What could the new US presidency mean for Big Tech
And how will this impact the UK's TV and digital sector? Plus Netflix's live streaming technical challenges.
Now the US presidential election is over, I’ve revisited the various ongoing legal and political pressures on big tech and the media to see what the implications might be for regulation as well as mergers and acquisitions. While some nominations have been made (and another made and then withdrawn), who ends up in two key roles could have a significant impact on the UK’s TV, streaming and digital content markets.
I’ve also written about the enormous technical challenge that is live streaming following the problems users experienced during the Netflix Paul vs Tyson match. Watching it unfold must have given many people sweaty flashbacks to the stomach-churning stress of platforms falling over during live streamed events.
Before diving in, last week, I wrote about how TV production companies could get into YouTube, which prompted this insightful comment from Sam Barcroft on LinkedIn which I thought important to share:
The truth is that nearly all TV production companies will talk about this until the cows come home and then do little or nothing about it. The people that make the decision to make YouTube their number one priority above all else are the only ones that will prosper in the end. Everyone else will be likely wasting their time.
Certainly a sobering reality check from someone who has been there, done that and got the teeshirt on building a successful digital video and factual TV production company. The challenge remains for companies to structure their TV and YouTube activities while also giving both the necessary commitment over a long period of time if they want to succeed.
What next for anti-trust, social media regulation and mergers
The new US presidency could have an impact on the UK’s TV, film and digital sectors, depending on the direction of travel the administration decides to take.
Without wishing to get into the weeds on the politics of it all, or try to make any predictions, it is worth flagging how important two main roles will be for tech, media regulation and mergers over the coming years. They are the Chair of the FCC (the US Federal Communications Commission) and the US Attorney General.
Why these roles matter: the FCC is responsible for media regulation, some of which is specific only to the US, however due to the nature of the internet, other areas have a major impact in the UK and the internet as we know it. For example, the FCC is responsible for ‘net neutrality’ rules, as well as mergers involving any company with an FCC licence (so broadcasters, wireless companies etc). The Attorney General (amongst many other responsibilities) has oversight over anti-trust laws, along with the Federal Trade Commission.
So in no particular order, here are some thorny issues in the FCC and the AG’s inboxes that could have an impact on the UK market:
The Paramount and Skydance deal - if this deal is approved or blocked, how will this affect the broadcasters, networks, studios and games operations the two companies own, including of course Channel 5?
The future of Warner Bros. Discovery - rumours continue to swirl of WBD being up for sale, and buyers include everyone and anyone (Apple, Comcast?). Irrespective of what a deal looks like, the new head of the FCC will have a strong say on its chance of being waived through or blocked.
Next steps for Google - already two anti-trust cases have been lost in the last 18 months, while a third case is waiting on a judgement
TikTok - will it be blocked, or forced to be sold if it wants to continue operating in the US?
Meta and Amazon - following on from the Google fallout, both of these two companies could face similar anti-trust law suits.
These are just the obvious high profile cases, and some continue to rumble on.
To look at Google for a moment. The US Department of Justice is exploring at all sorts of measures, including breaking the corporation up, forcing it to sell off various products and services such as its Chrome browser (which has 60% share of the browser market), or making it stop paying billions each year to Apple to be the search provider on iPhones and iPads. The impact on YouTube, advertising and the internet itself is potentially significant.
There is also the question of Section 230, which tech companies in the US have used as a shield to say they aren’t responsible for the content published to their platforms. This again has significant knock-ons to the UK market, as currently there is an uneven regulatory environment depending on which company is running the platform and what content is being published. In simple terms, social platforms are allowed to publish all sorts of content and permit younger audiences onto their platforms in a way that broadcasters and advertisers are not. I’ve written before about regulation in an online world, and how some commentators think it should be reformed.
Of course, the UK is pursing its own regulatory laws for the internet, such as the Online Safety Bill due to come into effect next year.
Separately, there is also the frustration from small to medium-sized publishers and businesses that they can lose their traffic overnight due to changes to how Google, Meta et al run their algorithms. I wrote about this situation recently:
So within this context, then the two nominees for these roles potentially could have a huge impact across big (and small) tech, as well as TV and the wider digital market here in the UK and globally.
