As of last week, the Big Four (Amazon, Apple, Facebook, and Google) have a combined market cap of $3.2 TRILLION which represents over 15% of the $20 trillion US economy.
In 1997, shares of Amazon (AMZN) & Apple (AAPL) traded below $2 per share. Facebook (FB) & Google (GOOGL) hadn’t even been started. It was the dawn of the Internet Era. The following year, Google was launched by a pair of Ph.D. students who now collectively own 14% of a $835 Billion company. Mark Zuckerberg was 14 and probably hadn’t started applying to Harvard.
BIG TECH DRAWS THE SPOTLIGHT
Notorious B.I.G. had it right when he said ’More money, more problems.’ In the past 6 months, The Big Four have drawn the attention of regulators, congress, and democratic presidential candidates for anti-competitive practices, privacy concerns, and manipulative advertising. Mark Zuckerberg even doubled his annual security bill. He’s now receiving $20 million from Facebook to protect himself and his family.
Large tech giants allegedly stifle small-business competition and act as de-facto monopolies. Face it, you can’t just go use the other Facebook. There is no alternative product.
Data & privacy issues remain a concern for lawmakers after the Federal Trade Commission recently negotiated a $5-billion fine with Facebook for “sacrificing security and civility for clicks.”
This comes in the wake of the Cambridge Analytica scandal. In that case the federal judge in San Francisco ruled this Monday to allow a class action filed by 37 states to proceed.
A $5 billion fine against Facebook is to make headlines; not a difference. $5 billion is less than 10% of Facebook’s revenue in 2018. It’s a slap on the wrist for our robot friend Zuckerberg.
Senator Elizabeth Warren recently vowed to break up the monolithic giants, Amazon, Google and Facebook, if elected U.S. president. Bernie Sanders has consistently denounced Amazon for paying $0 in taxes in 2018. No seriously… You read that right: zero dollars in taxes.
Meanwhile, most others have kept more tempered tones. This is likely due to the fact that Google, Amazon, and Facebook spent nearly $50 million in lobbying efforts in 2018. Those checks keep rolling in.
Despite Amazon’s PR department being riddled with accusations of inhumane, sweatshop-like working conditions, cities aggressively courted Amazon’s secondary headquarters bid with tax breaks.
All four stocks have outpaced the S&P 500 this year.
Tech innovation is outpacing regulators. The Big Four are continuing to draw negative press, potentially causing short-term price decreases in conjunction with negative trade news. But none of us are going to make it the rest of the day without using Google (probably) on a MacBook or iPhone.
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