Snapchat's fear: Weaker net neutrality rules
Snap, the parent company of Snapchat, filed its papers to go public this week, making it the first big tech listing of the year. But it's wary of another development expected this year that would be bad news for its long-term success.
In its filing with the SEC, Snap said it relies on current FCC net neutrality rules banning mobile providers from discriminating against content providers like Snapchat, and also preventing carriers from striking deals with certain content providers for faster, better service.
"If the FCC, Congress, the European Union, or the courts modify these open internet rules, mobile providers may be able to limit our users' ability to access Snapchat or make Snapchat a less attractive alternative to our competitors' applications. Were that to happen, our business would be seriously harmed."
Why Snap is worried: Republicans at the FCC and in Congress want to dismantle the current rules that expanded the FCC's oversight of the broadband industry. Without firm rules requiring providers treat internet traffic equally, Snapchat content could be slowed down on some networks in favor of competitors' content or apps. That wouldn't go over well with its primary user base: impatient teenagers.
The latest: On Friday, a day after Snap filed for its IPO, new FCC Chairman Ajit Pai indicated he doesn't intend to go after wireless carriers over free data, or "zero rating," programs that let consumers view certain content and apps without it counting against their data limits. (Current FCC rules allow the agency to assess these plans on a case-by-case basis and intervene if necessary.) In response the Internet Association, which counts Snapchat among its members, said zero rating can promote consumer choice. But, "when done improperly or left unchecked it can also be harmful to consumers and stifle competition online."
What's next: Republican policymakers generally agree that the current rules' prohibition of blocking, throttling and fast lanes should stay in place, but they want to vanquish provisions that gave the FCC expanded regulatory power. How they'll go about doing that is still an open question. And Snapchat, like other companies who rely on broadband networks to reach consumers, knows the devil is in the details.