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Big Tech’s Antitrust Troubles Spell Trouble for the Whole Market

1 | By Shah Gilani

The regulators are coming! The regulators are coming!

For Facebook, Amazon, Google, and Apple, that is.

But they aren’t going to be the only casualties in brewing antitrust battles.

The whole market’s now in the line of fire.

Here’s what big tech’s facing, who’s coming after them and why, how effective they’ll be, and what it all means for the market…

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The first Congressional hearing on the “outsized dominance,” as antitrust crusaders see it, of Google, Amazon.com Inc. (NasdaqGS:AMZN), Facebook Inc. (NasdaqGS:FB), and Apple Inc. (NasdaqGS:AAPL) began on Tuesday in the House of Representatives.

Representative David Cicilline, the Rhode Island Democrat heading up the House Judiciary Committee’s “top-to-bottom” review of big tech’s antitrust trappings, which happens to be running in parallel with antitrust probes being pursued by the FTC and the Justice Department, said to reporters on Tuesday, “I have very serious concerns about the FTC’s commitment to these issues.”

That comment echoed what other lawmakers have been vocal about: that regulators “have been derelict in their duties.”

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One avenue the House committee harped on was the digital advertising space and big tech’s crushing impact on print advertising.

“Concentration in the digital advertising market has pushed local journalism to the verge of extinction,” said Cicilline.

Republican Doug Collins, who co-authored a bill with Cicilline aimed at giving news organizations a stronger hand in talks with big tech, chimed in saying, “Smaller news organizations don’t stand a fair negotiating chance when they try to negotiate deals with the platform giants.”

“These giants stand as a bottleneck – a classic antitrust problem – between consumers and the producers of news content,” Collins claimed.

There’s going to be a lot of data about big tech’s influence coming out of Congressional hearings, from the FTC and the Justice Department. Data, as in how much money they make on advertising, how they use data they gather on users on their platforms, and how they target ads.

In other words, a lot on the inner workings of big tech companies are going to be revealed.

That’s going to focus the public’s attention on alarming statistics about just how dominant these firms really are.

Bank analysts and investment firms have already published hard data on how much influence the giants exert over advertising.

One report by Goldman Sachs states, “Today, the most concentrated areas of the US equity market are Tobacco and Interactive Media & Services based on sales. Within Interactive Media & Services, Google and Facebook account for 87% of 2018 US industry sales (63% and 24%, respectively).”

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As more data comes out on how companies manage their data, more politicians are going to jump on the antitrust bandwagon.

Presidential hopeful Elizabeth Warren is already staking out advertising space to make her antitrust case.

She put up a billboard right in the heart of Silicon Valley, an “I’m coming for you” kind of assault meant to prove her fighting credentials.

In an already overcrowded field of Democrat presidential hopefuls, every would-be candidate is going to make the antitrust crusade against big tech a premier platform position to placate voters, as stirred-up public opinion becomes galvanized around all the highly charged issues facing big tech.

Politicians pressuring Congressional committees, the FTC, and the Justice Department to dig deeper and deeper into big tech’s influence is going to scare investors in every targeted company.

Along with the uncertainty that brings to owning big tech companies, investors will start worrying about the foundation of the market’s growth, and the leadership those big companies brought along with their growing users, revenues, and profits.

All of that’s now in the line of fire.

You’ve been warned.

Sincerely,

Shah

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One Response to Big Tech’s Antitrust Troubles Spell Trouble for the Whole Market

  1. Robert in Vancouver says:

    I actually like targeted ads.

    Before computers, I bought magazines and newspapers to get information and ads for things I was interested in. Now when I’m looking for a new printer or TV I get ads for these things on sale or from sources I never heard of before.

    So I often click on the ad and get a better deal or product than I was willing to settle for before seeing the ad.

    Where’s the problem?

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