Wednesday’s interrogation of four tech titans by the U.S. House Judiciary Subcommittee on Antitrust marked a concerted display of bipartisan hostility toward some of the largest technology companies in the world.
But lawmakers failed to score decisive points, particularly with regard to the companies’ alleged violations of antitrust law, and shares of
(FB) rallied on the day.
“I’ve long thought and continue to think [antitrust regulation] isn’t going to be a major threat to these companies,” says Douglas Melamed, a Stanford University law professor and former general counsel of Intel. “They aren’t going to bust up Facebook or Google. Conceivably, they might halt some minor acquisition, but there’s nothing that’s going to go to court.”
Melamed says that there was no clear legislative agenda evident from lawmakers’ questions, which covered a range of perceived grievances and didn’t delve into whether antitrust laws need to be adjusted.
Over about 5 ½ hours, socially distanced, masked committee members grilled Alphabet’s Sundar Pichai, Amazon’s Jeffrey Bezos, Apple’s Timothy Cook, and Facebook’s Mark Zuckerberg, who were beamed onto monitors set up throughout the chamber in the Capitol.
I’ve long thought and continue to think [antitrust regulation] isn’t going to be a major threat to these companies.
Committee members frequently interrupted the CEOs to ask questions covering everything from Facebook’s advertising practices and acquisition strategies to the fairness of Google’s search results, and whether Amazon used its third-party seller data to develop competing products. Apple’s perceived dominance through its app store received much less attention.
Despite digressions, both political parties managed to get their digs in. “The companies as they exist today have monopoly power,” subcommittee chairman David Cicilline (D., R.I.) said as he adjourned the session. “Some need to be broken up. All need to be properly regulated.”
Republican ranking member James Sensenbrenner (R.,-Wis.) said that “as the business landscape evolves, we must ensure that our existing antitrust laws are applied to meet the needs of our country and its consumers.”
Yet, several observers say the hearing lacked antitrust content, with only about a fifth of the questions relating directly to antitrust law, according to former Justice Department antitrust attorney Avery Gardiner. “They got very close to some important issues and then didn’t pursue them,” she says.
Baron Funds portfolio manager Michael Lippert says he is much more concerned with European antitrust activity than U.S. threats. “There’s a lot of bluster, but I don’t think there is a lot that can be done under our laws,” he says.
Investors seem to agree. In addition to Wednesday’s strong showing, Facebook, Amazon, and Apple all surged on Friday after they posted strong second-quarter earnings. “I don’t think investors were all that worried after yesterday, and they won’t be until they get a better sense about a specific risk area,” Michael Cuggino, president of the Permanent Portfolio Family of Funds told Barron’s on Thursday. (For more on earnings, see Big Tech’s CEOs Got the Last Word. Here’s Why Tech Earnings Were So Important.)
For the moment, the stocks’ performance will be governed by whether the companies continue to see strong growth. T. Rowe Price portfolio manager Joseph Fath notes that because
(MSFT) continued to innovate, its shares outperformed the S&P 500 by more than 900% during the years when the government pursued an antitrust case against it. In the near term, he says, an antitrust threat won’t dent tech industry earnings.
Write to Max A. Cherney at [email protected]