Meta, Deutsche Telekom Standoff In The EU Is Something To Keep An Eye On

Telecom lobbyists have been working overtime in both the US and EU, trying to get policymakers to force internet companies to pay them billions of extra dollars for no coherent reason. These efforts, routinely dressed up as serious adult policy, usually involve false claims that tech companies are getting a “free ride” on the Internet, and should therefore give telecoms billions of dollars. You know, just because.

The effort has been particularly heated of late in the EU, where former EU Internal Market Commissioner Thierry Breton, a former CEO of France Telecom, had been pushing a plan to effectively tax tech companies on behalf of telecoms (already being paid an arm and a leg for bandwidth by tech companies and consumers alike).

It’s bad faith bullshit all the way down, and it’s an extension of the decades old net neutrality wars, which also involved predatory telecom monopolies hungrily eyeing the fat revenues of tech service companies, then concocting elaborate, creative new ways to redirect a lot of that money to themselves.

This month there’s been a notable standoff between Meta and one of the biggest EU ISPs, Deutsche Telekom (DT). DT has been demanding an end to traditional, reciprocally beneficial, free transit peering relationships in favor of charging Meta extra money simply to reach DT customers.

In a blog post explaining the stand off, Meta (correctly) refused to play along, and says it’s now striking a new partnership with a third-party transit provider:

“Following months of discussion, we are surprised and disappointed by the breakdown in negotiations with Deutsche Telekom. Meta has taken significant steps to keep its apps available directly through Deutsche Telekom, but given the court ruling concerning the unprecedented and unacceptable fees demanded, we are now routing our network traffic through a third-party transit provider, instead of exchanging traffic directly with Deutsche Telekom.”

Meta routinely operates in bad faith on a litany of issues, but this is one policy standoff in which they’re absolutely in the right.

You might recall a similar standoff between Verizon and Netflix, which resulted in Netflix users seeing streaming video slowdowns because Netflix initially refused to play along. The goal, again, is to eliminate industry standard free peering arrangements and replace them with new, barely regulated systems in which everybody pays telecoms more money than ever.

The shift is particularly problematic if you’re a company that lacks the budget or political influence of companies like Google, Netflix, or Meta.

Net neutrality expert and Stanford Law Professor Barbara van Schewick warns in a blog post that the next step for DT is to specifically punish Meta by slowing all traffic over that third party transit route, making Meta-owned services work more poorly for potentially millions of EU residents:

“If DT does this, then millions of DT internet subscribers could have WhatsApp messages that won’t load, Instagram stories that stutter, and Facebook updates that don’t update. 

Ultimately, the result of this showdown could determine whether the internet will pivot to a disastrous model where every app and site has to pay every ISP in the world.”

Some groups have warned that the EU’s telecom industry’s plan to tax Big Tech giants would simply drive up online costs for consumers, given Big Tech companies would just pass these added costs on to users already paying an arm and a leg for bandwidth. Other organizations have warned the internet could become inherently less stable as online companies try to reroute their traffic around such fees.

And in South Korea, where telecoms convinced regulators to implement a similar tax on Big Tech companies, ISPs have taken to suing Netflix simply because Squid Game was popular with consumers and that resulted in a bandwidth consumption spike. The added costs of simply existing literally drove Twitch out of the country late last year because they couldn’t afford all the additional telecom surcharges.

This idea that big ISPs are inherently owed a cut of the revenues of services traveling over their networks is what launched the net neutrality wars around the world several decades ago, when AT&T insisted Google “wouldn’t ride our pipes for free.” It’s evolved in dumber and dumber ways ever since.

These modern incarnations are easily identifiable. They usually begin with a false claim that tech companies (be it Google, Netflix, or Meta) are getting a “free ride” on the internet, despite the fact they (and their customers) spend billions of dollars on bandwidth, hosting, transit, CDN, and other telecom costs. It is, as van Schewick observes, simply an effort by telecoms to “double dip”:

“Like all of Europe’s biggest telecom companies, DT wants to get paid twice for accepting and delivering the data its customers request – once by its own internet service customers, and again by the websites and services these customers want to use. “

Telecoms have gotten the press and some policy makers to portray these efforts as good faith reforms, usually by claiming that if you let them impose broad new nonsensical taxes on internet services, it will somehow improve broadband deployment and make life better for everyone.

But in broken, heavily monopolized telecom markets (be it the U.S. or EU) it doesn’t work like that.

Tech companies pass on the new costs to consumers, raising the costs of internet-based services. Telecoms and investors pocket the proceeds while charging captive customers ever-higher rates, because they can. And everything generally becomes more unstable as companies try to navigate around the new, pointless, bureaucratic logjams created by telecoms’ insatiable need to double dip.

Trump’s chosen FCC pick Brendan Carr, who has been angling for FCC chiefdom for most of the last decade (mostly through whining about Chinese-owned social media companies he doesn’t regulate on cable TV), will absolutely be making such a system a top policy priority should Trump retake the White House in November (he wrote a Project 2025 chapter about it).

It’s all a pointless, costly, giant mess you’d like to think U.S. policymakers could competently avoid.