By Matt Salm, Investment Analyst
For the past few years there has been a growing debate about whether America’s largest tech companies – which happen to be the largest companies in the world by market capitalization – have abused their market power to unfairly harm competitors. This debate was front and center this week when the CEOs of Apple, Amazon, Facebook, and Alphabet (Google’s parent company) were called to testify before Congress.
Their testimony came at the end of year-long investigation by the House of Representatives into whether America’s tech giants have engaged in anti-competitive practices.
The hearing, which lasted nearly six hours, demonstrated bipartisan frustration with the Silicon Valley giants. In an effort to deflect criticism, all four companies were sure to highlight their substantial contributions to the US economy. While this is undeniable, the subject at hand is if they’ve engaged in anti-competitive practices that ultimately hurt American consumers, workers, and the economy as a whole. Lawmakers from both sides of the isle also grilled the business leaders about improper data use, censorship, combatting disinformation, and other issues central to digital life. Everyone had something to complain about.
It’s worth noting that the ongoing trade war with China has direct implications for these companies, as well. They seem to be arguing that America needs Amazon, Apple, Facebook, and Google to champion free markets, freedom of information, and free expression at a time when certain corners of the globe are growing increasingly hostile towards these values. If American companies aren’t large and powerful, how can they fend off competition from Chinese firms like Tencent, ByteDance, and Alibaba?
As I’m not a lawyer who specializes in anti-trust litigation, I’ll stay away from commenting on whether big tech has engaged in illegal anti-competitive practices. But as an investor, I would keep an eye on Washington’s evolving relationship with Silicon Valley. Altering how big tech is regulated could shape the future of the American and global economy, for better or worse.