So now Alphabet and Netflix will have to become ISPs, quickly.
The video industry was turned on its' head this week, and the ramifications of this will take many months to fully play out.
Firstly, the district court decided to allow AT&T and Time Warner to merge. This will produce one of the world's biggest content creation firms, once it goes through. Also, it is predicted to push Comcast to offer a similar proposal for Twenty-first Century Fox, to consolidate the market further. Chip Pickering, who is the CEO of INCOMPAS - an advocacy organisation that supports competition - said: "AT&T will get a merger that nobody supports, but will have to pay for".
However, the second big story is the last repeal of the FCC rules on Internet neutrality, which will enable telecom firms, such as AT&T, to promote their content instead of their competitors. Previously AT&T did not have a lot of content, but now they have acquired Time Warner, they have a huge library including Warner Bros, TNT, TBS, CNN and HBO. All of a sudden, that ruling about prioritization is looking extremely lucrative and potent.
Both of these stories are sending chills through all video on demand services, from Netflix to YouTube. If Comcast successfully bids for Twenty-first Century Fox, American connectivity will consist of a few content vault ISPs and some software players, who will pay through the nose to provide content to their customers. Alphabet and Netflix are therefore in a worse negotiating position moving forward.
DOJ fails to block AT&T-Time Warner merger