Antitrust Flexes Its Anti-Big-Tech Muscle
But excessive actions are unlikely to significantly harm Alphabet or Facebook.
The latest antitrust movement in the United States creates additional risk for Alphabet (GOOG)/(GOOGL) and Facebook (FB), but we believe this is already priced in, with both stocks fairly valued. Further, we don't believe investors should be overly concerned about a worst-case scenario.
As the 2020 elections approach, politicians, federal agencies, and international lawmakers have begun to investigate Alphabet's Google, Facebook, and several other Big Tech companies, proposing more stringent enforcement of antitrust laws and some calling for changes to or reinterpretation of existing statutes. However, the consumer welfare interpretation of antitrust law, in place for more than four decades, and recent cases, such as Ohio v. American Express in the U.S. Supreme Court, have set precedents favoring tech companies in general. While other cases, such as the 2011 Microsoft Internet Explorer settlement, do not look favorable, they have created a playbook for tech companies to navigate regulatory scrutiny and prepare for enforcement actions.
Ali Mogharabi does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.