The backlash against Big Tech gathers pace
China's regulators have proposed new anti-monopoly guidelines that could hit tech giants Alibaba and Tencent. Could the US be next to join in?
![US Capitol building](https://cdn.mos.cms.futurecdn.net/yJYsiCeEACVmRvfgGpoyzV-415-80.jpg)
The Big Tech backlash has come to China, says Jacky Wong in The Wall Street Journal. Regulators recently suspended Ant Group’s $37bn stockmarket flotation at short notice. Now they have proposed new anti-monopoly guidelines that could hit Alibaba and Tencent, the internet giants whose social-media apps and payment and e-commerce platforms dominate daily life in China.
The news rocked Chinese tech shares, says Megha Bahree on Al Jazeera. Hong Kong’s Hang Seng Technology index retreated by 11% over two days last week. China has previously taken a largely “hands-off” approach towards its domestic tech titans, but Covid-19 has made the issue of market concentration unavoidable. E-commerce accounted for roughly one-quarter of sales in China last year, but that figure is “edging towards 30%” due to the pandemic.
The draft rules would ban such practices as “selling goods below cost… and exclusive sales agreements”, says Nikki Sun in Nikkei Asia. Regulators are also concerned about the rise of online loans, which are not subject to normal bank regulations. The move “strikes at the heart” of a business model that depends upon walled technology ecosystems and “scale economies”, says a Gavekal Dragonomics note.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The new safe haven?
US Big Tech has so far received less regulatory pushback, says David Goldman in the Asia Times. The share of the five biggest tech players on the S&P 500 by market capitalisation has doubled over the past decade to 22%. Microsoft, Google and Apple collectively have one-fifth of all the cash held by companies on the index. Some 70% of “all digital advertising revenue…goes to Facebook and Google”. Indeed, so dependable are these revenue streams that the tech giants now “trade the way utilities used to”, closely tracking movements in bond yields.
The prospect of more regulation has been a “dark cloud lingering over the tech sector”, Daniel Ives of Wedbush told Teresa Rivas in Barron’s. Yet the US election results may deliver a “goldilocks scenario” for tech, with a gridlocked Congress unable to agree on antitrust measures. Biden is also likely to stabilise relations with China, helping firms such as Apple whose supply chains are “caught in the crossfire”.
In recent years successful investment performance has boiled down to buying and holding “popular technology names” and watching them soar, says Michael Mackenzie in the Financial Times. Yet it is value stocks that have been shining of late. Nevertheless, investors will continue to put a premium on the tech sector’s superior growth prospects and strong cash flow, which give it defensive characteristics, says Jim Paulsen of Leuthold Group. “Tech will underperform, it will not crater.”
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Regulator moves to protect access to cash amid branch closures and disappearing ATMs
News The Financial Conduct Authority has told banks to start assessing if local communities have adequate cash access from mid-September
By Marc Shoffman Published
-
VAT hike on private school fees could come earlier than previously expected
The government could start charging VAT on private school fees as soon as January 2025, according to the latest reports. What does it mean for parents?
By Katie Williams Published
-
UK mid-caps: an improving outlook
UK mid-caps have perked up and the rally may run further, but long-term investors should remain selective
By Cris Sholto Heaton Published
-
The tobacco industry is going smoke-free - how to profit from it
Tobacco companies have realised their traditional products are on the wane. But new opportunities have opened up – and should prove lucrative
By Rupert Hargreaves Published
-
Is it time to invest in creative industries?
Any industrial strategy should not overlook the creative industries, one of our top national assets
By David C. Stevenson Published
-
Is Mercia Asset Management set for success?
Mercia Asset Management helps the government fund smaller companies in Britain’s regions. Should you invest?
By Rupert Hargreaves Published
-
British stocks set for a boost
British stocks are due for a bounce as the UK looks more stable compared to many economies
By Alex Rankine Published
-
Ocado shares jump by a fifth
Ocado takes a turn for the better after attractive profit forecasts were announced
By Dr Matthew Partridge Published
-
The AI boom is on borrowed time
The hype around the AI boom could be on its way out – but why?
By Alex Rankine Published
-
Diploma: a blue-chip set for strong growth
Diploma, whose niche products include seals and fasteners, serves an array of growth markets. Should you invest?
By Dr Mike Tubbs Published