Facebook, Amazon, Apple, and Google will face a grilling from Congress. One tech stock stat is going to make the hearing insanely awkward.
Nothing exposes the sheer economic dominance of U.S. tech stocks like Facebook and Amazon better than the upcoming congressional hearing featuring four Silicon Valley CEOs.
In one sitting, the U.S. House Judiciary Committee will hear from Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, Apple’s Tim Cook, and Google’s Sundar Pichai.
All four men agreed to appear before the House voluntarily in late July.
The antitrust hearing comes at an awkward time for the four titanic tech stocks. Their combined market caps are equivalent to nearly a quarter of the U.S. economy’s annual output:
That adds up to $4.68 trillion, or 21.8% of annual GDP ($21.43 trillion as of 2019).
While that’s fantastic for longtime investors, it’s going to make it harder for the Silicon Valley CEOs to argue that their leviathan companies shouldn’t be broken up.
The stock market values these companies so highly precisely because of their monopolistic hold on the tech industry. That’s more true now than ever.
During the pandemic, their dominance has grown – not shrunk.
While the lockdown has destroyed lives and livelihoods. it’s been a blessing for the “stay-at-home” stocks that populate Silicon Valley.
Year-to-date, 15 traditional retailers have filed for bankruptcy. Many more could follow.
Bankruptcy is not a concern for Amazon, Apple, Facebook, or Google.
Amazon recorded a net sales jump of 26% in the first quarter, and its expansion plans have proceeded unhindered. In June, Amazon acquired autonomous car startup Zoox for over $1.2 billion.
The pandemic hasn’t stopped the lavish spending plans of Facebook, Apple, or Google either. In April, Facebook invested $5.7 billion for a 9.99% stake in Reliance Jio Platforms, an India-based telecom network.
Last week, Apple acquired enterprise software firm Fleetsmith. Alphabet purchased augmented reality smartglasses startup North just days later.
As millions lost their jobs and the U.S. economy took a nosedive, these four Silicon Valley stocks swiftly recovered. Excluding Google-parent Alphabet, they’ve all shot to new records.
Those optics could spark some uncomfortable questions for Bezos, Cook, Pichai, and Zuckerberg when they face the House this month.
The CEOs reportedly decided to appear jointly before the U.S. House Judiciary Committee to avoid being individually “singled out for intense scrutiny.”
That strategy may backfire.
Collusion like this between four companies worth nearly a quarter of U.S. GDP is why the antitrust subcommittee exists.