Netflix has long been one of the louder voices when it comes to defending net neutrality, so it came as a bit of a surprise last week when the company’s CEO, Reed Hastings, said he’s “not too worried” about what’ll happen to it under the Trump administration.
“Even if the formal framework gets weakened,” Hastings said in response to questions from The Verge, “we don’t see a big risk actualizing, because consumers know they’re entitled to getting all of the web services.”
Consumers expect Netflix, and internet providers know it
Basically, Hastings says that if net neutrality as it currently stands gets spiked — and it sure sounds like Republicans want that to happen — consumers will demand that internet providers let them access any streaming service they like, so it’s not a problem.
But what Hastings may actually mean is that consumers now know they’re entitled to get Netflix, and that internet providers would be pretty foolish to mess with it.
The comment comes off as a striking change of pace for Hastings, whose company has long supported net neutrality rules. But if you look back through Netflix’s history of supporting open internet protections, a pretty clear picture starts to emerge of self-interest, with Netflix only looking out for net neutrality when it was a business advantage and ignoring it when doing so was more convenient.
Take a trip with me through five years of Netflix’s net neutrality commentary to see what I mean. I’m also including Netflix’s total US streaming subscribers (based on nearby quarterly earnings reports) and its stock price from the day of the quote.
April 2012 — Hastings criticizes Comcast for zero-rating
After learning that Comcast didn’t count its own TV service toward its own internet data caps when streamed through an Xbox, Hastings criticized the cable company for unfair treatment.
“Comcast no longer following net neutrality principles,” he wrote on Facebook. “Comcast should apply caps equally, or not at all.”
This is a pretty good starting point, since it shows Hastings supporting net neutrality at a time when Netflix’s streaming service is just getting started — it’s been less than a year here since it was split off from the DVD service. Hastings’ concern is very specific, too: he’s flat out opposing zero-rating, which makes Netflix less appealing than an ISP’s competing service.
Stock price: $14.45
January 2014 — Netflix says it’ll make subscribers revolt if internet providers get in the way
After the FCC’s 2010 net neutrality rules got struck down in court, Netflix essentially threatened internet providers to behave.
“Were this draconian scenario to unfold with some ISP," Netflix wrote, "we would vigorously protest and encourage our members to demand the open internet they are paying their ISP to deliver."
Keep this quote in mind, as it basically explains Netflix’s stance today.
February 2014 — Netflix starts paying interconnect fees
Throughout 2014, Netflix would make deals with Comcast, Time Warner Cable, Verizon, and AT&T to speed up its traffic at so-called “interconnect” points between internet backbones and service providers’ networks. Comcast is the first of them.
Netflix is very unhappy about this and would make clear that it felt internet providers were essentially extorting it by making the company pay for interconnect improvements, despite already paying once for delivery.
This is a critical issue for Netflix. If it doesn’t pay, the site’s traffic will slow down and subscribers may consider going elsewhere. For Netflix, this is one of the key issues that’ll define net neutrality.
July 2014 — Netflix criticizes the FCC’s new net neutrality proposal for including fast lanes
The FCC’s proposal for new net neutrality rules came out, and Netflix wasn’t happy with them. In a strong comment, it said that “no rules would be better than rules legalizing discrimination on the internet.”
It went on to argue against allowing internet providers to offer some services at faster speeds, saying that doing so would create “an internet that looks more like cable TV, one characterized by legalized discrimination, carriage disputes, gamesmanship, and content blackouts which harms consumers.”
February 2015 — Netflix applauds FCC for adding interconnect oversight to net neutrality
So the FCC comes out with a strong net neutrality proposal, and rather than praising the whole thing... Netflix says this:
The FCC is poised to take decisive action that will ensure consumers get the Internet access they pay for without ISPs restricting, influencing or meddling with their choices. We support the commission asserting jurisdiction over interconnection and implementing a case-by-case process that prevents ISPs from charging unfair and unreasonable tolls. If such an oversight process had been in place last year, we certainly would've used it when a handful of ISPs opted to hold our members hostage until we paid up.
It’s a generally positive statement, but the only thing Netflix really applauds is the addition of interconnect oversight.
