WEBVTT 00:00:11.520 --> 00:00:16.400 here now to bring us up to speed on the ongoing big tech antitrust battle and the risk posed to 00:00:16.400 --> 00:00:21.520 investors and opportunities as well is IBD Tech Reporter Brian Deagan thanks for being here today 00:00:21.520 --> 00:00:28.560 Brian very happy to be here with you valley so with the ongoing antitrust battle with these 00:00:28.560 --> 00:00:34.400 mega cap technology companies like google apple facebook amazon and microsoft you and extent 00:00:34.400 --> 00:00:39.680 what exactly is on the table here we have lawsuits and legislation in the works 00:00:41.840 --> 00:00:48.960 something I like to call dog pile on big tech big tech in this case being apple amazon 00:00:48.960 --> 00:00:55.920 google facebook some cases microsoft and in some cases twitter and this momentum has 00:00:55.920 --> 00:00:59.520 been building for a couple of years and it really started to hit a peak last year 00:01:00.080 --> 00:01:06.560 and now this year we recently saw here the introduction of six anti-trust bills in the house 00:01:06.560 --> 00:01:15.360 judiciary committee that are specifically tailored at big tech and nobody else really and you know 00:01:15.920 --> 00:01:23.920 it's it's going to be a long process and so it's targeting so-called anti-competitive practices 00:01:25.120 --> 00:01:30.480 what would you say is the likelihood of this legislation passing 00:01:31.200 --> 00:01:38.880 it seems like there is bipartisan support uh but the impact to these big tech companies 00:01:39.760 --> 00:01:43.280 is yet to be seen but something investors need to be aware of 00:01:45.280 --> 00:01:50.080 yeah well in terms of there is bipartisan support something we don't see very often 00:01:50.080 --> 00:01:57.120 uh but it sort of ebbs and flows and um they're coming at it from different directions 00:01:57.680 --> 00:02:00.880 but you know when you when you talk about the likelihood of this passing 00:02:00.880 --> 00:02:09.440 um some quick history here in 1975 there was united states versus ibm it was an anti-monopoly 00:02:10.320 --> 00:02:16.400 lawsuit that went on for two years and then it was dropped without merit and ibm walked away 00:02:17.280 --> 00:02:22.400 the charge was that they had too much control over business computers and they absolutely were 00:02:22.400 --> 00:02:29.440 the dominant force and then in 1975 of course the famous united states versus microsoft uh 00:02:29.440 --> 00:02:35.680 case in which microsoft with was charged with monopoly power with the operating system 00:02:35.680 --> 00:02:43.280 and the browser the on their system that went on for a few years and ultimately got thrown out 00:02:44.560 --> 00:02:48.480 because they couldn't prove the government could not prove the case 00:02:48.480 --> 00:02:54.080 against microsoft so in fact microsoft basically got a slap on the hand and you see where they are 00:02:54.080 --> 00:02:58.720 today one of the you know biggest companies in the world so so that gives you an example 00:02:58.720 --> 00:03:04.800 this is going to be very hard to to win a battle like this because proving monopoly 00:03:04.800 --> 00:03:10.560 is going to be extremely difficult in addition to the fact that these companies have huge suns of 00:03:10.560 --> 00:03:18.000 money that they can use to spend on lobbyists and lawyers and whatever you want to fight them so um 00:03:18.000 --> 00:03:24.800 we're not gonna you're not gonna see any changes soon that's absolutely certain an 00:03:24.800 --> 00:03:33.760 ongoing battle it is but if we did happen to see you know some tightening and some oversight on 00:03:33.760 --> 00:03:40.080 so-called anti-competitive practices what would that look like it sounds like it would result in 00:03:40.080 --> 00:03:48.560 some pretty significant changes to a lot of the services that we know and love and use all the 00:03:48.560 --> 00:03:56.640 time but what do you think would be the impact of these companies if they did have to spin off 00:03:56.640 --> 00:04:04.480 their businesses in a big way or be prevented from buying out smaller companies to expand their reach 00:04:05.920 --> 00:04:13.840 yeah well you know the threat is real I mean uh these