Morning Report: In a surprising move to some, the US Congress has voted to stop the implementation of Obama-era privacy protection rules for broadband subscribers. ISPs and advertising giants alike probably saw this coming.
Yesterday, the US House of Representatives voted 215 to 205 to halt the implementation of privacy rules designed to protect US broadband subscribers. The vote came on the heels of the Senate vote last week, which resulted in a 50-48 majority against the new privacy rules. Both votes were largely along party lines, with House and Senate Republicans leading the charge.
The rules, approved by the Federal Communications Commission (FCC) in October 2016, were fairly simple. Among other things, the rules required that internet service providers (ISPs) disclose the kind of data they collect, to whom that data is being sold, and to give consumers the ability to opt-out of such data collection. The FCC’s regulations also required ISPs to explicitly opt-in to certain types of data being collected, like personal browsing history, application use, children’s browsing history, location and the content of communications. These measures were supposed to be implemented this month.
According to Colorado Democratic Representative Jared Polis, eliminating the privacy rules would make ISPs “more powerful than Amazon and Google.”
However, it doesn’t seem like these new privacy rules are impacting Wall Street’s perception of ISPs or advertising and e-commerce giants. Investors in ISPs, big search, social networking, and online retailers have seemingly shrugged off the rule changes.
On the day of the Senate vote, March 23rd, the S&P 500 closed more or less flat on the trading day. The passage of the bill in the Senate was likely expected and priced into the stock price of ISPs and ad giants alike. There aren’t any strong directional changes one way or the other for these companies
Yesterday, on the day of the House vote, the S&P 500 also closed flat on the trading day.
And once again, results were mixed for the small handful of companies we analyzed here.
With Republicans in both houses of Congress in alignment regarding the rollback of these FCC rules, the President will be able to sign legislation that will likely hamper both current and future efforts to enact and implement privacy measures. As former FCC Chairman Tom Wheeler wrote in an op-ed in the New York Times, “[the bill] would also prevent the Federal Communications Commission from ever again establishing similar consumer privacy protections.”
In other words, with the vote from Congress, nothing is going to change. And if the President signs the bill into law without modification, nothing will ever change again, at least when it comes to consumer privacy protections.
Although many in the internet privacy community may be surprised, and perhaps a little horrified, by the vote to halt implementation of the FCC’s consumer protections, the markets were not. It’s still unclear how exactly the rule changes will affect the internet advertising market in the long run, but for now, its business as usual.
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