3 Tech Stocks to Watch as Antitrust Pressures Ease

tech stocks - 3 Tech Stocks to Watch as Antitrust Pressures Ease

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Breaking up big technology companies has become popular with lawmakers and regulators in Washington, D.C. There are currently six bills that seek to curtail or break-up major technology companies winding their way through Congress. This has had a significant effect on some of the biggest tech stocks.

Over the past year, the leaders of some of the most successful technology companies in the world, including Apple (NASDAQ:AAPL) Chief Executive Officer Tim Cook, have had to sit in the hot seat before lawmakers and answer questions about the company’s business practices.

President Joe Biden also seems to support moves to lessen the influence of big technology companies. Silicon Valley leaders have publicly opposed the bills and called for the House Judiciary Committee to slow down its investigation into potential monopolistic practices. And it looks like some of the pressure that has been on big tech firms may now be starting to ease a little bit.

Here are three tech stocks to watch as antitrust pressures cool off as we move through the hot summer months:

  • Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
  • Facebook (NASDAQ:FB)
  • Amazon (NASDAQ:AMZN)

Tech Stocks to Watch: Alphabet (GOOG, GOOGL)

Google (GOOG, GOOGL) headquarters in Mountain View, California.

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Alphabet, the parent company of online search engine Google, has been battling antitrust issues all over the world in recent years. The company was recently fined $592 million by the government of France for anticompetitive business practices. Specifically, France took issue with the way in which the company negotiates compensation with publishers for the reuse of their news and media content. France’s competition watchdog said that Google ran afoul of the European Union’s digital copyright laws.

Elsewhere, Google has been fighting antitrust fires in England, Australia, Turkey and Russia. Foreign governments accuse the Silicon Valley company of abusing its dominance in the online advertising space to snuff out competition. They have been lining up to levy fines on the company, most of which Google is fighting in court. At home in the U.S., Google has been sparring with the Justice Department, which accuses the company of illegally protecting its dominance in online search and advertising.

The Justice Department has cited Google’s deals with companies such as Apple to make it the iPhone’s default search engine as examples of the company’s efforts to stifle competition. A total of 36 U.S. states have also filed antitrust lawsuits against Alphabet over the way in which its operates its Google Play mobile app store. With so many antitrust cases ongoing, senior executives at Alphabet will no doubt welcome any easing of pressure from lawmakers in Washington, D.C.

Year-to-date, GOOG stock has risen nearly 50%, while GOOGL stock has risen 45%. Both have passed $2,500.

Facebook (FB)

A person using the Facebook app on a smartphone

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Another favorite target of trustbusters is social media giant Facebook. However, the company headed by Mark Zuckerberg recently scored a major victory when the U.S. government’s antitrust case against Facebook was dismissed by a federal court judge.

The antitrust suit brought against Facebook by the Federal Trade Commission (FTC) and state attorneys general seeking to break up the social network was tossed by U.S. District Judge James Boasberg because, he said, prosecutors failed to clearly define what social networking is or explain their calculation that Facebook controls more than 60% of the online market for social networking.

As newspaper editorials called for a rewriting of America’s antitrust laws, FB stock skyrocketed in the wake of the antitrust cases dismissal, pushing Facebook’s market capitalization past the $1 trillion mark.

Elsewhere, Facebook has been under antitrust pressure in Europe. In Germany, an effort by antitrust regulators to crack down on Facebook’s data-collection practices is currently winding its way through that country’s legal system.

FB stock has receded a bit in recent days but still opened on July 15 at $349.23.

Tech Stocks to Watch: Amazon (AMZN)

Logistics activity on the Amazon site of Vélizy-Villacoublay in France. Packages are sorted by workers on coneyors.

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While there are many online retailers all over the world today, few can hold a candle to Amazon. The Seattle, Washington-based company controls fully half (50%) of the e-commerce market in the United States. The company now generates more than $100 billion in sales each quarter. That kind of dominance has put Amazon firmly on the radar of antitrust regulators in Washington, D.C. They made several obvious moves aimed at curtailing Amazon’s market dominance.

The most glaring recent example was the selection of Lina Khan as the new chair of the Federal Trade Commission. A law professor who specializes in antitrust issues, Khan published an article in the Yale Law Review while still a student called “Amazon’s Antitrust Paradox.” In it, Khan argued that Amazon and other technology giants can abuse their market power even if those companies lower prices for consumers rather than raise them. Amazon publicly called for Khan to recuse herself from leading the FTC, citing a conflict of interest, but to no avail.

Overseas, a group of more than 2,000 small online retailers have filed an antitrust case against Amazon in India. They claim that the company favors retailers whose online discounts drive independent vendors out of business. Like many major U.S. technology companies, Amazon continues to fight antitrust cases in the courts of various jurisdictions around the world.

So far in 2021, AMZN stock is up 12% to $3,694.20 per share at the start of July 15.

On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


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