold the new net neutrality laws.
It’s a big win for companies like Netflix—or, well, especially for Netflix. The streaming media service has had tremendous impact on Hollywood in recent years, and while its influence on the rules that govern the Internet is less visible, it is even more consequential.
More than one-third of today’s Internet bandwidth is already consumed by Netflix. As a result the company has a lot at stake when it comes to an unfettered Internet—one that can’t be channeled into separate slow and fast lanes. Netflix has poured millions of dollars into lobbying efforts, both to squelch Comcast’s bid for Time Warner Cable (which was successful) and to spearhead the charge for net neutrality (also successful). Both of these efforts, and its more recent involvement as a “public advocate” in Charter Communications’ merger with Time Warner Cable, have been led by Christopher Libertelli, its VP of global public policy and a former FCC adviser.
In a recent interview with Fortune (which took place last month, before the June 14 decision), Netflix CEO Reed Hastings talked about his company’s role in the net neutrality debate, calling the original FCC decision a success. “That’s a big win for the consumers, and is what we think how the Internet should be laid out,” he said. “And I think people on the ISP [Internet service provider] side are grudgingly coming around to that view.”
The thing is, most ISPs aren’t coming around. In a statement issued Tuesday, AT&T’s general counsel had this to say about the appeals court’s decision: “We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal.”
Maybe June 14 won’t be that historic after all.
BITS AND BYTES
Twitter’s investment in SoundCloud feels like a Hail Mary pass. The social network put $70 million into the music service earlier this year, reports Recode. Twitter confirmed the infusion, but not the amount or the motivation. SoundCloud, popular among musicians trying to build visibility for new material, has about 175 million users. (Recode, Fortune)
Looks like Uber is raising money again. The ride-sharing company may sell a leveraged loan of $1 billion to $2 billion to institutional investors, the first time it has experimented with this sort of debt, reports The Wall Street Journal. The company has been spending money like crazy to recruit drivers and establish a presence in potentially lucrative developing markets such as China. If the sale happens, it will bring Uber’s fundraising total to $15 billion. The company’s latest valuation is around $68 billion. (Wall Street Journal)
Marc Andreessen predicts more tech IPOs, M&A. Andreessen Horowitz recently established a team to help portfolio companies prepare for initial public offerings, a signal that the firm thinks a two-year-old drought may be over, Andreessen said Tuesday at a Bloomberg technology conference. So far, there have been just two offerings this year, although Twilio’s filing this week may be a turning point. The industry should also expect more mergers and acquisitions, as evidenced by Microsoft’s $26.2 billion buyout of LinkedIn. (Fortune, Bloomberg)
How Facebook handles data ethics questions. The social network, which collects personal information about more than 1.6 billion people, has established a five-person employee team to consider legal and ethics issues. The company isn’t sharing their names. (Wall Street Journal)
Xerox names CEO for business services company. Ashok Vemuri will lead Xerox Business Services, one of two companies that will be created by a breakup of Xerox later this year. Vemuri was previously the CEO of iGate, a services organization that was sold to French consulting firm Capgemini last year for $4 billion. Xerox is still seeking a chief executive for the new document management and imaging company that will be created by the split. Its current CEO, Ursula Burns, will be chairman of that business. (Wall Street Journal)
Bain Capital, Vista Equity are out of the running in Yahoo auction. The two private equity firms teamed up to bid for Yahoo’s core Internet assets but they weren’t asked to submit a final bid, according to sources. It may be just as well, given that Vista just bought marketing software company Marketo and security firm Ping Identity. The price range for Yahoo is said to be $4 billion to $5 billion. (Fortune)
Alibaba expects to double transaction volume by 2020. The Chinese e-commerce giant is projecting gross merchandise volume of approximately $915 billion within four years, according to remarks made by executive chairman Jack Ma at an investor conference in China. The company had more than 423 million active buyers last year. (Reuters)
Dropbox CEO: We’re not profitable, but we’re cash-flow positive. The cloud software company, which has been valued at more than $10 billion based on its venture backing, is now able to fund its operations from the cash being generated by its customers, according to CEO Drew Houston. For comparison, Box executives have said they expect their company (which is public, unlike Dropbox) to reach this milestone in the fourth quarter of 2016. (Recode, Bloomberg)
The inside story of how the Verizon strike ended. Secretary of Labor Thomas Perez watched the tense negotiations between the telecommunications company and its two big unions for almost a year before the strike of 40,000 workers actually happened in April. The secret, informal meeting he convened in mid-May—on a Sunday, no less—put the talks back on track. His ultimatum later 10 days later got the deal done. (Fortune)
How ego almost destroyed Steve Jobs’ career. Ryan Holiday, founder of marketing company Brass Check and author of four previous books, was formerly director of marketing for American Apparel. His 2013 book, Trust Me, I’m Lying: Confessions of a Media Manipulator, caused a stir in the media world, exposing online journalism’s vulnerabilities.
Holiday’s new book, Ego is the Enemy (Portfolio, 2016), explores how an outsized view of one’s own importance can be professionally and personally destructive. Take Steve Jobs, he writes in an excerpt published by Fortune. Holiday believes Jobs was 100% responsible for his firing from Apple. Due to his later success, Apple’s decision to fire him seems like an example of poor leadership, but he was, at the time, unmanageable. Read the excerpt. (Fortune)
IN CASE YOU MISSED IT
Alleged Microsoft-LinkedIn inside trader may have flown an ‘iron condor’ by Stephen Gandel
This is the future of artificial intelligence by Daniel Arbess
This Uber exec says the startup ‘wants to be regulated’ by Claire Zillman
Here’s how robots could save jobs by Jonathan Vanian
Facebook takes steps to prevent suicide by Kia Kokalitcheva
Twitter makes it easier to block trolls by Madeline Farber
Intel data center guru talks about layoffs and the cloud by Jonathan Vanian
ONE MORE THING
All the things we didn’t hear about during Apple’s developer conference keynote. This year the product updates are all about software, although the tech giant showcased far fewer third-party applications than usual. Plus, Apple barely mentioned the iPad tablet, which is the centerpiece of its push to win over corporate business. (Fortune)
This edition of Data Sheet was curated by Heather Clancy.