4 Big Tech Stocks Glad to See Elizabeth Warren Drop Out

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tech stocks - 4 Big Tech Stocks Glad to See Elizabeth Warren Drop Out

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Massachusetts senator Elizabeth Warren dropped out of the 2020 presidential race on March 5. The exit of the former Democratic front-runner relieved supporters of Joe Biden and Bernie Sanders. It also undoubtedly resulted in a sigh of relief from investors in some very big tech stocks.

A key part of Warren’s campaign was her plan to “break up” tech companies. Introducing her plan in a post from March 2019, she wrote:

“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.”

Whatever you think of Senator Warren’s plan, it would have spelled bad news for some of the biggest of the big tech stocks. With that said, here are four companies in particular that are now letting out a big sigh of relief.

Tech Stocks Glad to See Elizabeth Warren Drop Out: Facebook (FB)

Tech Stocks Glad to See Elizabeth Warren Drop Out: Facebook (FB)

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Facebook (NASDAQ:FB) made headlines for much of the previous year. The social media giant faced scrutiny over data privacy and use of the platform for election interference.

Senator Warren accused Facebook of using acquisitions to stifle competition, increasing its dominance. She pointed out CEO Mark Zuckerberg’s comments that Facebook was so powerful it could act more like a government than a traditional company.

Her plans for FB included the appointment of federal regulators who would be tasked with “unwinding anti-competitive mergers,” including WhatsApp and Instagram. 

These messaging apps are considered the future of Facebook as growth on the main platform stalls and younger users abandon it. The hit from a Warren presidency would have been a big one for FB stock.

Alphabet (GOOG)

Alphabet (GOOG)

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Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google gets singled out for the amount of web traffic going through its services … and the power it wields as a result.

Warren’s plan alleges Google has used its search rankings to “snuff out” competition and favor results of its own services over those of competitors. She defines Google’s search and advertising business to be “platform utilities” that would need to be spun off independently.

In addition, Senator Warren’s plan would see Google’s Nest, Waze and DoubleClick acquisitions unwound.

Add the Warren plan to the antitrust scrutiny Google is undergoing in Europe and the potential impact on GOOGL stock was difficult to overstate.

Amazon (AMZN)

Amazon (AMZN)

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Amazon (NASDAQ:AMZN) also got called out by name in the Warren plan. She noted that nearly half of all U.S. e-commerce goes through AMZN. This gives the company the power to force brands that want to sell on its platform to lower their prices. She also leveled a more damning accusation:

“Amazon crushes small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version.”

Under her plan, Amazon Marketplace becomes a platform that’s spun off. In addition, Amazon’s Whole Foods and Zappos acquisitions get unwound.

None of these measures has anything but downside for AMZN stock.

Apple (AAPL)

tech stocks: Apple (AAPL)

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Although Warren didn’t call out Apple (NASDAQ:AAPL) by name in her original post, she was quick to point out that the company was in her sights as well.

The next day she was interviewed by The Verge, where she targeted Apple’s App Store operation:

“Apple, you’ve got to break it apart from their App Store. It’s got to be one or the other. Either they run the platform or they play in the store. They don’t get to do both at the same time.”

The App Store is big business for Apple. The 30% cut of sales and subscription revenue the company takes is lucrative. During the 2018 holiday week, customers spent $1.22 billion at the App Store, including $322 million on New Year’s Day alone. That revenue is projected to keep rising, and is increasingly important to the company as iPhone revenue begins to decline.

If Elizabeth Warren’s plan to break up tech companies had come to fruition, AAPL is another of the big tech stocks that would have felt the impact.

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015. As of this writing, he did not hold a position in any of the aforementioned securities.

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2020/03/4-big-tech-stocks-glad-to-see-elizabeth-warren-drop-out/.

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