View From a Height

In running through the 10-Ks for some companies, I came across this paragraph in the Risks section of Alloy, Inc.'s 10-K:

We also face risks due to a failure to enforce or legislate, particularly in the area of network neutrality, where governments might fail to protect the Internet’s basic neutrality as to the services and sites that users can access through the network. Such a failure could limit our ability to innovate and deliver new features and services, which could harm our business. The U.S. Congress is currently considering changes to the existing regulatory regime, including bills to prohibit broadband network discrimination. This proposed legislation would prevent broadband network operators from interfering with the ability of consumers to access the Internet, as well as from charging businesses for the distribution and carriage of online content and services over their networks. No assurances can be given that this or any other legislation prohibiting or otherwise limiting broadband network discrimination will be adopted.

Whatever one thinks of Net Neutrality (I happen to lean against it, at least in terms of Federal legislation), this paragraph is clearly argumentative, essentially an editorial in favor of Net Neutrality. There's nothing wrong with this, but it is an interesting development. Usually, the Risks section highlights issues without taking a position on them. "The United States may adopt the Kyoto protocols which would hamper our ability to develop new energy resources by reducing the demand for our product." Not, "The US may commit economic suicide by adopting Kyoto restrictions designed to force everyone onto bicycles."

Alloy may or may not engage in direct lobbying activities, although it almost certainly does so through trade associations. As a content provider, it has almost certainly let Congress know of its support for Net Neutrality. Despite that, Alloy believes that it's important that 1) the market know of the legislative effects on its business, and 2) the market know of its position on the issue. Whether Alloy intends it or not, its shareholders may be encouraged to pick up the phone and call their Congressmen.

Google's discussion of Net Neutrality, while briefer, uses some of the same language:

We also face risks due to failure to enforce or legislate, particularly in the area of network neutrality, where governments might fail to protect the Internet’s basic neutrality as to the services and sites that users can access through the network. Such a failure could limit Google’s ability to innovate and deliver new features and services, which could harm our business.

In Google's case, the matter is much more troubling. Google is calling for regulatory protection from the predations of private network operators, having folded like a cheap suit in the face of Chinese threats.

The use of 10-Ks to discuss political or legislative issues in more than bland terms bears watching.