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

Passive investors beware: you may be dangerously overexposed to big tech stocks
Stockmarkets

Passive investors beware: you may be dangerously overexposed to big tech stocks

Most investors in index funds are likely to be dangerously over-invested in US stocks, and particularly in a few huge tech stocks. It’s time to think …
15 Feb 2021
Stockmarkets shrug off turbulence
Stockmarkets

Stockmarkets shrug off turbulence

Stockmarkets have hit their first bout of turbulence of the year, but most are clinging onto January’s gains.
4 Feb 2021
The MoneyWeek Podcast: how to not lose money to inflation and financial repression
Investment strategy

The MoneyWeek Podcast: how to not lose money to inflation and financial repression

Merryn talks to Peter Spiller of the Capital Gearing Trust about how he navigated the last extraordinary year; what he's buying now; and how he plans …
16 Apr 2021
Lab-grown meat: the new agricultural revolution
Soft commodities

Lab-grown meat: the new agricultural revolution

Vegan alternatives are taking off, but the future of food technology lies in lab-grown meat – cultivating steaks and burgers from animal cells, says A…
16 Apr 2021

Most Popular

The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
What does the Coinbase listing mean for bitcoin and other cryptocurrencies?
Bitcoin

What does the Coinbase listing mean for bitcoin and other cryptocurrencies?

As the bitcoin price hit new highs, the world's biggest cryptocurrency exchange, Coinbase, listed on the stockmarket. John Stepek looks at what that m…
15 Apr 2021
Properties for sale for around £400,000
Houses for sale

Properties for sale for around £400,000

From a converted church in Banffshire with views towards the Cairngorms National Park, to a period property in the Georgian market town of Beverley, e…
2 Apr 2021