Massive Tech has an antitrust goal on its again. Here is why that ought to concern traders
The antitrust target on Big Tech’s back is growing.
With separate antitrust actions by 48 attorneys general and the Federal Trade Commission against Facebook Inc. FB, -0.29% on Wednesday, European Union indictment against Amazon.com Inc. AMZN, -0.09%.,
and a Justice Department lawsuit against the togetL from Alphabet Inc., -0.57% toget, -0.49% Google, only Apple Inc. AAPL, + 1.20% among the Big Four, has yet to undergo official regulatory action put. However, Apple is facing a high-profile private lawsuit and a backlash from developers that is anything but unharmed.
It could get worse: In addition to the lawsuits against Facebook on Wednesday, the federal and state antitrust authorities are preparing further possible measures against Facebook and Google by the end of January. This emerges from a report in the Wall Street Journal quoting people familiar with the matter.
Read more: Facebook with antitrust lawsuits aiming to unwind Instagram and WhatsApp acquisitions
“The problem of monopoly control and misinformation is one of the few areas where Republicans and Democrats agree,” Dan Wang, who teaches technology strategy at Columbia University, told MarketWatch. “They have different reasons, but they came to the same conclusion. There should be some kind of government action. “
The sense of taking action is palpable on Capitol Hill, though it remains unclear when more action can be taken and how far they will go.
The dominance of big tech “has real ramifications for businesses operating online and whether those markets are open and fair or increasingly controlled by just a few dominant firms,” said Rep. David Cicilline, DR.I., its antitrust subcommittee one Violation issued a 449-page report in October with remedial measures such as divesting businesses and blocking large acquisitions.
What impact will inevitable antitrust actions have on technology stocks and innovations outside of Apple, Amazon, Google and Facebook? So far, it hasn’t hurt the stocks of the four companies – each company is up at least 30% in 2020, and their total market value is $ 5.5 trillion.
In the short term, the threat could be substantial as large corporations do their best while haggling with the federal government in court and closely monitoring lawmakers threatening criminal law.
“I see it as a mixed bag of positive net results” for Silicon Valley, Matthew Cowan, general partner of venture capital firm Next47, told MarketWatch. “Any major acquisition of the top five tech companies, including Microsoft MSFT, will be -0.60% chilling..
On the other hand, it will drive companies like Google to be more cautious in their business practices and innovate in startups.
“The antitrust enforcement threat is almost as effective as the enforcement,” added Cowan.
Luigi Congedo, lead analyst for venture capital firm BootstrapLabs, told MarketWatch that he expects “more competition, more talent distribution and more IPOs in the short term.”
For much of the second half of 2020, Google and Facebook were kept from entering into large M&A deals, despite a number of billion dollar tech deals based on data analysis from news site The Information. That could change if Facebook moves on with an allegedly planned purchase of Kustomer, a customer relationship management startup, for $ 1 billion. However, the likelihood of such a deal has likely decreased significantly with the antitrust lawsuits filed against Facebook on Wednesday.
At the same time, Google continues to plan its proposed $ 2.1 billion (F0 -0.42%) purchase of Fitbit Inc. FIT – the EU will approve the deal – and is reportedly planning a buyout of ShareChat, one of them Social media company, $ 1 billion platform based in India.
From 2019: How experts assess the antitrust weaknesses of Big Tech
Executives at major technology companies are carefully weighing the benefits of major mergers and acquisitions versus their impact on regulatory oversight, said John Chambers, former CEO of Cisco Systems Inc. “Regulation and antitrust law are coming and absolutely part of a company’s strategy. Chambers told MarketWatch.
Litigation could take years or reduced charges could be resolved quickly as armies of lawyers on both sides battle it out in court, says Constantin Kogan, managing director of Wave Financial, which provides financial services and software to small businesses.
According to GlobalData, a leading data and analytics company, anti-trust and related keyword mentions increased more than 100% from Q1 to Q3 this year for all company filings compared to the same period last year.
One thing is certain for now: President-elect Joe Biden is expected to face the giants of Silicon Valley over antitrust law, data protection and misinformation in a sharp departure from the policies he pursued as Vice President under President Barack Obama, which the current support of both Parties to the Restriction of Big Tech.
“The evidence we reviewed showed that by controlling access to certain markets, these companies can select winners and losers across the economy,” said Cicilline, chairman of an antitrust subcommittee for the House, who published a scathing report on the business practices of Big Tech published the UBS European Virtual Conference on November 10th. “Not only are they dominant, but the evidence shows that they abuse their dominance in two important ways – by exploiting companies that rely on their platforms and excluding rivals.”
The report, released in October, concluded that Big Tech posed a serious threat to the markets that may require the liquidation of the best-known U.S. tech companies and capping their acquisitions – the same remedial actions that were filed against Facebook on Wednesday Lawsuits were proposed.
Heading into 2021, probes from the four major U.S. tech companies have surfaced in the U.S. and Europe, each facing various charges of antitrust abuse, data breach, and other misconduct.
However, each examination has its limitations, such as: B. how the Biden administration deals with the Google and Facebook cases inherited from the Trump administration. Uncertainty about control of the US Senate; whether the EU gives the US authorities a clear roadmap for regulation; if more developers join Epic Games Inc.’s lawsuit against Apple; as well as how the COVID-19 pandemic is affecting efforts.
See Also: Will Video Games Be The Achilles Heel For Apple, Google In Antitrust Investigations?
The game developer sued Apple in August, claiming the smartphone giant was “monopoly” with its app store practices, allowing Apple to generate up to 30% of its revenue from digital purchases from apps downloaded through its app store.
Epic had tried accepting payments through its own technology in “Fortnite” on iOS devices, but Apple removed the game from the App Store because developers were unable to bypass the App Store’s traditional payment mechanism.
“COVID-19 will absolutely be the catalyst for big tech disintegration, but it’s indirect,” said Scott Galloway, professor of marketing at New York University’s Stern School of Business.
Galloway, whose most recent book “Post Corona” recently told MarketWatch that the incoming Biden Harris administration is already having an impact on the actions of Facebook and Twitter TWTR, + 8.43%,
who began to identify misinformation related to the US elections on their platforms from the beginning of the fall.
“We will have antitrust law, it will be slower and more conscious. It will not be legislation or policy that fails to stand up to legal scrutiny, ”said Galloway.
For more information on each company’s potential cartel pathways, see the following reports:
Amazon and antitrust law: At the start of the EU investigation, the US is considering similar measures
Apple and antitrust law: “Fortnite” dispute could open floodgates for a serious examination of the most valuable US company
Google and antitrust law: Big Tech’s first goal could include more legal action
Facebook and antitrust law: Efforts to force spin-offs from Instagram and WhatsApp begin a long legal journey