Yahoo Finance

The latest chapter in the net neutrality debate is set to unfold Thursday, as the Federal Communications Commission is expected to approve regulations that would treat Internet service like a public utility.

The policy change would mean companies could no longer pay Internet service providers for faster connection speeds, a practice the telecommunications industry believes is best left to the free market.

Small tech firms, however, say they lack the financial lobbying power necessary to give them a fair shot online. Treating the Internet as a public utility would mean content from every website would be delivered at the same speed.

The plan has caused a rift between companies in Silicon Valley, one that should continue well beyond the FCC’s announcement Thursday. Here are three companies Zacks is watching as the debate heats up.

Tumblr’s Parent

Smaller tech startups have banded together in opposition to telecoms lobbying for lax Internet regulation. One major group that’s pushing for stronger rules includes Etsy Inc, Kickstarter Inc, Vimeo LLC and Tumblr, the blogging service owned by Yahoo Inc (YHOO).

While Yahoo is large, mature company that can benefit from fast lanes provided by telecoms, it also has a lot of its future staked on the success of Tumblr. CEO Melissa Mayer promised Tumblr fans, after Yahoo acquired the company in 2013, that Yahoo would not “screw it up,” and staying aligned with Tumblr’s political goals may prove tricky for its parent. (Read more: Yahoo! Takes Another Step to be a Mobile First Company)
 
Telecom Giant

The companies in power are wary of allowing the government to meddle in Internet traffic. To be sure, companies such as Comcast Corp (CMCSA) believe that they can do a much better job of regulating themselves, saying the government is ignoring many of the potential downsides of net neutrality.

Making the Internet completely neutral would prevent telecoms from policing certain types of users, such as those who download and swap files illegally. Others sectors of the Internet, like those related to medical  services, benefit from faster, uninterrupted services, and companies like AT&T feel they should be able to support those services for societal benefit. (Read more: Comcast Q4 Earnings in Line, Revenues Beat Estimates)
 
The King of Search

One company has remained oddly silent in the most recent rounds of the net neutrality fight. Formerly a major proponent of government intervention, Google Inc (GOOG) has quietly shifted to a more ambiguous position, mainly because its dominance of Internet traffic makes the current lack of regulation favorable for the company.

Nearly a decade ago, Google and Facebook (FB) led the coalitions against telecoms to enact net neutrality standards. But now Google’s Executive Chairman Eric Schmidt is telling the White House that president’s new policy is a mistake, the Wall Street Journal reported.

Google may have more to gain from the status quo. As it has begun building its own broadband network, it seems to be challenging AT&T Inc (T) and Comcast for control of Internet traffic. While net neutrality once was essential to Google’s growth as a business, it no longer needs the regulation to succeed as a company. (Read more: Google in Talks to Launch Project Loon)
 
Check back Thursday for the latest coverage on these stocks and more from Zacks Investment Research.

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