A few days ago, we wrote about Silicon Valley giant Alphabet’s possible game-plan in the event of a US anti-trust case. Over the week, anti-trust discussions have continued apace, with Big Tech as a whole coming under close scrutiny. However, it has also been made plain that the biggest players in this space – the Googles, Facebooks, Amazons, and Apples – have spent years preparing themselves for what was probably always an unavoidable onslaught.
Share price declines show that investors weren’t expecting anti-trust issues to emerge – can the same be said about Big Tech?
Source: Yahoo Finance
While investors might not have seen this coming, the companies in question most certainly did. Bloomberg cites “people close to” Alphabet, Amazon and Facebook when writing that these companies have “long anticipated U.S. probes.” It also notes that Big Tech as a whole started adding veteran anti-trust lawyers to its payroll months ago. Add to that the frequent public arguments that companies like Amazon and Facebook have been making all year about how they encourage competition rather than discourage it, and it becomes very clear that Big Tech drew up its battle plans months – or even years – ago.
Arguably, investors were slow on the up-take. Left-wing presidential hopefuls for 2020 have been making anti-trust noises for a while, but they’re easy to ignore… after all, these aren’t even policy promises at this point. They’re essentially political marketing – gestures that an electorate might warm to, but not solid policy prescriptions. More informative are the current president’s statements over the past year. As Rob Atkinson, president of the Information Technology & Innovation Foundation (a think tank that lobbies against excessive tech regulation) says: “Trump’s pretty clearly made some comments about this. Over the next 18 months you’re going to see FTC and DOJ certainly be making a lot more noise.”
With flashy new legal hires, unprecedented lobbying efforts, well-prepared game plans, and years of experience fighting European regulators under their belt, Big Tech might not be guaranteed an easy time, but it’s certainly not time for investors to panic.
Disclosure
Dominion holds Alphabet, Amazon, and Facebook in its Global Trends Managed and Global Trends Ecommerce Funds.
Author: Theo Leworthy
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