The U.S. federal government is preparing to crack down on some of Silicon Valley’s most significant business in a new antitrust push that could rattle the tech giants.
Four of Silicon Valley’s biggest tech companies– Google, Amazon, Facebook and Apple– could face antitrust investigations from the Trump Administration and Congress.
The federal government’s leading antitrust enforcers, the Department of Justice and Federal Trade Commission (FTC), have apparently reached an agreement on how to divide up their obligations for investigating Silicon Valley’s most significant business, with the Justice Department setting its sights on Apple and Google and the FTC taking the lead on Facebook and Amazon. The committees are said to be weighing whether to open official examinations.
Scrutiny of the internet giants started to grow in the aftermath of the 2016 election, which also produced a legislature managed by Democrats and a swelling field of Democratic governmental candidates (led by Sen. Elizabeth Warren) who progressively favor antitrust enforcement.
Tech giants stumble before breaking higher
Last week presented some major concerns for investors in the tech market, with stocks across the board slipping significantly.
Facebook’s fall cut more than $38 billion from its market cap, before bouncing back. Facebook is currently under investigation by the FTC over its handling of user data and has stated it is anticipating a fine of approximately $5 billion.
Other tech stocks took a hit over similar issues. Amazon’s stock fell 4.6% last Monday following a Washington Post report that the top U.S. antitrust enforcement agencies have a new contract on tech oversight. The drop shaved more than $40 billion from its market cap, though the company followed Facebook’s lead, rebounding by the end of the week.
Shares of Google parent company Alphabet were down 6.1% after the Journal reported Friday that the Justice Department is readying an antitrust investigation of Google. The stock lost about $47 billion from its market cap before rallying back in premarket on Monday.
These moves come after the multiple reports stimulated fears that some of these tech companies might face more stringent guidelines in the future, with some investors even fearing a breakup of the behemoths may be in the pipeline. Regardless of the slipups, however, all three business have charged back with a vengeance as financiers piled in on what they viewed as a quick fire sale.
Could Congress break up Big Tech?
One of investors’ main worries is that lawmakers could step in and efficiently require the tech giants to scale down their services, but could that really happen?
The possibility of these companies being separated are slim and their fundamentals indicate further long-term development. Consequently, this unexpected drop was seen as an entry point for investors looking for fresh exposure to some of the best-performing stocks in the last few years.
Up until now, the industry and its investors have been relatively upbeat that the tech giants can quickly adhere to any new personal privacy regulations and soak up the most significant fines regulators can throw at them.