June 05--Today: Netflix and Verizon publicly beef about broadband speeds and net neutrality. Also: Google gains as browser, mobile search market shares head in opposite directions.
The Lead: Netflix and Verizon expose net neutrality beef
Netflix's battle against Internet service providers received an open hearing Thursday, as Verizon openly asked the company to stop blaming slow streaming speeds on its broadband service and Netflix bluntly said "No."
The latest scrum in a net neutrality battle that has been raging for months began Wednesday, when screenshots showed that Netflix had begun informing customers that slower service was the result of Verizon or other ISPs, not the Los Gatos company's streaming service. In response, Verizon sent a cease-and-desist letter to Netflix demanding a stop to the practice and suggesting legal action could be taken.
"There is no basis for Netflix to assert that issues with respect to playback of any particular video session are attributable solely to the Verizon network," Verizon General Counsel Randal Milch wrote in a letter to his counterpart at Netflix, David Hyman, later adding: "The cost/quality trade-off is one Netflix has chosen."
The letter also requested information on what customers received such notices, and mentioned that a recent agreement between the companies could be harmed by these actions.
Netflix responded to the request with a statement saying that the messages were part of a test that the company does not plan to cease.
"This is about consumers not getting what they paid for from their broadband provider," Netflix's response read. "We are trying to provide more transparency, just like we do with the Netflix ISP Speed Index, and Verizon is trying to shut down that discussion."
Thursday's back-and-forth continues a fight that began earlier this year, when Verizon's lawsuit against the Federal Communications Commission's "net neutrality" rules was successful in negating the law, which attempted to ensure those who provide Internet access could not discriminate against services carried on their networks. The FCC wrote a new set of rules that allow ISPs to charge content providers to ensure broadband speeds strong enough to support their services as Netflix entered into such an agreement with Comcast.
However, Netflix CEO Reed Hastings began trashing such arrangements publicly almost immediately after signing the deal with Comcast, as Netflix's connection speeds to Comcast customers dramatically improved.
"Some big ISPs are extracting a toll because they can -- they effectively control access to millions of consumers and are willing to sacrifice the interests of their own customers to press Netflix and others to pay," Hastings wrote in a blog post in March, later adding, "While in the short term Netflix will in cases reluctantly pay large ISPs to ensure a high quality member experience, we will continue to fight for the Internet the world needs and deserves."
Netflix stock gained 1.2 percent Thursday to $428.35 as a second analyst praised the company's international prospects, while Verizon added 0.3 percent to $49.28.
SV150 market report: Wall Street gains, Google bounces back
Many stocks posted similar gains Thursday, as Wall Street enjoyed a strong session after a move to fortify European economies. Silicon Valley stocks improved Thursday as Google rebounded from recent weakness amid reports about increasing and decreasing market shares.
Google jumped 2 percent to $564.93 after three straight days of declines, as reports indicated Google's share on the Web browser market gained while its mobile search share could be in danger. The Mountain View Internet giant topped Microsoft to have the most popular Web browser when combining its Chrome desktop browser and mobile Android browser, Adobe reported. While Microsoft's Internet Explorer remains the most popular desktop browser and Apple's Safari wins on mobile, Google's efforts in both realms helped it to the top overall, the report stated. An eMarketer report suggested Google's success in mobile search may be harmed by apps that accomplish more targeted searches, such as Yelp. "The explosion of mobile app development and usage means mobile users have more -- and more specialized -- alternatives for finding information," eMarketer analyst Cathy Boyle wrote in the report, which predicted Google's share of the mobile search market would decline from 83 percent in 2012 to 64 percent in 2016.
Apple continued to post its highest prices since 2012 by gaining 0.4 percent to $647.35 even as Chinese media attacked the Cupertino company and other Silicon Valley tech giants; Cantor Fitzgerald analyst Brian White sent out a note Thursday morning that said Asian manufacturers are gearing up to begin producing smartwatch parts for Apple later this month, writing, "we expect the 'iWatch' to be unveiled with the iPhone 6 in September." Twitter jumped 3 percent to $33.89 after announcing the acquisition of Namo Media, a San Francisco advertising-tech company that should complement Twitter's largest acquisition to date, of MoPub. Other Silicon Valley social-networking companies were not as fortunate as Twitter: Facebook fell 0.2 percent to $63.19 after a WhatsApp co-founder gave some insight into life under the Facebook umbrella; LinkedIn dropped 0.7 percent to $155.24 while working on its search engine; and Zynga suffered the largest percentage decline in the SV150, falling 9.2 percent to $2.97. Tesla Motors gained 1.4 percent to $206.90 as a bill that seeks to restore the Palo Alto electric car maker's sales in New Jersey advanced and California made a new effort to bring the company's planned "gigafactory" to the state.
Up: Splunk, SolarCity, Workday, Twitter, Pandora, SanDisk, Adobe, Google, Tesla, Netflix
Down: Zynga, LinkedIn, Symantec, Electronic Arts, NetApp, Gilead, Facebook, SunPower
The SV150 index of Silicon Valley's largest tech companies: Up 10.63, or 0.73 percent, to 1,470.32
The tech-heavy Nasdaq composite index: Up 44.58, or 1.05 percent, to 4,296.23
The blue chip Dow Jones industrial average: Up 98.58, or 0.59 percent, to 16,836.11
And the widely watched Standard & Poor's 500 index: Up 12.58, or 0.65 percent, to 1,940.46
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