1. Big tech's new worst enemy: telecoms
Telecom companies like AT&T and Verizon are racing into the digital advertising space — currently dominated by Google and Facebook — now that Washington has given them the ability to sell data to third-party advertisers.
- Why it matters: The growth rate in the digital ad market is expected to decrease over the next four years, according to eMarketer, meaning that any market share internet service providers are able to gain will eventually come at the expense of other advertising-based businesses, mainly Google and Facebook.
AT&T's proposed merger with Time Warner will be a linchpin in the battle between internet companies and the web firms that rely on their services. If the merger survives the Department of Justice challenge, AT&T and Verizon — two of the largest internet companies in the U.S. — could collectively put a dent in Google and Facebook's advertising dominance.
“What a lot of people don’t understand — and frankly this is what I think the government is missing as it relates to looking at these mergers in a backward-looking way — is we’re competing in the land of the giants... If you don’t think Facebook and Google and Amazon are the land of the giants, think again."— John Martin, chief executive of the Time Warner-owned Turner, at CES
Conservative regulators are seizing on this rationale as they pull up telecom regulations, arguing that empowering legacy telecom companies could be an way to curb the dominance of the duopoly.
- FCC's commissioner Michael O'Rielly, one of the agency's Republican members, told reporters on Monday that lifting regulations on internet service providers was the right way to grapple with the growing influence of Google and Facebook.
- The commission's Republican chairman, Ajit Pai, said last year that web giants were advocating against his net neutrality repeal to use "the regulatory process to cement their dominance in the Internet economy," adding that "the government shouldn’t aid and abet this effort."
- The effort to free up ISPs to use data for ad targeting goes as far back as March, when lawmakers voted to roll back privacy rules that covered their customer data.
AT&T and Verizon have taken major steps to take advantage of the regulatory environment that will allow them to dive deep in the ad business. Both companies are using brand safety as a major pitch to lure advertisers to their advertising platforms.
Go deeper: More from Axios' David McCabe and I in the Axios stream.