Just seven stocks -- Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta Platforms -- make up close to $11 trillion in market value and contributed about 75% of returns of the S&P 500 in the first half of 2023, according to a recent Bank of America report.
Big Tech is soaring to new heights -- by quickly gobbling up any potential competition.
That worries the Federal Trade Commission and the Biden administration. The so-called "magnificent seven," they fear, could become monopolies that buy and squash any new innovation so they can remain on top.
The question is whether the FTC and White House have the power to stop that.
What's happening: Two years ago, Lina Khan, 34, became the youngest and perhaps most progressive leader of the FTC's 100-plus year history.
Khan's tenure was heralded as the start of a new era of antitrust governance in the US that would challenge decades of loose policy towards mergers and acquisitions, which allowed tech titans to swallow up their competition and emerge as companies with trillion-plus dollar market caps.
So far, those challenges haven't made a huge impact.
Apple is now worth $3 trillion, the only company ever to reach that milestone. Khan, meanwhile, was unable to successfully block Microsoft from closing its $69 billion deal purchase of videogame publisher Activision Blizzard last week. The FTC is appealing, but lost a similar case earlier this year when it was unable to prevent Meta Platforms from purchasing virtual reality startup Within Unlimited.
Earlier this month, Khan sat before Congress for more than three hours while facing a barrage of criticism from Republican policymakers who accused her of "harassing" businesses during a House Judiciary Committee hearing.
"You are now zero for four in merger trials," Representative Kevin Kiley, a Republican from California, said to her. "Why are you losing so much?"
But Khan appears undeterred, and late last week, the FTC and President Joe Biden released a set of long-anticipated draft updates to the nation's merger guidelines, introducing potentially comprehensive changes to the way the US government reviews mergers and acquisitions for the first time in more than a decade.
The proposed changes could lead to major shifts in how the US government identifies — and tries to block or alter — deals it believes are anticompetitive, reports my colleague Brian Fung.
Some members of the business community aren't happy about that.
But on Monday, Khan defended her record and actions at The Economic Club of New York.
"In federal court, we have lost two merger cases. We have brought somewhere between 13 and 20, depending on how you count," Khan said. "In the scheme of our merger enforcement program, losing two is OK."
The FTC, she said, doesn't have any specificity about how big or small a business should be.
"Congress, when passing the antitrust statutes, was setting out a policy preference, in many cases, for competition over monopoly," Khan said. "That said, the statutes don't prohibit being a monopoly. They only prohibit becoming a monopoly through illegal tactics. And so that's the sort of thing that we look at."
What's next: Khan, who first garnered attention when she wrote a 98-page article about Amazon's anticompetitive behavior for the Yale Law Journal, is undeterred. She's preparing to take on Amazon headfirst in the coming months with a big antitrust suit.
Khan's FTC has already put forward three cases against Amazon, but according to a Bloomberg report, they are getting ready to take them on once again. The suit, reported Bloomberg, will focus on Amazon's core marketplace business -- alleging that Amazon uses its power to reward merchants that use its logistics services and punishes merchants that don't.
Tech earnings also begin this week. Alphabet and Microsoft report on Tuesday afternoon followed by Meta on Wednesday.
No comments:
Post a Comment