Are Amazon, Facebook, Google too big for current regulatory rules?
Amazon (NASDAQ:AMZN) shares touched a fresh all-time high on Monday, building on Friday’s massive 13.2% post-earnings surge, as investors continued to push the Nasdaq to new record levels after blowout quarterly reports last week from three of the world’s biggest tech companies.
Shares of Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) also touched new highs, as investors are betting the trend of earnings and revenue beats will continue when the two tech titans report earnings later this week (Facebook on Wednesday and Apple on Thursday).
As investors celebrate the rising stock prices, some are calling on lawmakers to tighten the screws among these industry leaders with new regulations as big-tech critics allege that the ecommerce behemoth and some of its FAANG (Facebook, Amazon, Apple, Netflix and Google's Alphabet) peers have been operating at an unfair disadvantage.
“We have to look at the world as it is, and our laws that tend to favor tech giants and disfavor legacy businesses,” David Chavern, CEO and president of the News Media Alliance (NMA), a newspaper trade group that represents over 2,000 newspapers in the U.S., tells FOX Business. The alliance includes the Wall Street Journal, a property owned by News Corporation (NYSE:NWS), the sister company of 21st Century FOX (NASDAQ:FOXA), which is the parent company of the FOX Business and FOX News.
Chavern adds that these tech businesses that were “once cool start-ups aren’t start-ups anymore, they’re huge businesses with an immense impact on our economy,” and therefore, he argues that they shouldn’t be given “special treatment to make sure they grow, as they’ve obviously grown already.”
Meanwhile, President Trump’s former chief strategist and executive chairman of Breitbart News Steve Bannon, is also railing against the “Lords of Silicon Valley,” advocating the regulation of the big tech companies as public utilities, according to Axios. According to the report, Bannon says “these guys are running our lives, keeping our data, our content, and our communications.” President Trump himself has also criticized Amazon, blaming the giant for hurting retailers and jobs, in a tweet last August.
Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt - many jobs being lost!— Donald J. Trump (@realDonaldTrump) August 16, 2017
Amazon declined to comment to FOX Business for this article.
In July, the NMA urged Congress to revise antitrust laws in order to allow newspapers to bargain collectively with Alphabet (NASDAQ:GOOGL) (the owner of Google and YouTube) and Facebook, which combined, according to research firm eMarketer, currently control over 60% of the U.S. digital ad market and over 50% of the global digital ad market.
Last week, Chavern, along with legal experts and trade association leaders, testified at a House Oversight subcommittee hearing on information technology (IT) and the regulation of political advertising on social and traditional media, stemming from recent revelations that Russian operatives purchased online ads during the last election cycle.
Erin Egan, Facebook vice president of U.S. Public Policy, told FOX Business in a written statement that the social media giant “stands with lawmakers in their effort to achieve transparency in political advertising.” While a Google spokesperson said the company “supports efforts to improve transparency, enhance disclosures and reduce foreign abuse,” and is “evaluating steps we can take on our own platforms and will work closely with lawmakers, the FEC, and the industry to explore the best solutions.” Both companies declined to comment on calls for more anti-trust scrutiny.
Republican Rep. Will Hurd (R-TX), who chairs the IT subcommittee, said in his opening remarks that the hearing was part of a series of hearings being held “to analyze existing laws and regulations that may have become obsolete or need updating to reflect technological advances.”
Chavern contends that while the hearing focused on political advertising, and whether Internet businesses should have the same advertising disclosure rules that print and television companies do, it’s part of a bigger debate, as he argues there are a lot of “regulatory rules and regimes that apply unevenly to the tech world vs. legacy businesses.”
And legacy publishers aren’t the only ones growing increasingly concerned about the dominance of Silicon Valley’s tech giants.
According to the New York Times (NYSE:NYT), some smaller technology, entertainment and retail firms have “informally begun regular meetings and conference calls to compare notes about Google, Facebook and Amazon to find a way to join in a stronger opposition force.”
Business-reviews website Yelp Inc. (NASDAQ:YELP), which has been involved in a long public feud with Google regarding claims of Google participating in “scraping” content off its site, filed a new anti-trust complaint against the search giant in September.
Luther Lowe, Yelp’s vice president of global public policy, told FOX Business that Google’s current market share dominance “suggests the competitive environment is much less healthy,” than it was when the FTC decided to close the initial investigation Yelp lodged against Google in 2013.
Google said in a statement to FOX Business that the company has been in regular contact with Yelp about product changes and how they appear in search results and that the company’s new complaint was “the first time we’ve heard of Yelp’s complaint that images from their site may be appearing in the way they claim and if they’d raised this concern with us, we would have immediately taken steps to look at the issue and update these results, as we’re doing now."
After being hit with a record $2.8 billion fine this summer from the European Union for favoring its own shopping service over rivals, Google in late August offered a proposal on ways to make rivals more visible to shoppers.
Nonetheless, big tech retains high public popularity, according to a March 2017 poll conducted by public relations firm Edelman, which found that 75% of the public in the U.S., China, Germany, Japan and the U.K. trust tech companies, making it the most trusted sector in business, Edelman said.
However, Edelman also raised a red flag for the industry, showing that since the financial crash, trust in the banking industry has risen by 11 points, and energy by 9 points, while tech’s trust level has remained flat.