Regulators are taking on Big Tech

US regulators have launched a concerted attack on the Silicon Valley tech giants. Could their glory days soon be over? Matthew Partridge reports.

950_MW_P09_Shares
America's antitrust police are on the warpath

Investors have "pummelled" technology stocks, says The New York Times. Facebook shares fell by more than 7% last Monday, while Google and Amazon shares were also sharply lower. US regulators are reportedly "divvying up antitrust oversight of the Silicon Valley giants", with the Justice Department agreeing "to handle potential antitrust investigations related to Apple and Google, while the Federal Trade Commission will take on Facebook and Amazon". At the same time, lawmakers are investigating "whether they have stifled competition and hurt consumers", and are even considering updating antitrust laws "to keep up with an industry that didn't exist when antitrust laws were written".

It's "hard to deny" that the big tech companies enjoy a huge degree of market power, say Robert Cyran and Gina Chon on Breakingviews. For example, Amazon "controls about half of the US e-commerce market" while Alphabet dominates internet advertising thanks to a 95% share of mobile search. An antitrust investigation is a "no brainer". Still, the agencies will "struggle to prove that consumers are being harmed by their huge scale" especially since Internet users are "lavished with free services" by Google, while Amazon provides "countless products at generally low prices". After all, a previous investigation into Google "ended with a whimper" in 2013.

Regulators "would do well to remember that past crackdowns on tech behemoths have come only after good old competition did their job for them" says Dan Gallagher in The Wall Street Journal. For example, Google, and its parent company Alphabet, "is showing on its own that it is far from invincible". For instance, its search dominance has failed to translate into other markets, such as smartphones, where Google Pixel has a mere 1% share.

Is the tech sector's time up?

Recommended

The MoneyWeek Podcast: let's talk about bubbles
Stockmarkets

The MoneyWeek Podcast: let's talk about bubbles

Merryn and John talk about the many obvious signs of a bubble in certain assets, including tech stocks, TikTok, and stock-trading 12-year olds. It's c…
22 Jan 2021
Eternal growth: how to invest in the future of the drinks industry
Share tips

Eternal growth: how to invest in the future of the drinks industry

Humans have been dabbling in tasty beverages for millennia. Jonathan Compton assesses the key trends in the sector and recommends seven hard- and soft…
22 Jan 2021
The world’s fund managers are getting very bullish – be careful out there
Stockmarkets

The world’s fund managers are getting very bullish – be careful out there

The latest survey of fund managers shows them to be extremely bullish on all the same things. And that, says John Stepek, means the market is in dange…
21 Jan 2021
Five online retail stocks to diversify your portfolio with
Share tips

Five online retail stocks to diversify your portfolio with

Professional investor Tancredi Cordero, founder and CEO of Kuros Associates, selects five of his favourite online retail stocks to buy now.
18 Jan 2021

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
Inflation is the easiest way out of this – just don’t expect politicians to admit it
Inflation

Inflation is the easiest way out of this – just don’t expect politicians to admit it

The UK government borrowed £34.1bn in December, a record amount for that month. Britain's debt pile now amounts to 100% of GDP. How are we going to pa…
22 Jan 2021
When will the US stockmarket bubble burst?
US stockmarkets

When will the US stockmarket bubble burst?

With US stocks more expensive than before the Wall Street crash of 1929, there are growing signs of “mania”. But what will push markets over the edge?
22 Jan 2021