Tech’s day of reckoning on Capitol Hill was long and harsh
By Wed, Jul 17, 2019
Tech’s day of reckoning Tuesday on Capitol Hill started with skepticism about Facebook Inc.’s proposed digital currency, and ended with a spirited debate over charges of anti-conservative bias on Alphabet Inc.’s Google search. In between, the industry’s Big Four took some plenty of body blows from both political parties.
Nonetheless, shares of the four companies that were placed under the microscope of three different Congressional hearings remained largely unchanged, underscoring their inexorable march to record market valuations, generally strong quarterly results and mounting influence on the global economy.
Facebook’s FB, -0.03% stock was flat at $203.84, and Alphabet GOOGL, +0.26% GOOG, +0.28% shares were up slightly to $1,153.46. Shares of Apple Inc. AAPL, -0.35% were flat at $204.50. Amazon.com Inc. AMZN, -0.55% was down 0.5% to $2,009.90. The quartet have a cumulative market valuation of more than $3 trillion.
While the government, consumers and privacy advocates may be concerned about the tentacles of Big Tech reaching into their lives, investors don’t seem to be. “As long as advertisers get high ROI on Facebook, which is by far the largest platform in town, there is no need to look elsewhere,” Shebly Seyrafi, an analyst who covers Facebook at FBN Securities, told MarketWatch in a phone interview, assessing the one-year high in Facebook’s stock price. “An antitrust investigation will take years, and legislation a while. Facebook is in no immediate trouble.”
But while investors aren’t sweating it, representatives from all four companies took their turns on the hot seat Tuesday, facing an onslaught on acidic, harsh comments.
Perhaps no company took more of a grilling Tuesday than Facebook. Its prospective digital currency, called Libra, was met with withering skepticism from the Senate Banking Committee over regulatory and trusts issues, and the company was later singled out as an antitrust menace in an afternoon hearing before the House Judiciary Committee.
Read: House Judiciary Committee presses Big Tech on anti-competitive behavior
“I don’t trust you guys,” Sen. Martha McSally, R-Ariz., a member of the Senate Banking Committee, bluntly told Dave Marcus, who heads Facebook’s Libra cryptocurrency project, during an earlier hearing. That single line seemed to sum up the day.
Also see: Facebook’s Libra cryptocurrency project gets blistering reception from Senate
Apple, Amazon and Google didn’t get off scot-free. Each took incoming arrows for user-data transgressions or restrictive business practices. Apple is being challenged in a class-action lawsuit over the way it manages its App Store, as more than one House member pointed out during its hearing. The suit claims Apple acted as a monopoly by requiring iPhone and iPad customers to download apps only from its portal while taking a cut of some sales made through the store.
Google, meanwhile, withstood a battering from Sen. Ted Cruz, R-Texas, and his Senate Judiciary subcommittee. No surprise, given the title of the hearing, “Google and Censorship through Search Engines.”
“The hourglass has run out on regulation and tech,” Sen. Richard Blumenthal, D-Conn., said in the Google-search hearing. “Big Tech is in a perfect storm.”
Karan Bhatia, Google’s vice president of public policy and a former senior official in the George W. Bush administration, was also battered by Sen. Josh Hawley, R-Mo., for the company’s business dealings in China.
Not to be overlooked, Amazon was repeatedly questioned on its growing impact in the retail industry, and its impact on smaller merchants.
It all made for an unrelenting assault on companies that rarely find themselves in defensive postures. But they might get used to the feeling, if Tuesday was any indication. And more is on the horizon, with potential antitrust investigations of all four companies by either the Department of Justice or Federal Trade Commission.
“Everybody wants to take a swipe at Big Tech these days,” Stanford law professor Doug Melamed told MarketWatch. “But the stock market seems to be ignoring all that is happening out of Washington, except for the Fed.”
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