When the FCC actually votes to enact the rules, Netflix does the exact same thing, issuing a statement focused on the importance of interconnect oversight: “Today’s order is a meaningful step toward ensuring ISPs cannot shift bad conduct upstream to where they interconnect with content providers like Netflix,” the company wrote.
This is a huge win for Netflix. Interconnect wasn’t even part of the conversation when the net neutrality debate started, and here it was in the final rules.
March 2015 — Netflix makes a deal in Australia to be exempt from data caps
After criticizing Comcast for its zero-rating practices just three years earlier, Netflix makes a deal with an Australian internet provider to be exempt from data caps.
“Zero rating isn't great for consumers as it has the potential to distort consumer choice in favor of choices selected by an ISP,” the company wrote in a statement. “We'll push back against such efforts, but we won't put our service or our members at a disadvantage.”
It would walk back that statement a month later, saying “we should have avoided” the deal.
Still, it’s a hypocritical position for Netflix to have put itself in. It spends years criticizing zero-rating and pushing for net neutrality, then immediately violates those causes as it prepares to launch in a new market.
July 2015 — Netflix supports Charter–TWC merger, which includes interconnect protections
Back in 2014, Netflix came out in opposition of Comcast’s attempt to buy Time Warner Cable, saying the combined company might have too much leverage to charge “arbitrary” fees.
A year later, Charter comes along, and Netflix is cool with it. Why? Charter said it wouldn’t charge interconnect fees through 2018. “Charter's new peering policy is a welcome and significant departure from the efforts of some ISPs to collect access tolls on the internet,” Netflix wrote.
It’s a pretty clear reminder of where Netflix’s interests lie.
January 2016 — Netflix has no problem with T-Mobile’s Binge On service
The initial version of T-Mobile’s zero-rating service, Binge On, only exempted select video providers from the carrier’s data caps. But Netflix was among those companies, and it had no complaints.
“They’re not charging any of the providers. It’s an open program,” Hastings said in defense. “Many of our competitors such as Hulu and HBO are in the program also."
Again, here’s Hastings in 2012: “Comcast should apply caps equally, or not at all.”
March 2017 — Hastings says he isn’t worried about net neutrality being weakened
And that brings us to last week, when Hastings continued to walk back Netflix’s commitment to net neutrality. “We don’t see a big risk actualizing, because consumers know they’re entitled to getting all of the web services,” he told reporters.
Netflix didn’t respond to a request to elaborate on its current net neutrality stance.
So what happened? Well, a couple things: over the past five years, Netflix’s US subscriber base has more than doubled (its international subscriber count has also gone from shy of 2 million up to 44 million). And Netflix’s share price has gained 10x.
That means its leverage (and its ability to pay) has increased enormously since the days when net neutrality was truly an issue for the company. Back in 2014, when Netflix threatened to sic its subscribers on misbehaving ISPs? That would have been something. But it’s an even bigger threat today.
It’s not hard to imagine how this would play out, either. Just look at this headline from when Dish threatened to drop AMC in 2012:
The network even made a video of zombies dragging a Dish satellite around New York:
Then in 2013, AMC had customers complain on Facebook amid channel negotiations with Rogers in Canada.
And it pulled the same kind of thing when DirecTV threatened to drop AMC and affiliates in 2014:
That’s just what AMC can do. Netflix has an equally passionate audience and a huge number of internet-savvy viewers who’d be happy to make their complaints with any misbehaving internet provider publicly known. That gives Netflix a lot of leverage in any dispute.
Hastings is right that there’s an established baseline for how the internet works and what consumers expect. But that’s really been true since before the net neutrality proceedings started, and yet we still saw proposals for fast lanes and continue to get zero-rating services that violate those principles.
Netflix is now in a position where it can weather any adverse affects that might come with a weaker policy — it’s one of the giants and a company internet providers might even want on their side as part of a discriminatory internet scheme. And in some cases, like data cap exemptions, a bit of wiggle room might actually help its business.
But that’s no solace to any upstart streaming service, which might soon find itself in the same place Netflix was back in 2012: ascendant, but left out.