Although Microsoft Corporation (NASDAQ:MSFT) was and is a formidable opponent, it was still little match for this year’s tournament favorite, Apple Inc. (NASDAQ:AAPL), in round-two pairings. In fact, it was another blowout.
Like any tournament, this one is getting increasingly tougher for the teams that move on. Will the quarterfinals be the one where top-seeded Apple finally faces a true threat? Never say never — Google is its best opponent yet.
This is gonna be a good one.
In the first round, it became clear Apple was a winner simply because it makes a product that consumers love: the iPhone. Each iteration of the iPhone has been more popular than the previous one, and the fantastic user experience has endeared the company to millions of smartphone owners and investors.
And although the iPad seems to be hitting a headwind on the sales front, even many of those who don’t own them won’t deny the iOS-powered tablet is superior to its competitors. It’s just priced out of reach for a few too many consumers (many of whom already have an iPhone).
The quality of its products isn’t likely to change wane anytime soon, either.
By the time the second round of the tournament began, Apple had announced a game-changer: the advent of a pay-TV service, proverbially taking Apple TV to the next level by bringing network broadcast programming to users through an internet connection rather than through a coaxial cable.
While the Apple-branded TV service was applauded, it may not have been fully appreciated. This service would bring ABC, CBS and Fox sports broadcasts to the internet. It’s a big deal, as sports programming is much of the reason millions of TV viewers have yet to “cut the cord.”
In the meantime, Apple has officially been added to the Dow Jones Industrial Average. Although most index funds and mutual funds have already made the adjustment by purchasing the stock to hold in those portfolios, more may still need to buy AAPL shares to remain true to the Dow’s makeup. That’s going to drive some bullishness on the stock’s price in the foreseeable future.
And the downside of AAPL at this time? There aren’t many, and none worth worrying about other than the possibility that the Apple smartwatch ends up being a flop.
Much to tournament-watchers’ surprise, Google knocked off Facebook in round two, as size and experience were preferable to youth and drive. It makes one wonder whether Google was an underestimated contender from the very beginning, and able to cause more problems for Apple than anybody would have expected before the games began.
On the other hand, Google is suffering an injury at the most inopportune time.
Most consumers as well as investors quietly, tacitly know that Google’s search results are somehow gamed to suit the search giant’s purposes. But the public was essentially willing to overlook the self-serving practice simply because the search engine still served its purpose as well or better than alternative search engines.
The Federal Trade Commission wasn’t willing to look the other way, however.
Although the investigation was closed in 2013 with the FTC choosing to essentially do nothing about it (other than point it out), the government agency did indeed determine:
“(The) evidence paints a complex portrait of a company (Google) working toward an overall goal of maintaining its market share by providing the best user experience, while simultaneously engaging in tactics that resulted in harm to many vertical competitors, and likely helped to entrench Google’s monopoly power over search and search advertising.”
Where’s the report been the past two years? Buried. It was accidentally sent to the Wall Street Journal earlier this month when the WSJ requested other records. Perhaps the more important question is, why didn’t the Federal Trade Commission do anything about it then? Answer: Some fights just aren’t worth fighting.
Google has changed some of its self-serving approaches in the meantime, suggesting it’s even less likely any consumer advocacy groups would press the issue now, especially spurred by a two-year-old report that wasn’t even meant to be released.
So what’s the problem? Haters and critics love to pounce on prey when they’re the most vulnerable. With Google now merely being associated with impropriety, any complaint about the company’s business practices could come out of the woodwork. Indeed, the European antitrust movement against Google is reportedly gaining traction again.
Sometimes the public is able to make a mountain out of a molehill.
Our Quarterfinal Pick: AAPL
Google remains a fierce competitor even with the re-marred reputation and would likely roll over most other teams. But, with or without the antitrust issues surfacing right in the midst of the tournament, Apple was going to be tough to top.
Apple’s apt to move on with relative ease, regarded as a name with no real vulnerabilities.
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As of this writing, James Brumley did not hold a position in any of the aforementioned securities.