More Thoughts on eBay-Skype Merger and What It Means for Net Neutrality Debate in Particular

[cross-posted from the PFF Blog]

Well it seems that the eBay acquisition of Skype is the hot high-tech issue du jour on the PFF blog, so let me add just a few thoughts to what Kyle and Ray have already said. Specifically, I want to pick up right where Ray left off when he ended his essay wondering what ramifications this alliance might have for the debate over ‘net neutrality’ regulation.

But first, let me just say that I can immediately think of a few ways that this deal will benefit consumers. In fact, as an avid eBay-er who has moved his last 4 cars on the site, I can give you a perfect real-world application. When I am selling or looking to buy a car on eBay, I often trade quick e-mails with others to get or send info about the vehicle. But I sometimes think it would be a heck of lot easier to just pick up the phone and call the person to get the job done. Few people, however, want to put their cell or home phone on the site. But what if eBay offered a secure way for buyers and sellers to make auction-specific phone calls? Now that would be very, very cool. With Skype, eBay can now make that happen. For example, I’m about to sell a BMW that I bought on eBay four years ago. As part of that auction, I would love to be able to provide an VoIP phone number just for this specific auction that bidders could use to contact me for more detailed information about the vehicle. That way, when I get a call on that Skype phone number, I know it’s about the specific car I have for sale, not anything else. And when that auction ends, that specific phone number could disappear or perhaps I would use it for a future auction.

Anyway, that’s just one potentially interesting way that eBay might be able to use Skype to augment its already wonderful auction services. I’m sure they will find many other innovative ways to use the service.

But let me turn to the net neutrality issue. I suppose there are two ways to look at how this alliance might impact the debate (if it does at all):

(1) eBay, which has been a vociferous supporter of net neutrality (NN)mandates, might argue that this merger gives them even more reason to back NN regs. They might claim that their new VoIP services will require regulators to get aggressive about enforcing NN rules to ensure that their new VoIP offerings are now adversely impacted by the actions of broadband service providers (BSPs).

(2) But let’s look at the flipside of the equation and think about the future. If the NN rules could be used by eBay against various BSPs, could it not be the case that others might seek to use the NN regs against eBay at some point in the future? After all, the “net” in net neutrality refers to networks and eBay has two major networks now–an amazing auction service and a VoIP service. Presumably, much like they did when they acquired PayPal, eBay plans to assimilate Skype’s VoIP network services into its unparalled online auction network.

So, let’s revisit the scenario I described above. eBay not only integrates Skype services into their auction pages, but they only allow you to use Skype for all VoIP-related activities, much like they only allow you to use PayPal as a digital payment service. Personally, I don’t have any problem with this. While eBay has a strong grip on the online auction market, there are no significant entry barriers in this field and no government regulations restricting entry either. So I say let eBay use Skype and PayPal as their exclusive, vertically integrated services of choice.

But, at some point, I can see someone raising a big stink about these practices, especially as eBay’s stronghold on the market (and its profits) continue to grow. But, unless such a critic is willing to push an antitrust case, there’s not much the government can do to interfere with this process.

If NN regs were on the book, however, things might be a little different. As VoIP comes to be more heavily regulated by the FCC, I can imagine a day when someone might seek to creatively interpret NN principles to say that eBay was doing something potentially illegal by restricting access to other VoIP carrier over the eBay network. The critics could argue that since eBay has such a strong position in the online auction marketplace, “special” rules need to apply to how it behaves. Hence, net neutrality regs should require eBay to open its system to competing VoIP systems (and perhaps independent digital payment system after that).

I will admit that this scenario is a little far-fetched today. But who’s to say what a net neutrality regulatory regime will look like in the future? One of the many things I find so troubling about NN mandates is the remarkably open-ended nature of “digital non-discrimination” regulation. Today’s targets are clearly the Bells and cable companies. But tomorrow it could be someone else. Maybe even eBay.

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