5 Big Tech Regulatory Risks To Watch

For years, regulators and politicians have questioned the power and size of the largest U.S. tech companies, including Apple, Inc. AAPL, Microsoft Corp MSFT, Alphabet, Inc. GOOG GOOGL and Amazon.com, Inc. AMZN.

Recent big tech crackdowns in Europe and China may have emboldened U.S. President Joe Biden and Congressional Democrats to finally take some bold measures to keep tech giants in check.

Here’s a look at five regulatory risks U.S. tech stock investors should be watching.

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1. New FTC Digital Division

House Democrats recently proposed setting aside $1 billion for the Federal Trade Commission to establish a new division focused entirely on digital privacy violations, cybersecurity incidents and online abuses. If approved in its current form, the new legislation could increase the FTC’s total appropriations over the next decade by roughly 30%.

2. Antitrust Lawsuits

Some state regulators are taking big tech companies on in court. In July, attorneys general from 36 states and one district filed a new lawsuit against Google targeting its Google Play store. A separate antitrust lawsuit against Google includes the U.S. Department of Justice. Amazon is the target of an ongoing antitrust lawsuit involving pricing.

3. American Innovation And Choice Online Act

The American Innovation and Choice Online Act is a House bill that would help legally define and limit tech platforms that have more than 50 million monthly U.S. users and have stocks with market capitalizations of at least $600 billion — presumably Apple, Google, Amazon, Facebook and Microsoft. The bill would make it illegal for tech companies to give preference to their own products and services over competing products and services on their own platforms.

4. Platform Competition And Opportunity Act

This House bill would make it more difficult for big tech companies to acquire smaller competing companies that could pose a threat to their dominant positioning in an industry. This antitrust legislation takes aim at companies like Facebook, that have taken a “copy, kill or acquire” attitude toward potential competitors.

5. The Merger Filing Fee Modernization Act

This bill would make it more costly for large tech companies to request merger approval and make it cheaper for smaller companies to do the same. It would also provide more funding for the FTC and DOJ to investigate proposed tech mergers and enforce antitrust laws.

Benzinga’s Take: It doesn’t seem that big tech investors are too concerned about a large impact from a regulatory crackdown at this point. Even after huge runs in recent years, shares of Alphabet, Facebook and Microsoft have far outperformed the S&P 500 so far in 2021, while Amazon and Apple are up 5.9% and 12.1% year-to-date, respectively.