From a note to clients by analyst Daniel Ives that landed on my desktop Tuesday:
For Facebook there was a lot of focus on its new cryptocurrency, Libra as well as Calibra, its newly formed subsidiary providing financial services… Google was probed on YouTube as well as its search engine’s algorithms and if they keep consumers safe while also not to favor their products in search results. For Amazon questions focused on third party sellers on its platform and how the company keeps the playing field level vs. the likes of its own products. In Apple’s case regulators were mostly focused on the AppStore, not hesitating to bring up the Spotify issue as the company responded that it charges a 30% fee for in app purchases and it relies on a thriving ecosystem. (emphasis mine)
We reiterate our belief that this broader Beltway vs. Big Tech battle is more bark than the bite of broader structural changes across the tech food chain… Current antitrust law does not provide for a forced breakup solely due to the size of the business; if it did, Walmart would have been broken up decades ago. Instead, the objective standard is whether a company engages in anti-competitive behavior, thereby driving up prices for consumers. In our opinion a broad movement to break up large tech companies solely because of their size will fail without a change to existing antitrust laws; and in order to change the laws Congress would have to agree, which we view as exceedingly unlikely. We ultimately expect a “no harm, no foul” outcome on these FAANG names as the 202 area code comes knocking as we continue to be bullish on FAANG plays into the rest of 2019/2020.
My take: Apple got off easy. Its witness, chief compliance officer Kyle Andeer, fielded so few questions in the first round that Rep. