Tech’s top four CEOs should be nervous as they approach a virtual hearing on July 27 before the House of Representatives’ Antitrust Subcommittee on the Judiciary.
Apple Inc.’s
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Tim Cook, Amazon.com Inc.
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Jeff Bezos, Facebook Inc.’s
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Mark Zuckerberg and Alphabet Inc.’s
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Sundar Pichai can think of 5 trillion reasons why: That’s the collective market value, in dollars, of his companies. Everyone but Facebook is worth at least $ 1 billion.
The fabulous four have never been worth more as they gobble up their market share and expand to other segments through an avalanche of acquisitions. As Apple rushes to become the first company to reach a market value of $ 2 trillion, Amazon and Alphabet shares catapulted to record levels after Mizuho analyst James Lee raised their price targets for both, citing leaps in cloud spending for health, retail and financial services. -care industries.
Read more: Amazon, Alphabet Shares Rise to Records After Mizuho Raises Price Targets
See also: Apple $ 2 billion? This chart may cause you to reconsider your investment
The strong rise of Big Tech, which is fueling a resurgent stock market despite a deepening pandemic, underscores the enduring power of the industry as consumption of the industry increases in a work-from-home economy.
This is particularly pronounced among the Mount Rushmore of technology, minus Microsoft Corp.
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. Its products and services have become essential for shopping (through Amazon and Google), entertainment (Apple and Google’s YouTube), news and tutorials (Google search), and socialization (Facebook). And that does not include sharp spikes in the use of smartphones (Apple and Google) and the cloud (Google, Amazon and Microsoft).
“If anything, the pandemic has fueled Americans’ dependence on technology for food, goods, communication, entertainment,” Rebecca Allensworth, a law professor at Vanderbilt University, told MarketWatch in a telephone interview. “This is one more opportunity to solidify the power of these companies.”
How the House Judiciary Antimonopoly Subcommittee interprets the growing financial power of the Big Four in technology, and how it influences the subcommittee’s calculation, remains a closely guarded secret. An employee rejected the comment.
“Since last June, the subcommittee has been investigating the dominance of a small number of digital platforms and the adequacy of existing antitrust laws and their enforcement,” Rep. David Cicilline, DR.I., chairman of the subcommittee, said in a statement. . “Given the central role these corporations play in the lives of the American people, it is critical that their CEOs be forthcoming.”
This is true: all four have been “called into the principal’s office,” Allensworth said, and for profoundly different reasons.
Facebook you’re caught up in a whirlwind of bad news as the Federal Trade Commission reflects on its number 2 position in digital advertising, helped in large part by its Instagram and WhatsApp acquisitions. The spread of the coronavirus has accelerated the shift in advertising from billboards, newspapers, and radio to digital platforms such as Facebook, Google, and Amazon.
Ironically, the scrutiny of antitrust regulators comes amid a global Facebook boycott in July by hundreds of brands, including heavyweights Coca-Cola Co.
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Verizon Communications Inc.
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Starbucks Corp.
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Unilever
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and SAP
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– in protest at hate speech and misinformation appearing on the social media company’s digital platforms.
Read more: Facebook Considers Banning American Political Ads Before Election – Report
See also: These are the main brands that have withdrawn Facebook ads
Last week, leaders of four of the organizations coordinating the #StopHateForProfit ad boycott met with Facebook CEO Mark Zuckerberg, COO Sheryl Sandberg, Product Director Chris Cox and others.
Facebook is also facing immense pressure on its non-intervention policy regarding political advertising and is reportedly considering banning such ads before the US election in November. If it’s met, you could lose hundreds of millions of dollars, according to RBC Capital Markets.
Google, which reportedly hopes to avoid an EU antitrust investigation into its planned $ 2.1 billion acquisition of Fitbit Inc.
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By vowing not to use Fitbit’s health data to help him target ads, he also appears to be in the sights of Attorney General William Barr.
In the coming months, the Justice Department is expected to decide whether to file a lawsuit accusing Alphabet’s Google of abuse of power in the advertising technology and search product market. The government is also examining allegations that Google abused its search domain, according to published reports. Ultimately, a successful lawsuit could reshape Google’s business, not to mention a large part of the economy, and accelerate several years of unrestricted growth in Silicon Valley.
Google hinted in a recent 67-page presentation that, although it accounts for almost 30% of spending on the digital advertising market worldwide, it is not enough to overburden customers and squeeze competitors.
Apple, which is grappling with COVID-19’s impact on its retail operations, could also be vulnerable to accusations of how it wields market power. Late last year, email app developer Blix said it had data that showed Apple removed the app store’s product classification that competes with Apple’s own apps. In October, Blix sued Apple, alleging patent infringement and antitrust violations.
On its website, Apple says its App Store offers “equal opportunity for developers to deliver their applications and services on iPhone, iPad, Mac, Apple TV and Apple Watch.”
Amazon It competes in several defined markets, anti-trust experts like Herbert Hovenkamp of the University of Pennsylvania point out. It is how the company interconnects those markets that has caught the attention of antitrust investigators.
It all turns into an interesting intersection of politics, economic power, and cultural ethics when Cook, Bezos, Zuckerberg, and Pichai testify before Congress on July 27. But will it be enough to demonstrate significant change? At least one legal expert still has doubts.
“Do they continue to act with impunity? Do the 2020 elections change the calculation? There will be marginal changes on both counts, ”Andrew Jay Schwartzman, senior advisor to the Benton Institute for Broadband and Society, told MarketWatch. “I see no sign that companies are being forced to make fundamental changes in the course that they have followed.”
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