Recently, the FTC, led by progressive Big Tech critic Lina Khan, renewed its fight with Facebook, going after the company's decision to acquire Instagram and WhatsApp. Drumming up fears of an antitrust breakup, this battle, like so many others brewing on The Hill is part of a larger war around the fundamentals of the platform-driven […]
Recently, the FTC, led by progressive Big Tech critic Lina Khan, renewed its fight with Facebook, going after the company's decision to acquire Instagram and WhatsApp. Drumming up fears of an antitrust breakup, this battle, like so many others brewing on The Hill is part of a larger war around the fundamentals of the platform-driven business model.
While the variety of charges and regulations cover plenty of ground, many question the legality of Big Tech’s size and scope, while going after the mergers and acquisitions that made it possible. They challenge their role as gatekeepers and go after their ability to compete with other businesses that sell similar products on their platforms.
Breaking up is hard to do and getting legislators on the same page during this period of polarization will create roadblocks for structural reform. With a conservative majority on the Supreme Court, major changes to antitrust law are also unlikely.
Despite Biden’s aggressive antitrust executive order signed in July, agencies will need new authorities and bigger budgets to go big before they go home, which companies and conservatives will effectively challenge.
Despite the hurdles, regulators still have a shot at some meaningful reforms and the Biden administration is in a strong position to shape the future of tech regulation.
Generally, it’s safe to assume there will be more scrutiny, oversight, and regulation as courts and legislators begin to wrap their heads around this nascent industry’s size and complexity. With so much capital and aspiration in the US equity markets tied up in Big Tech stocks, it’s also safe to assume investors will flinch, at least a little. Looking ahead, these are the most important questions to keep in mind.
Measures that address the fundamentals of the platform-driven business model like Amazon’s right to produce consumer goods or Google’s ability to organize Search
results around its own products could force meaningful shifts that limit new verticals for growth. In the short run, they might only chip away at profits, but in the long run, they could drastically limit the scope of new products and services.
Many progressives in government like FTC Chair Lina Khan believe in broadening the definition of a monopoly to account for the effects of market power that don't directly impact consumer prices. This would allow regulators to go after company's for their impact on competition and innovation, even if they offer free or affordable products like Amazon and Facebook.
Even in the case of a breakup, depending on when you got in, you might still come out ahead. Looking forward, the opportunity to diversify your investments across multiple companies with the same management and products as a traditional Big Tech stock could be more profitable.
In many ways, the success of Big Tech represents a ceiling of expectations for what investors believe a tech company can accomplish. If major changes occur, that ceiling will drop, which will have down-market effects on valuations and growth projections over time.
Ultimately, Big Tech stocks will always be a big opportunity, but some of the regulatory freedoms and opportunities for growth that fueled their sky-high valuations won’t last in the long run.
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