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Just weeks ago, Ebay and Yahoo joined forces to combat Google’s rapidly expanding marketshare; and not long after, Google announced plans to launch Gbuy in the coming months, which will directly challenge Yahoo and Ebay’s payment systems. What on earth could have possibly united these Internet giants in a common cause to produce this stunning latest SE news, when they are duking it out so bitterly? Interestingly enough, it was a little-known Democrat-backed amendment called the “Net Neutrality Act.”

The Net Neutrality Act sought to rigidly enforce neutrality toward all sites, which meant that broadband companies would not be able to give preference to one site over another. While Internet giants like Google, Ebay, and Yahoo fiercely opposed this amendment – in some instances even sending out personal emails to all registered members, calling them to action – AT&T, Verizon, and Time Warner fired back, appealing to Republican legislators to reject this amendment, which they view as government intervention in business.

These telecommunications giants claim that they have already been significantly restricted by government regulation in the delivery of their services; and that doing so further will simply continue to hinder their ability to provide low-cost services to their customers. While this argument may have been persuasive, most economists would label it invalid.

Government restrictions on Internet service providers have actually given them a virtual monopoly wherever they are allowed to operate, allowing them to raise prices and to reap monopolistic profits. For them, however, it makes sense to oppose this amendment, which clearly would prevent them from siphoning off even more profit, which they plan to do in the near future.
All of this latest SE news makes sense, but what is in it for Google, Yahoo, and Ebay? What economic incentives drove them to fight for the amendment’s passage? They may have a general concern for their members – and may genuinely believe that the rejection of such an amendment would hinder their members freedom – but they were at least partially motivated to oppose the new power that would grant telecommunications giants.

If AT&T wanted to, it could extort Google, Yahoo, and Ebay – and force them to pay exorbitant fees if they wanted their sites to load quickly. To me, that seems a far more reasonable reason for opposing it, at least from Google and Yahoo’s perspectives.

They both ban sites from their own indexes and also accept money to place sites in places they can be found more easily through their Adwords and Yahoo Publisher Network programs. However, it was quite contrary to what their messages were in DC this week.

Ultimately, Google, Yahoo, and Ebay lost — the giant telecom companies won, as the first Internet amendment to the constitution was rejected by a fairly significant majority this Thursday.

What does this latest SE news imply for the future of the Internet? It implies that all sites will no longer have to be viewed neutrally by telecommunications companies. If telecom companies want, they can now levy fees on websites; and even create a “fast lane” for video and flash sites that are willing to pay higher fees. This means that the Internet, the last true bastion of the freedom of speech, will be regulated by businesses for the benefit of businesses, not for the benefit of the average consumer.

What compounds things even further about this latest SE news is that these companies are already regulated by Federal law. This means that most towns in the United States must choose one broadband company or the other, preventing competition between the two.

Although the regulation actually makes sense (by preventing the build-up of extra, unnecessary telecom cables and equipment) it will have to be cast in a different light following this latest SE news. It now means that telecommunications companies can decide what we can and cannot view on the Internet (most likely by giving preference to the highest bidder) – all while hiding behind older legislation, which would effectively prevent consumers from switching to the provider that is least restrictive and greedy.

How will this latest SE news affect you? It all depends on how you use the Internet and what you do for a living. If, for instance, you own an Internet-based home business, you might be sorely disappointed by this news, as it means you might have to start paying a form of taxes to multiple broadband providers just to get viewed.

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Mary Murtha

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