{ "id": "R46207", "type": "CRS Report", "typeId": "REPORTS", "number": "R46207", "active": true, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 615386, "date": "2020-01-30", "retrieved": "2020-01-30T23:00:37.755349", "title": "Competition on the Edge of the Internet", "summary": "Edge providers are individuals and entities that provide content, applications, services, and devices accessed over the internet. An edge provider can be a personal blog created by an individual or a website created by a billion-dollar company. Some edge providers sell products or subscriptions, while others sell consumer data or use it for digital advertising. Edge provider activities, conducted on the \u201cedge\u201d of the internet\u2014hence the name\u2014are not regulated by the Federal Communications Commission (FCC).\nEdge providers rely on internet service providers (ISPs) and mobile carriers to deliver content to users. Some companies that operate as ISPs have become edge providers, and a few edge providers with substantial financial resources have become or intend to become ISPs. This has the potential to affect competition among edge providers, as an ISP may have incentives to prioritize content from affiliated edge providers. To deliver content at speeds similar to edge providers associated with ISPs, unaffiliated edge providers may choose to incur the costs of direct connections to users\u2019 ISPs. Other unaffiliated edge providers may build or pay to use another company\u2019s content delivery networks, which use geographically dispersed servers to deliver online content and services more quickly. Mobile carriers that also serve as edge providers can also have a competitive advantage. For example, they can include their own apps on mobile devices for free, while charging other edge providers a fee. Mobile carriers can also allow users to access content from affiliated edge providers without incurring charges on the users\u2019 data plans. These actions could affect net neutrality, a term associated with the concept that all data traveling through the internet should be treated in a nondiscriminatory manner.\nSome edge providers are acquiring other edge providers for a variety of reasons, including to increase their customer base, to improve the content or services offered, or to eliminate potential competitors. By increasing its customer base, an edge provider could enhance its market position, increasing its leverage in bargaining with ISPs over the speed and quality with which its content is delivered. An edge provider that relies on digital advertising could also benefit from enlarging its customer base, as this would allow it to send advertisements to more individuals and sell more advertisement spaces to advertisers. It may be difficult to distinguish between acquisitions intended to improve the content or services offered and those seeking to eliminate potential competitors. While consumers generally benefit in the former case, the latter case could have negative effects, such as hindering innovation.\nWhile the FCC does not regulate edge provider activities, the Federal Trade Commission (FTC) and Department of Justice (DOJ) may examine edge providers on a case-by-case basis for potential consumer privacy or antitrust violations. The FTC, DOJ, and at least 47 attorneys general have reportedly opened antitrust investigations of possible anticompetitive behavior, reportedly including Google, Apple, Facebook, and Amazon. The House Judiciary Committee also opened an investigation into competition in digital markets.\nA key question in these investigations is how to define the markets within which edge providers compete. Oftentimes, edge providers offer products and services that can be classified under multiple industries. For example, do video streaming services compete only with each other, with cable networks and movie theaters, or with the entertainment industry as a whole? Should a diversified company be examined as a unified entity, or should its edge provider component be evaluated separately? Estimating the market shares of edge providers that rely on revenue from digital advertising is further complicated by the difficulty of determining \u201csales\u201d for these companies, as they may not obtain revenue from offering their content to users. \nSome edge providers now operate in multiple industries. Some companies have integrated vertically, both generating content as edge providers and delivering it to consumers as internet service providers (ISPs). Other companies have integrated horizontally by acquiring other edge providers, which could increase their customer base and expand the content or services offered, but also eliminate potential competitors. This report focuses on how horizontal and vertical integration may affect edge providers\u2019 relationships with ISPs and competition among edge providers.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R46207", "sha1": "d1d9c32f9c76e869566dedfa4ee9664431199cfc", "filename": "files/20200130_R46207_d1d9c32f9c76e869566dedfa4ee9664431199cfc.html", "images": { "/products/Getimages/?directory=R/html/R46207_files&id=/3.png": "files/20200130_R46207_images_df128c4d05d25282cf6b8f39075756c289828567.png", "/products/Getimages/?directory=R/html/R46207_files&id=/1.png": "files/20200130_R46207_images_cd560585b145aded8ba1b9ba95346064ad488a6a.png", "/products/Getimages/?directory=R/html/R46207_files&id=/0.png": "files/20200130_R46207_images_3859838a01b0c16c1538854cfea1c4152040fbb8.png", "/products/Getimages/?directory=R/html/R46207_files&id=/2.png": "files/20200130_R46207_images_a058ec5bee13748e767b2d12b05387da60416ab0.png", "/products/Getimages/?directory=R/html/R46207_files&id=/4.png": "files/20200130_R46207_images_1603d1979666c223ff0b74e677a9d14e1972925b.png" } }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R46207", "sha1": "aae4de15c44a3c957e7329b19ec513bd5d3a6629", "filename": "files/20200130_R46207_aae4de15c44a3c957e7329b19ec513bd5d3a6629.pdf", "images": {} } ], "topics": [] } ], "topics": [ "Industry and Trade" ] }