Brendan Carr has been nominated for the chair of the FCC, and therefore commentators and journalists are freshly scrutinising what his strategies and priorities might be. The Register has this piece: ‘Trump's pick to run the FCC has told us what he plans: TikTok ban, space broadband, and Section 230 reform’. While Business Insider outlines what that may mean for regulation and the shape of the internet over the coming years, noting that Carr wrote the Project 2025 section on the FCC. The document is here online, where he lists his priorities as follows:
Reining in Big Tech
Promoting national security
Unleashing economic prosperity, and
Ensuring FCC accountability and good governance.
In the Project 2025 document, Carr goes on to list a range of more detailed recommendations, such as:
Banning TikTok in the US
Reforming section 230 rules to ‘rescind Big Tech's content-moderation immunity’
Compel big tech companies to disclose their algorithms.
This Wired piece suggests that it would be a ‘radical’ view that the FCC can reform section 230 in this way, while also questioning how possible it would be in practice to make these types of changes without hitting various legal and judicial roadblocks.
Matt Gaetz was nominated to be the Attorney General, before withdrawing yesterday. His opinions on big tech were fairly well known, thanks to time spent as a member of Congress’ anti-trust committee.
wrote this piece on his observations on Gaetz’ positions, which he summarised as being ‘… part of a minority of Republicans opposing corporate power’. This Business Insider piece - ‘Trump's picks are giving Big Tech plenty of reasons to be nervous’ - says Gaetz advocated for strict anti-trust enforcement, and reports him having said he is ‘concerned about the monopoly power of Google’. And this article in The Hill outlines Gaetz’ views towards big tech, and includes the following:“If I were Big Tech, I would be very concerned about his track record on antitrust enforcement and his general view against Big Tech and big business,” said Kellie Lerner, managing partner at antitrust law firm Shinder Cantor Lerner.
Overnight, Pam Bondi was named the new Attorney General nominee - and thus far, it isn’t clear what her position will be on antitrust, big tech and other related legal issues. However, it is worth noting that Gaetz’ views weren’t unique amongst those in the new administration. This Newsweek opinion piece from July outlines that VP-elect Vance has a similar view on big tech, and this article from the Verge - ‘JD Vance is anti-Big Tech, pro-crypto’ - says:
Like many powerful Republicans, Vance sees cracking down on big tech as a way to loosen the control a handful of Bay Area companies have over the way speech is distributed online.
Having said that, there are different opinions on how tough (or indeed conversely, sympathetic) the administration will be to tech companies in reality. This Yahoo piece captures the conflicting positions held on tech and various associated laws, as well as the importance of these issues over the coming months and years.
With so much heat and froth around these nominations, until they are confirmed, many questions will remain: will AG nominee Pam Bondi share similar opinions on regulation and big tech to Gaetz? Will these nominees be confirmed, and if so to what extent will their priorities match up to their existing positions? And even if they do match up, how effectively can they implement their plans?
Again, politics aside, this is an area worth watching, because if the people hired into these two key roles share the opinions outlined, then it is possible their actions could directly impact the UK media market and therefore TV production companies in some way.
Netflix shows that live streaming is hard
During the Netflix Paul vs Tyson match, social media was flooded with users saying they were getting buffering, pixelation, and then error messages where they couldn’t access the stream at all. Some users online said they were viewing an alternative stream via Discord. Others commented how the experience made them nostalgic for the reliability of broadcast TV for live viewing, for example:
The technical viewing experience was rather brutally described as ‘unwatchable’, ‘a complete disaster’ and ‘a total debacle’. Other commentators were more tempered, highlighting how challenging delivering live simultaneous viewing over the internet can be, especially compared with broadcast TV. They went on to question how these issues can be solved within a month or two when live NFL games and WWE begin on the platform:
If the streaming problems are this prevalent on Friday night, what will they be in January when Netflix becomes the permanent home of WWE’s flagship show, Monday Night Raw? Or, more notably, what will the issues be on Christmas Day when Netflix streams a pair of NFL games?
As Sonny Bunch of The Bulwark said:
For those who have worked on the internet side of TV broadcasting, then planning how the peaks of traffic will be managed is one of the main engineering priorities for any project. The peaks of traffic that can be driven by a presenter on air saying “and to find out more, you can go to our website” are like no other: often hundreds of thousands (if not millions) of users simultaneously - in the same tiny window of a few seconds - all try to hit the same website. And then if they find it slow or can’t get on, then usually hit refresh over and over, which creates yet more load.
