03.08.2020 – Special Report. Hard times for the big high-tech companies in Silicon Valley: Interfering in the election campaign in favor of the Democrats is likely to have consequences. In addition to this, there is the shameless building of monopolies, which destroy jobs and small companies. And since Facebook, Apple, Amazon and Google, and to a small extent Twitter, are pillars of the stock market, investors should follow the issue closely. There may soon be short opportunities here.
Monopolies and censorship
What happened last week in front of the House Judiciary Antitrust Subcommittee was a monstrous spectacle. Four company bosses had to answer questions – Tim Cook from Apple, Mark Zuckerberg from Facebook, Sundar Pichai from Google and Jeff Bezos from Amazon.
Val Demings, Democratic politician on Joe Biden’s short list for vice president, asked Zuckerberg why he was cutting off access to tools from competitors like Pinterest, but not from non-competitors like Netflix.
Ken Buck, a Republican from Colorado, reported that the founder of a company called PopSockets had to pay $2 million to Amazon – only then did the online retailer stop selling fake products on the platform. Amazon gets away with such scams because Jeff Bezos is the owner of the “Washington Post” – which is pro-democracy. The Democrats hold the majority in the House of Representatives; under Barack Obama Amazon had nothing to fear. Now, however, things could get out of hand.
Businesses and newspapers die
“The Guardian” wrote: “Congress’s historic tech hearing suggests antitrust crackdown could come soon”. The Guardian said that America lost around 100,000 small companies between 2000 and 2015, many of which went down on their knees because of Amazon – while Amazon avoided taxes, the company undercut prices and increased fees. In addition, thousands of media outlets have been closed because the advertising revenues go to Google or Facebook; two thirds of the counties in the USA no longer have their own newspaper.
Possible blacklisting of the conservatives at Google
With negative consequences for the diversity of opinion. After the hearing, Republican Senator Tim Cotton demanded clarification from Google about the blacklisting of conservative media. In a letter to CEO Google Sundar Pichai, he demanded an answer about a change in algorithms in May. Pichai had earlier testified under oath that it was not possible to manipulate the search. But Alex Marlow, editor-in-chief of the right-wing website Breitbart News, told Fox News that search engine traffic had dropped by 99 percent since May. Specifically, Breitbart accuses Google of ensuring that its own website is hardly ever accessed via Google. While most news sites receive 30 to 50 percent of their online traffic through search, Breitbart’s is only 9 percent. Other conservative websites are also blocked.
Big Tech no more
Whether Big Tech will be crushed depends above all on the election in November – the Republicans are likely to make short work of it if they march through. This could mean an antitrust smashing for the stock market: If the powerhouses Google – i.e. Alphabet – Facebook, Apple and Amazon are decapitated, then these corporations should initially be turned into a few smaller units. Whether the many small techs that will then emerge will operate as successfully as the gigantic units currently in existence is a matter of doubt – they will no longer be able to crush the competition with their market power. Perhaps not all of them will be included in the S&P 500 due to lack of profits, perhaps some will be swallowed up by big competitors. Either way, managers of investment funds will first have to reorient themselves in this case. Therefore, the Nasdaq is likely to be turbulent. We will keep an eye on the matter for you!
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