nhs lawsuits are very broad and expansive 00:04:13.840 --> 00:04:19.440 and you know to use an extreme situation you know google could be forced to divest youtube I mean I 00:04:19.440 --> 00:04:22.880 absolutely do not see anything like that happening but that's some of the direction 00:04:22.880 --> 00:04:28.960 that they're trying to go they're claiming that these these big techs have monopoly power in a 00:04:28.960 --> 00:04:34.960 way that crushes competition and innovation so one of the areas they're going after is making it 00:04:34.960 --> 00:04:40.480 harder to do an acquisition because as you often see you know a 200 million dollar company with 00:04:40.480 --> 00:04:45.840 a great idea gets scooped up by facebook and uh sometimes we never know what happens with it 00:04:45.840 --> 00:04:53.280 after that a lot of this is what we call being baked in the big investors are already sort of 00:04:53.840 --> 00:05:01.040 evaluating the potential outcome and have adjusted their level of stock interest in these companies 00:05:01.040 --> 00:05:06.960 so like you to give an example of what can happen though you know recently here facebook won 00:05:07.760 --> 00:05:15.520 uh an anti-trust lawsuit that the ftc had filed against them for monopoly power related uh 00:05:15.520 --> 00:05:24.000 to whatsapp and instagram and that was filed in december and when the decision came down 00:05:24.000 --> 00:05:29.840 uh the judge said sorry ftc you did not prove your case you you did not prove that 00:05:29.840 --> 00:05:34.880 facebook has monopoly power and the next thing you know facebook stock that same day hits the record 00:05:34.880 --> 00:05:40.640 high and reaches a valuation of a trillion dollars for the first time so once once the the 00:05:40.640 --> 00:05:46.000 pressure once it becomes obvious what's going to happen then you see these stocks react but usually 00:05:46.000 --> 00:05:52.320 you won't see them react violently not violently but aggressively until some decisions come down 00:05:54.320 --> 00:06:00.240 so even though there are potential risks here for investors these can also be 00:06:01.040 --> 00:06:06.320 news headlines around and decisions around this anti-trust battle battle can also be 00:06:06.960 --> 00:06:14.320 catalyst to the upside now also Brian could you comment on the consumer side of this and 00:06:14.320 --> 00:06:20.640 what we're seeing on that front in a recent ibd tip poll there were some interesting findings 00:06:20.640 --> 00:06:29.040 around the support for breaking up big tech or not where does the consumer stand on this issue 00:06:30.720 --> 00:06:36.560 uh I think when that poll is taken i'm going to assume that consumers really didn't have a 00:06:36.560 --> 00:06:41.040 good enough background or knowledge of what was what potentially could happen or what was going 00:06:41.040 --> 00:06:48.960 on because in the current anti-trust case uh that's you know in the house google had 00:06:48.960 --> 00:06:53.280 made the argument that hey you guys better watch out what you're doing because you could force us 00:06:53.280 --> 00:06:58.560 to effectively harm the consumer to take away things that the consumers really want you know how 00:06:58.560 --> 00:07:03.840 it is sometimes when you try to break something up you make it even worse I have a hard time actually 00:07:03.840 --> 00:07:12.000 seeing a a major breakup in any way of these big tech companies proving an anti-choice case is very 00:07:12.000 --> 00:07:18.000 difficult and you know and once it gets once the consumers start seeing that hey there i'm going to 00:07:18.000 --> 00:07:21.280 lose this or i'm going to lose that they're going to go what and they're going to raise their voices 00:07:21.280 --> 00:07:26.320 and the congress is going to start to listen i want to make a point here last year they 00:07:26.320 --> 00:07:34.000 were working on what's called section 230 of the communications decency act that was passed in 1976 00:07:34.000 --> 00:07:39.840 and it is the law that is said to have built the internet because it gave liability protection to 00:07:40.480 --> 00:07:47.440 the internet companies so for example if I posted something negative toward a person on 00:07:47.440 --> 00:07:52.960 twitter they couldn't sue twitter they would have to sue me twitter was not responsible uh 00:07:52.960 --> 00:07:59.440 for me putting a liable content on their site but this is where it gets rather strange because or 00:08:01.520 --> 00:08:06.800 it came into focus because of the presidential election where the social media platforms were 00:08:06.800 --> 00:08:12.160 so heavily used and abused that there was a lot of disagreement about what should be done 00:08:12.160 --> 00:08:18.480 so they said it's section 230 we need to rewrite it or we need to throw it in the trash can and 00:08:18.480 --> 00:08:24.000 those hearings went on for a while the the statement was that if they did rewrite 00:08:24.000 --> 00:08:30.720 it they could rewrite it in a way that would force twitter facebook and all these social media sites 00:08:30.720 --> 00:08:36.880 to tear out of their systems any content that say I wrote and put on the website because 00:08:36.880 --> 00:08:42.880 now they're responsible for what I write so people wouldn't like that I i wouldn't like that 00:08:42.880 --> 00:08:50.320 right yeah so that's yet another aspect of this anti-trust battle what would you say 00:08:50.320 --> 00:08:59.680 is the timeline that investors could expect this to play out there's still a lot to sort through 00:08:59.680 --> 00:09:08.960 here do you think that as we progress and as these companies in some cases continue to expand their 00:09:08.960 --> 00:09:16.240 reach in various verticals can we just expect this kind of friction to continue 00:09:19.200 --> 00:09:24.800 there's a lot of suits out there and moving at different paces for example the ftc suit that I 00:09:24.800 --> 00:09:32.400 referred to earlier has nothing to do with the six builds that were just recently introduced section 00:09:32.400 --> 00:09:36.480 230 has nothing to do with that either they're sort of separate the other thing I would point 00:09:36.480 --> 00:09:40.960 out is europe is going after big tech in a very aggressive way they're they're finding they're 00:09:40.960 --> 00:09:45.840 they're taxing their profits they're they're they're doing a lot of stuff that the united 00:09:46.960 --> 00:09:51.200 washington legislators are looking at and you know europe tends to be much harsher 00:09:51.200 --> 00:09:56.880 on these companies than the united states might normally be so you know I know google there's 00:09:56.880 --> 00:10:03.280 a google suit out there forgets what it is but you know there's an own suit against google amazon 00:10:03.280 --> 00:10:07.120 is being pursued because of the way they treat their third-party vendors 00:10:07.840 --> 00:10:12.560 um and so so there's a lot of moving parts you know in a lot of manner speaking you 00:10:12.560 --> 00:10:16.800 just don't know until you know until until it finally comes down like nobody knew the other 00:10:17.360 --> 00:10:23.120 recently here that that that facebook decision was coming down so usually these things happen and 00:10:23.120 --> 00:10:27.280 you find out after the fact and the stocks already moved before you get a chance to do anything 00:10:28.480 --> 00:10:37.040 but but like like I previously said these are hard cases to prove and me personally I 00:10:37.040 --> 00:10:41.440 you know maybe they're going to do some touch-up around the edges and make it look like they did 00:10:41.440 --> 00:10:47.440 something but I have a hard time seeing anything major that would cause one of these companies to 00:10:47.440 --> 00:10:52.880 be severely hurt again referring back to microsoft i mean that was a very aggressive case against 00:10:52.880 --> 00:10:58.480 microsoft from not from monopoly power and they couldn't do it well we'll have to see how it all 00:10:58.480 --> 00:11:03.680 unfolds and we know Brian that you're going to be covering it and keeping us up to date every step 00:11:03.680 --> 00:11:08.720 of the way but really good for investors to stay on top of this if they own any of these stocks 00:11:09.280 --> 00:11:15.760 they should be aware of the potential impacts of even just headlines with 00:11:15.760 --> 00:11:27.840 all of the antitrust drama so thanks so much for being here today Brian thank you very much