Benjamin Rosen

About the Author Benjamin Rosen

Originally from Pittsburgh, Ben Rosen is a student at the University of Michigan -- Ross School of Business pursuing his degree in Finance and Management. Ben came to intern for Smarter Analyst after his freshman year where he developed a strong passion for financial markets and confirmed his interest in pursuing a finance-related career. Ben is involved in a number of different organizations, including BBA Finance Club, Michigan Real Estate Club, Enactus, and the Michigan Investment Group, where he serves as sector head for the technology, media, telecommunications desk. In his free time, Ben enjoys playing sports, travelling with friends, and rooting for the Pittsburgh Steelers.

Congress Bares Its Teeth at FAANG Tech Giants; Wedbush Weighs In

4 of 5  big tech representatives to attend antitrust meeting today.

Facebook (FB), Apple (AAPL), Amazon (AMZN), and Alphabet (GOOGL) are facing pressure–for being too big. On Tuesday, Congress will hold a “dominant platforms and innovation” antitrust hearing for 4 of tech’s largest domestic players. Both the Federal Trade Commission (FTC) and the Department of Justice (DOJ) are concerned that tech behemoths’ market power on online platforms has gotten too strong, and law enforcement is striving for change.

Policy executives from each company will testify in front of the House Antitrust Subcommittee to, as Congress states, “examine the impact of market power of online platforms on innovation and entrepreneurship.” The FTC and DOJ are fed up with big tech’s tight grasp on e-commerce, cloud-based data, digital advertising, and other industries with few other competitors. However, while each of these companies has managed to literally integrate themselves into everyday life, Congress is unable to make an antitrust case on any of these firms on the basis of size alone. That explains why the FTC and DOJ are still in the process of constructing a potential antitrust case. Is it time for these companies to worry?

According to Wedbush analyst Daniel Ives, not at all. Ives is confident that Facebook, Apple, Amazon, and Google are all in the clear. The analyst highlights the fact that current antitrust laws state that “the objective standard is whether a company engages in anti-competitive behavior, thereby driving up prices for consumers,” which is almost the complete opposite of the case with these companies. Aside from Apple, each firm offers their products and services at virtually the lowest available costs.

In other words, the only way that law enforcement can have a potential antitrust case against these companies would be if Congress were to change the existing antitrust laws altogether. However, in order for that to occur, Congress must actually agree on new terms, which Ives deems highly unlikely.

While Ives lacks confidence that any changes will be made to the existing regulations, he does recognize the fact that the issue of big tech dominance is receiving increasingly more attention. However, the analyst believes that rather than forcing breakups of the underlying businesses, this hearing could actually mark the “start of broader structural changes across the tech food chain and will likely result in business model tweaks and potential DOJ/FTC fines in a worst case scenario.” In fact, he expects that these growing tensions could potentially prove to be a catalyst for more technological innovation from each of these companies in the future. As such, Ives maintains a bullish outlook on all FAANG stocks.


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