Economy

Breaking up tech giants? Investors are not afraid of it yet

The major US tech groups, Facebook, Google, Apple and Amazon are widely abusing their dominant market position, the US House of Representatives committee said.

Proposed rules can even lead to forced division.

In the past, large companies have split up in the US, such as John D. Rockefeller’s mighty Standard Oil and telecom giant AT&T.

‘Legal battle’

“It will probably take a long time before measures are taken”, says Wim Zwanenburg, investment strategist at Stroeve Lemberger.

He foresees a legal battle, “and tech giants have enormous amounts of money to pay lawyers.”

Zoom and Salesforce

Furthermore, the legislation is complicated, which makes it more difficult to take measures against major tech giants, says Zwanenburg.

He also doesn’t see tech giants standing in the way of innovation. For example, there have recently been small players who have brought about innovations, such as Zoom and Salesforce.

‘No forced division’

A forced split of American tech giants does not see Jos Versteeg of Insinger Gilissen happening that quickly. He follows the tech sector, among others.

“It’s just a proposal and they approach it very differently in the US than in Europe.” “They look much more at whether a monopoly does not lead to price increases or stops competition,” said Versteeg.

Stock prices

There is also hardly any response from investors on the stock exchange, says Versteeg. Many tech companies showed a decline in early September, but have since recovered somewhat.

In the year so far, technology companies have performed extremely well at the fair. For example, the Nasdaq index, which contains many tech stocks, is up 27 percent from the start of the year, while the broad US S&P 500 is up less than 7 percent.

Text continues below the video.

Amazon and Apple

Analysts also wonder whether there is a monopoly. “Companies don’t have to sell their products on Amazon’s platform,” Versteeg continues. “In addition, Amazon is becoming an increasingly larger player in the field of advertisements, breaking into the Google and Facebook market,” said Versteeg.

“Moreover, it depends on how you define the market. Apple has many competitors and Google’s competing Android has a market share for mobile phones that is many times larger than Apple’s iOS. How can you attribute market power to such a player?” Versteeg wonders.

China

Don’t forget the battle with China, says Versteeg. “The US is in a serious tech war with that country, the Americans would be crazy if they killed the goose that got the golden eggs.”

“You really need companies like that in the US, because China is ahead on a number of points, such as facial recognition and 5G,” said Versteeg.

Microsoft

He makes a comparison with Microsoft, which in a gray past was also a topic of discussion because of an (alleged) monopoly. Ultimately, no major measures were taken against Microsoft, according to Versteeg. It was no longer allowed to install its own internet browser in Office, but many customers would install it later, he says.

Microsoft also received a number of fines, but in the end the matter lasted so long that it was outdated, Wim Zwanenburg adds.

‘Break up AT&T not a success’

Stan Westerterp of Bond Capital Partners previously mentioned the split of telecom giant AT&T in the early 1980s.

That company was broken up into seven different parts, affectionately known as the ‘Baby Bells’.

“She did not like that afterwards and it was then said: we no longer do such a thing. You have not seen such large actions since then.”

Tags

Related Articles

Back to top button
Close
Close