Big Tech CEOs from Apple, Google, Amazon and Facebook testified on Wednesday before the House Judiciary subcommittee on antitrust.
Six market analysts discuss their key takeaways.
James Pethokoukis, economic policy analyst at the American Enterprise Institute, sees fault in Congress’ focus on competitive complaints.
“These companies have a lot of money, they do a lot of lobbying. I think you saw in those answers what the actual problem for Congress [is] — a lot of breaking companies up or heavily regulating them, they were talking a lot about competition, but also about consumer benefit. Under current antitrust doctrine, if you’re providing a benefit to consumers, then it’s very tough to argue for action to break you up, to change your business practice. That is the key thing. And notice that in that hearing, there’s a lot of talk about competitors, and competitor complaints. Not very much talk about consumers.”
Jason Ware, partner at Albion Financial Group, said new rules does not change the investment thesis for these tech companies.
“The truth of the matter is there were very few direct hits placed on these companies by members of the House committee. The big risk to owning any of these tech companies, these large tech companies, is outright breakup. I think higher regulation or bigger hurdles in regulation just means it’s more difficult to compete against them if you’re a small or midsized company. So I think new rules probably will be the result ultimately over the next several months or several years, but that doesn’t really change the investment thesis for any of these companies.”
Aneesh Chopra, former chief technology officer of the U.S., said Congress could revise its approach to consumer harm.
“In my opinion, there may be a broader policy move afoot in Washington to revisit some key assumptions about what it means for competition policy and if those assumptions change, it might have an effect for the industry as a whole and namely, this concept of a consumer harm standard for the basis of determining whether or not there’s been a need for government intervention, and what you heard are individual case examples. I do think the conversation between Congressman Jayapal and [Amazon CEO Jeff] Bezos did surface new information to the public. That gives people a window into how these decisions are made, but they all are part of a broader fabric as to whether or not just because the price for the service is apparently free on the retail sense of the word, that there may be still harm and as a result, triggering the potential for intervention. And if that judgment changes then it has implications across tech as a whole.”
Brian White, analyst at Monness Crespi Hardt, said change will take time.
“I thought the hearing really shed light on some of the sins committed by Big Tech over the past decade. I think that was very clear. Ultimately, I think there’s going to be a lot of changes and this is really about, you’ve got this massive platform, all four of these companies. … There’s a lot of different ways you can misuse your platform, not just about one particular area. And so, if laws are enacted and go into effect, it’s in a lot of different areas and that will take time.”
Bradley Gastwirth, chief technology strategist at Wedbush, is skeptical about real change to these companies.
“I really find it hard to believe that the U.S. government will be able to do anything to break these companies up. I find it hard to believe they’ll have legislation down the road on this very fact. I mean, if you look at the size, how do you really restrict it? Do you restrict it by market cap? Do you restrict it by share? Restrict by revenue? … At the end of the day, I think these companies have made some incredible innovation, and I would actually argue that things actually helped the consumer and lowered prices, rather than hurt the consumer.”
Tristan Harris, former Google ethicist, said these companies act as modern-day infrastructure.
“I think what we saw [Wednesday] was a clear recognition that these platforms are the 21st Century infrastructure for the world. These are not products that we use, they’ve become fundamentally embedded into our lives and just like the 20th century was built on the backs of railroads, roads cars, the military infrastructure, the 21st century infrastructure of the world is Facebook, Google, Amazon, etc. Instead of these accountable institutions like the chamber of commerce which manages small to medium-sized businesses or the FDA which manages what’s safe and healthy, we have Apple deciding what’s a safe and healthy app that goes in their App Store. We have Facebook deciding the infrastructure by which 8 million small- to medium-sized businesses reach their consumers.”