The Walls Are Closing In On Tech Giants

from Axios

Tech behemoths Google, Facebook and Amazon are feeling the heat from the far-left and the far-right, and even the center is starting to fold.

Why it matters: Criticism over the companies’ size, culture and overall influence in society is getting louder as they infiltrate every part of our lives. Though it’s mostly rhetoric rather than action at the moment, that could change quickly in the current political environment.

Here’s a breakdown of the three biggest fights they’re facing.

More here.

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3 Responses to The Walls Are Closing In On Tech Giants

  1. Jeffrey Khoudary September 29, 2017 at 4:39 pm #

    I think the title of this article is very misleading. The articles say tech giants like Google and Amazon are getting heat from the Republicans and Democrats over things their ability to control the news and the content that people see. Throughout this article, we get the impression that this is all new concerns and the walls might cave in any minute. But this isn’t the case at all.
    For years people have been worried about the power these sites how to censor the new and control what people see and more importantly, what they don’t see. They quote a senator that brought up concerns that the big tech giants are “skewing political and public discourse.” And this is understandable because these companies have the ability to skew the political views of the people. They control what articles go onto the front page and the sites that people are seeing. In 2005 Google had their site in China, and they censored what the 1.3 billion people in China could see. The censored internet in China lasted for years, and in that time their stock price tripled. It is no different for Facebook. Last month it came out that Facebook sold ad space to the Russia government and it was used to spread fake stories and create tensions between both parties. While this is a huge story, Facebook’s stock price has not taken a hit. The concerns about the power these companies have always been there, and there is not impeding risk that these sites might go under.

    https://www.cnbc.com/2017/09/29/russian-facebook-ads-how-many-people-could-you-reach-with-100000.html

    http://money.cnn.com/gallery/technology/2016/05/23/banned-china-10/3.html

  2. Arielle Fortes September 29, 2017 at 8:48 pm #

    ‘Giant’ is a word that can be used in many different ways. It is the name of an alleged species or person who is many times larger than a human, and even the name of a football team that is based in New York, but have you ever heard of a ‘tech giant’? You have probably heard of something that these words describe of though. Have you ever heard of Google? Or perhaps Facebook? The most likely chance is that there would be no reason to explain wither of these companies. Google is not simply just a search engine that many of the world’s population use today but also provides the world with many other uses. Not only is this company multinational, it also has provides services to many people including services that bear its name and others who do not bear the name of the company. Some of the examples of the former are Google Photos, Google Drive, Google Maps, Google Translate and one of the most popular Google’s email server most popularly known as ‘Gmail”. One of its subsidiaries is YouTube and is one of the popular sites for videos. Facebook is newer than Google but is extremely popular as well. This service is used all over the world as a social networking service. It is approaching close to two billion user worldwide. Both of these ‘tech giants’ have extreme influence and some people are starting to get with concerned of how much influence they wield.
    One of the main issues that some people have with these companies is the increasing issue of the companies themselves using their personal opinion to influence what is happening in the world. Recently in Charlottesville there was a lot of violence occurring and some of the tech giants and some other companies started to act of their personal view. For example, Google revoked of particular server related to a white supremacist group. This started worry people of specific interests group and especially politicians that companies would start do things such as the matter mentioned in bode more. And do to the fact that people use companies like this so frequently it makes dangerous to certain parties, especially due to the wide influence that they world. So many people use these services and sites that some politicians fear that this would eschew the view of certain people in the public sphere causing more support for the certain right or party. However the main problem with wanting for these companies to do this is regardless these companies are not government based but privately owned and if the government steps in it would potentially cause more chaos if the government tried to exert more pressure or authority over them.
    Another problem is that there is a big problem for Facebook and other social media companies, since there are many people certain that the fake news that was centered on these companies but especially Facebook contribute greatly to the process and results of the American election. In addition we have no way to tell if this is actually true or not and it matters. If this is the case then Facebook basically ‘interfered’ with an election although indirectly. And the president has a big impact on the national policy of our nation. Not to mention they are also the face of our nation in general and that they are also interacting with foreign dignitaries and speaks for America in most cases. This is where these companies have encountered a problem. They have to try and be politically neutral overall or at least in public because it is in their best interest in making profit to have everyone want to use their services. In addition, thes companies also have access to a large mount of information. google maps can access your location if you leave your GPS on your phone on or use it for traveling. Or Google has access to the amount of information that people searched on Google and can use that information to make a profit

  3. Henry Steck October 6, 2017 at 5:34 pm #

    It’s pretty interesting typing in “FB EQUITY(f3) RV” or “FB EQUITY BQ” on the Bloomberg Terminal and hitting . Both functions yield similar results… If we focus on the relative valuation metrics provided, we can draw some very interesting conclusions about this area of the market.

    First the multiples in this area. FB is cheap relative to the other companies in question in this article at a staggering 37x earnings, with AMZN at 249x. These have ridiculous growth baked in. I can buy growth names in almost any other sector at cheaper multiples. But these shocking multiples may be justified by an even more ominous sign. If you look at the comps in the RV area of both functions, you will see that the companies listed aren’t really even comps. On a deep level, would you call Netflix a comp to FB? Because I wouldn’t. FB has no comps because it is virtually a monopoly. Who else is offering the same portfolio of services and has a market cap of nearly half a billion dollars.

    As you have stated professor, what makes this situation worse is that US regulators are blind to the situation. They are used to the AT&T cases—Companies whose balance sheets are dominated by tangible assets, making it clear to see who is dominating a market. Regulators probably aren’t looking at the fact that FB has over two billion active users each month, which could make it the largest country in the world by population.

    The same goes for AMZN. Google finance lists the companies compass as CS, IBM, MSFT, GOOG… All long shots at comparisons. They even list toy maker Mattel (MAT). Do these really sound like competitors for Amazon? Who else not only has a similar product portfolio, but also possesses a market cap approaching 500 billion and can disrupt entire industries by making 13.5 billion dollar acquisitions with stacks of FCFs. And the US regulators? They are nowhere to be found. Even the European Commission (EC) has had more to say about companies like FB and AMZN, but not by much.

    Let’s compare this to one of my favorite industries, the rails. I love industrials- I follow industrial services way more than tech. I’ll give you an example There have been many attempt to combine some of the smaller members of the 7 total Class 1 (largest) railways in the US. Even combining two smaller players with market caps of around $20 B, putting them well below the total market cap of the largest members of the group (in assets too) has been impossible. The last attempt between CP and NSC was never ended up being fully set in motion after worries about years of regulatory delays and a potential “no” from regulators gave both companies the creeps. Again, like AT&T, these M&A plans are the ones regulators have been dealing with in the US for centuries. With huge PP&E on the B/S, and thousands of miles of track, they are comfortable denying mergers in this area.

    Why doesn’t this happen when AMZN goes out and acquires Whole Foods for $13.5B? Where are the regulators? That is the question which needs to be asked immediately. Business, if left to consolidate too far can cause harm to the consumer. What happens when FB turns and uses all the data it has on billions of people in an evil way?

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