In the face of widespread opposition, the Federal Communications Commission rolled back net neutrality protections that prevented internet service providers from charging websites for faster download speeds. The vote fell along party lines. But one Democrat, Barack Obama’s former Federal Trade Commission chief Jon Leibowitz, dismissed net neutrality repeal as no big deal in the pages of the Wall Street Journal on Wednesday. He celebrated that the FTC would get restored authority to aggressively police the internet for anti-competitive or unfair conduct.
The op-ed contained an unusual disclaimer:
Mr. Leibowitz was a Democratic commissioner at the FTC from 2004-13 and chairman beginning in 2009. As a partner at the law firm Davis Polk & Wardwell, he represents both technology companies and broadband providers.
The reference to both industries reads as an effort to be upfront about any potential conflict of interest, but also to suggest that Leibowitz has clients on both sides of the issue, so his argument is dispassionate. Tech companies, historically, support net neutrality, while broadband providers oppose it.
But it’s not entirely clear what “technology companies” Leibowitz himself represents. When asked, he directed The Intercept to the Davis Polk website, which lists a fair number of tech companies for which the corporate law firm has done business.
However, we do know Leibowitz’s primary broadband client: Comcast, one of the biggest beneficiaries of the net neutrality repeal.
On his bio page, Leibowitz discloses that he has “advised Comcast Corporation in connection with a number of regulatory matters and acquisitions.” More broadly, Davis Polk was a key adviser in Comcast’s purchase of NBCUniversal, as well as deals with DreamWorks and Time Warner Cable (which didn’t end up being approved). Comcast “has used the New York-based law firm repeatedly,” according to Reuters. NBCUniversal’s general counsel came from Davis Polk.
So a Comcast lawyer used the Wall Street Journal to give an “unbiased” opinion on why the net neutrality repeal represented no threat to consumers. The opinion meshed seamlessly with Comcast’s own published endorsements of the FCC’s action.
Senior Comcast executive David Cohen wrote yesterday, “We have repeatedly stated, and reiterate today, that we do not and will not block, throttle, or discriminate against lawful content.” Leibowitz, in the op-ed, stated: “Every major broadband provider has committed not to block, throttle or unfairly discriminate against lawful content.” Comcast, by the way, is actually required not to discriminate, per a consent decree from the NBC merger that expires next year.
“The order returns authority to the FTC to regulate data privacy and security for the entire Internet ecosystem under a uniform federal technology-neutral framework,” wrote Cohen. Leibowitz wrote, “The plan to restore FTC jurisdiction is good for consumers because it puts the nation’s foremost privacy cop back on the beat.”
Cohen laments “political grandstanding” and “inaccurate cries of Armageddon” preventing policymakers from coming together “to develop sensible, transparent, and durable Open Internet regulations.” Leibowitz is sad that “the rhetoric over net neutrality has reached a fever pitch,” and if everyone just set partisanship aside, “Congress could cement a meaningful and permanent resolution to an issue that should have been resolved a long time ago.”
In other words, there’s essentially no daylight between Obama’s FTC head and a Comcast executive’s viewpoint on net neutrality repeal.
The disclosure that Leibowitz works for “technology companies and broadband providers,” seen to be on separate sides of the net neutrality debate, is also unimpressive because many tech giants aren’t so opposed to net neutrality this time around. Netflix has made deals with telecom companies to pay for faster speeds. And Facebook and Google have been noticeably quiet in internet-wide protests this year. So the op-ed disclosure was misleading even without disclosing the actual names of the companies, like Comcast, Leibowitz is involved with.
To go a step further, Leibowitz’s view is also wrong. Net neutrality supporters fear that kicking enforcement over to the FTC means that broadband providers would only get caught discriminating against websites after the fact. And the FTC is focusing on stopping “deception,” which critics have said could mean that if a company discloses to the customer it will block or throttle certain content, the agency won’t step in.
The FTC also doesn’t have the resources to do its current enforcement, even before adding the internet to its beat. And while a joint agreement with the FCC to allocate those resources will help, it may not be enough. This is also the agency that defied its own staff and let Google off the hook for preferring its own content in search, which happened while a guy named Jon Leibowitz was in charge.
But the big problem, which Leibowitz only tangentially cited, is that the FTC jurisdiction excludes common carriers, under Section 5 of the FTC Act. Last year a three-judge panel of the 9th Circuit appeals court, one of the most liberal in the court system, threw out an FTC case against AT&T for throttling customer data speeds for this reason. Even if AT&T provided non-common carrier services, the 9th Circuit ruled, its other business as a common carrier makes it exempt from the FTC’s jurisdiction.
The case is under appeal, and Leibowitz said breezily it’s “likely” the FTC will win. But the makeup of the Supreme Court shouldn’t raise hopes for expanded regulatory authority on anything.
Reclassifying broadband away from being a common carrier theoretically solves part of this problem. But AT&T’s argument is that it owns a landline common carrier, so it’s exempt from FTC enforcement on all its networks. If the 9th Circuit ruling sticks, it will drive not just AT&T, but all telecom and tech companies, to acquire some kind of common carrier business line to shut out the FTC. Tech firms like Google could merge with a common carrier telecom in a bid to fend off the FTC. Yahoo and Verizon have already started this possible trend.
More esoterically, companies could charter an “industrial loan company,” a type of bank that has a statutory exclusion from FTC enforcement.
The point is that you don’t want to put all enforcement responsibility into an agency that might actually not be able to enforce, pending court actions. And Public Knowledge’s Harold Feld argues that this is, in fact, the case, even beyond the AT&T common carrier dispute.
This is not the first time Leibowitz has gone to bat for his clients. His incessant criticism of the FCC’s privacy proposal led to Congress enabling internet service providers to sell personal data to marketing firms. And he signed on to a transition report on antitrust law that recommended gutting key aspects of the Consumer Financial Protection Bureau.
Democrats who are not on the Comcast payroll are expected to challenge the FCC vote. Several Democratic attorneys general have already planned a lawsuit.