Court Ruling Against FTC Oversight May Affect ISP Ad Business, Edge Providers, Says Gallant
The 9th U.S. Circuit Court of Appeals Monday dismissal of an FTC lawsuit accusing AT&T Mobility of inadequately informing customers of its data throttling program (see 1608290032) could have implications for the internet advertising business and edge providers, said Cowen…
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& Co. analyst Paul Gallant in a note Tuesday. He wrote that the ruling said the FTC is "precluded from regulating any aspect of an ISP for privacy, even other units of the company. The court said that once a company is deemed a common carrier, the entire company (not just the ISP business) is exempt from FTC oversight and is only subject to FCC rules." This is "encouraging" for ISPs like Verizon, which is diversifying its online ad business through recent AOL and Yahoo acquisitions, he wrote. Those units would be exempt from FTC oversight and Yahoo might also be exempt from FCC oversight since its authority would cover only actual broadband service, he added. Google could also avoid FTC privacy regulation, he said. "Google Fiber is a Title 2 common carrier service, which may exempt all of Google -- including search, Gmail, etc. -- from FTC privacy rules," wrote Gallant. Plus, Amazon, Facebook and Netflix also could acquire a small broadband provider to avoid such oversight, he added. As a result, Congress may have to broadly rethink the privacy oversight by both agencies and this might include eliminating the FTC common-carrier exemption, which would overturn the 9th Circuit ruling. "This is certainly possible, although Congress sometimes struggles to pass telecom legislation. And ISPs probably would press for any privacy bill to include equal privacy rules for ISPs and edge companies -- likely a contentious fight," he wrote.