Meta-Deutsche Telekom spar again over data cost

Hi everyone, it’s Jillian in London. Struggling European telecom companies have another problem to deal with. But first...Three things you n [View in browser]( [Bloomberg]( Hi everyone, it’s Jillian in London. Struggling European telecom companies have another problem to deal with. But first... Three things you need to know today: • DirecTV and Dish agree to merge into the largest [US pay-TV provider]( • Cerebras filed for an IPO as the startup seeks to challenge [Nvidia in chips]( • Chinese EV makers sold the fewest electric cars in [18 months in Europe]( Who should pay? [Meta Platforms Inc.](bbg://securities/META%20%20US%20Equity) and [Deutsche Telekom AG](bbg://securities/DTE%20GY%20Equity)’s long-simmering fight over data transmission boiled over last week, as the social media giant said it was ending its relationship with Europe’s largest telecom operator. DT accused Meta of “abusing its [overwhelming bargaining power]( and Meta accused DT of setting a “dangerous global precedent.” The fight is nerdy (we’re talking about peering agreements and net neutrality rules), but it sets the stage for the renewal of a much bigger conflict in Brussels over how much big tech companies should pick up the cost of transmitting so much data. The two companies’ relationship started well. Meta, or Facebook at the time, agreed in 2010 to pay Deutsche Telekom millions each year in what’s called a direct peering relationship. This meant that instead of using a third-party transit provider, the social media company would get two dozen private connections dedicated solely for Facebook, Instagram and WhatsApp traffic. This was a win-win, as both companies benefited from providing users with better connections. A decade later, Meta wanted to pay Deutsche Telekom less. German media reported at the time that Meta wanted a 40% discount, while DT offered 16%. Meta decided that wasn’t enough and stopped their contract with Germany’s largest telecom operator. Meta’s traffic was still sent directly via these private connections and DT billed Meta as usual. Meta would not pay, and the two still could not come to a new agreement on pricing. Three years ago, DT dragged Meta to court. DT got a major win when a court in Cologne ruled earlier this year that Meta was in the wrong. By still using these private connections, the court said, Meta had not truly terminated their peering agreement with DT and owed the operator €20 million ($22 million). But Meta got the last laugh. Last week, the social media company [announced]( it was rerouting its flow of information via a third party. This means Meta will no longer use DT’s private connections and its data will show up on the operator’s network via a transit provider. Meta is appealing to another German court, but the real fight will now play out in Brussels. The court case comes at a time when European regulators are looking at how to help the struggling telecom sector. Operators spent the past three years arguing that big tech companies should help pay for internet infrastructure (a battle called “fair share” that I’ve written about [here]( and [here](. While this failed to become policy during the outgoing European Commission’s term, politicians woke up to the sector’s struggles. Former European Central Bank President Mario Draghi said last month in his policy recommendations for the next European Commission that regulators should step in and [mediate disputes]( between tech companies and telecom operators if they can’t agree to data deals themselves. To some politicians in Brussels, the latest in Deutsche Telekom’s fight with Meta proved operators’ arguments: If Europe’s largest telecom operator can’t get Meta to the table, then what hope do any other operators have?  This doesn’t mean operators can expect millions from big tech companies anytime soon. The past few years of the fair share debate showed that while telecom carriers were successful in convincing the European Commission that they needed help, the fear of disrupting the continent’s coveted net neutrality rules — the theory that all internet traffic should be treated equally — spooked enough EU countries that they backed away from the idea. Operators argue these agreements don’t violate net neutrality rules because they still provide the sites to users even if they don’t have agreements with the big tech company. Meta says these kinds of peering agreements aren’t standard across the industry, and that Deutsche Telekom should do what other operators do and have settlement-free — in other words, no-cost — peering agreements. “These relationships are the accepted global standard and operate settlement-free to either side because they benefit everyone,” Meta wrote last week. The fight also comes at an interesting time when I hear more operators like BT Group Plc are focusing on working with the data-intensive social media and entertainment companies to better manage their traffic. But companies like Deutsche Telekom are defiant. They’ve put the money and the time into creating networks that provide the best experience possible for customers: Shouldn’t companies like Meta pay for it? The kinds of money these operators could get from Big Tech will never cover the struggling European telecom sector’s cost of capital, but expect to hear more about it. Companies like DT are just getting started.—[Jillian Deutsch](mailto:jdeutsch24@bloomberg.net) The big story Jonathan Kanter, the assistant US attorney general for antitrust, has helped lead the Biden administration’s effort to [revive oversight of competition]( in corporate America. Kanter and FCC chair Lina Khan have taken on Big Tech giants Google, Apple and Amazon during one of the most confrontational chapters in recent US regulatory history. One to watch [Empower Chief Investment Strategist Marta Norton joined Caroline Hyde on Bloomberg Technology to discuss the DirecTV-Dish merger and the rising number of deals this year.]( Get fully charged Epic’s antitrust feud with Google took another twist when the game maker accused the Alphabet Inc. company of conspiring with Samsung to [block rival app stores.]( Michael Dell sold more than $1 billion of [his company’s stock](. Finnish health tech company Oura is nearing $500 million in annual revenue and is preparing to release a [new fitness-tracking ring]( A California lawmaker who authored the just-vetoed bill to regulate AI safety says the [issue isn’t going away](. More from Bloomberg Bloomberg Screentime: The swiftly shifting entertainment-business landscape — from the ascendance of women’s sports to the impact of artificial intelligence on content creation, new disruption in gaming to strategies for winning the streaming wars — is on the agenda at the Screentime conference Oct. 9 — Oct. 10 in Los Angeles. Join Bloomberg’s Lucas Shaw in conversation with media executives, actors, dealmakers and trendsetters from Sony Music Group’s Rob Stringer to Snoop Dogg. Don’t miss our exclusive, in-person experiences as we help define the next era of pop culture. [Get your tickets today](. 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