Are OTT Platforms Abusing Their Market Power?

As first reported by the talented and always tenacious technology commentator Kara Swisher, the chief executives of some of the world’s most dominant technology powers will appear before the House of Representatives on July 27. The drama of these four titans of tech—Amazon's Jeff Bezos, Facebook's Mark Zuckerberg, Google's Sundar Pichai, and Apple's Tim Cook—appearing before the House Judiciary Antitrust Subcommittee is certain to attract widespread attention. Beyond the potential for evanescent headlines or negative publicity, it remains to be seen whether the upcoming hearing will demonstrate Congress’ willingness to impose rules and accountability on companies that have largely operated with neither. That is why this rare opportunity for substantive dialogue should not be squandered, including the consideration of emerging public policy concerns that will shape our shared digital future.

Some of the matters lawmakers will raise are familiar. Facebook’s founder, for example, will be called on to explain his demonstrated ambivalence about the rampant disinformation and hate speech cascading across the social media network. Other questions are less obvious but equally deserving of lawmakers’ focus. At a time when consumers around the globe are embracing a new paradigm of “Over the Top” (OTT) content consumption and ushering in the era of the so-called “streaming wars,” industry leaders, particularly Mr. Bezos, should be required to address penetrating questions about whether they are abusing their phenomenal market power and acting in ways that are inconsistent with firmly established principles of neutrality and non-discrimination that, in other contexts, have served the interests of consumers and citizens around the world.

At issue is whether OTT platforms, like Roku and Amazon’s Fire TV—arguably a duopoly, with 80 million accounts combined—are using their market power to eclipse or unreasonably extort an excessive share of subscriber fees or advertising revenue from services such as Peacock or HBO Max, new entrants into the increasingly crowded and competitive ecosystem of content streaming. Today, negotiations among the various parties are stalled because of the economic demands of these new gatekeepers, in effect blocking content to consumers, who are increasingly turning away from their set-top boxes or satellite providers as a distribution channel for their favorite shows, films, news, sports and unscripted series.

The friction between the gatekeepers like Amazon and new streaming services has at times been acute. In October 2019, Amazon withheld access to the new Disney streaming app on its Fire TV platform. Following arduous negotiations, the companies came to terms. Today, however, Amazon is refusing to allow HBO Max and NBCUniversal’s Peacock on its streaming platform. Previously, Amazon withheld its Prime Video app from Google devices in an attempt to drive customers to its Fire TV service. Amazon also refused to sell Google Chromecast and Home product.

The growing influence of the digital content distribution channels is encouraging their hubris. As one OTT platform executive recently told the media trade publication Variety, “We’re not going to do a bad deal just to get a new streaming service on the platform,” even if consumers suffer the consequences of reduced choice and finite content offerings in a media landscape otherwise bulging with dynamic creativity and scale. Such aggressive tactics and possibly anti-competitive behavior are particularly problematic in the midst of a global pandemic, when consumers are advised, if not required, to shelter at home and have dramatically increased their content consumption.

A decade ago, in the first of several philosophical and legal brawls between content providers and distributors over net neutrality rules, a few basic principles united all of the players in the emerging period of broadband penetration. One principle that has largely cohered is “non-discrimination,” specifically the obligation of Internet Service Providers (ISPs) to not abuse their market or technological power to pick and choose the content to which their consumers had access. While Democrats and Republicans have disagreed on the need for regulatory enforcement mechanisms, the principle of non-discrimination against content providers has attracted broad and bipartisan support.

The principles of net neutrality and its emphasis on non-discrimination have also resonated globally and were fundamental to the internet’s rapid expansion around the world. Congress should explore ways to redeploy this cornerstone principle of non-discrimination in the OTT era by investigating the market power of the new gatekeepers and encouraging the adoption of best practices for the financial arrangements between streaming services and OTT platforms. It is an issue of growing salience. According to one market survey, nearly one-third of American consumers who subscribed to a streaming service in the past year used the OTT aggregation platforms offered by Apple, Roku, and Amazon.

Putting the needs of consumers and citizens ahead of powerful gatekeepers who could be abusing their market power—all for the purpose of marginally greater profits—should be a priority for the House subcommittee when it questions the titans of tech on July 27. We should all hope that lawmakers seize this chance to both educate and illuminate.