Planning for these concurrent users involves careful tech architecture, thorough load testing, the creation of mechanisms to distribute the content in advance as well as ensure that once certain thresholds are hit, that new users are kept in a holding pen until the load has lessened. And even with all of that preparation, a website or service can still crash under the weight of traffic. When you are live streaming actual video rather than web pages of copy and text, then these challenges are monstrously larger. In a nutshell, witnessing the Netflix stream struggle will have given many a live streaming veteran flashbacks to at least one similarly stressful experience.
I’ve written previously about the enormous investment that Netflix has made into its technical infrastructure, and why this creates a massive advantage in streaming capabilities compared with other TV networks with similar services. In a nutshell, Netflix has spent billions creating their own CDN (content distribution network):
A Streaming Media article from October 2023 said: “Unlike its peers, Netflix has made a substantial capital investment to establish its own CDN, consisting of over 17,000 servers strategically spread across 158 countries. This network is uniquely designed to bring content physically closer to end users, ensuring efficient content delivery.”
This sets them apart from most of their competitors, although other organisations have also invested in a similar manner - YouTube most obviously, but the BBC has also built its own CDN.
Possibly one of the more insightful comments were from Peter Yared, former chief technical officer for CBS - speaking as someone who has been in the live streaming technical hot seat for events like this match:
He went on to say: “…since they run their own CDN that was initially built for edge caching, they have to make sure it can handle peak live load for upstream and downstream, and for transcoding. They will get there.” (In lay terms, this means that the CDN is set up to deliver completed programmes to users on demand, rather than deliver a live stream).
Netflix have said that the match peaked with 65m concurrent streams, and Bloomberg reported that the company’s CTO said in an email to fellow employees: “…We don't want to dismiss the poor experience of some members, and know we have room for improvement, but still consider this event a huge success.”
As for WWE - which Netflix has agreed a $5bn 10 year deal for subscribers in the US, Latin American and the UK starting in January - Newsweek report that they are ‘not worried’ and have been reassured these issues will be ‘kept to a minimum’ for their events.
As recently as September, it was reported that Netflix “…insists that it was not interested in live sports rights. However, deals with the NFL and WWE, among others, have shattered that stance, with the company acknowledging live sport can be a major driver of subscriptions and support its advertising business.”
Keeping churn low (meaning the percentage of people cancelling their subscriptions each month) is a key objective for all subscription businesses, and Netflix is no different. This TV Rev article by Brandon Katz of Parrot Analytics explains that Netflix’s churn rate is 1 - 3% compared with the 5% average churn rate of their subscription VOD competitors. He goes on to explain why it Netflix’s churn rate is so low:
First-mover advantage, compelling content and good technology have helped it achieve an industry-leading churn rate and build a highly profitable model. Who knows if that’ll be enough five years from now. But in the present, there’s a reason why Netflix is the king of streaming.
Keeping a low churn rate is hugely important to Netflix, and therefore considering the global appeal of this match to audiences it could be expected the company will increase its focus on live sports and perhaps other live events (as well as obviously invest more in their live streaming infrastructure).
If this is the case, then the question follows: what does this mean - if anything - for their commissioning priorities for non-live TV and film productions?
Graph of the week
Media consultancy Owl&Co this week published the following that shows (with caveats) that at least six major players have hit profitability. Disney, YouTube and Netflix posted similar year on year growth of 15 - 16%, although obviously this comes from different sources - YouTube heavily leans towards advertising (although 4bn in subscriptions is not to be sniffed at), while Netflix and Disney are focussed on subs.
Noticeably absent is Amazon, which Owl&Co state that while from a scale perspective they are in the top four, they are not yet profitable partially due to their sports investment.
Other odds and ends - all AI related this week!
The Atlantic: There’s No Longer Any Doubt That Hollywood Writing Is Powering AI
- : An anecdotal report of a major AI film screening and the reception that followed
- : Update on my AI predictions for 2024
Last thing - if you haven’t seen it already, it is worth spending 4 minutes watching Ben Affleck articulate his vision for AI and filmmaking:
Follow @businessoftv on Twitter/X, say hi via email hello@businessoftv.com, or connect with me on LinkedIn.
If Brendan Carr can reform Section 230 against the big tech companies, that would be a tectonic shift.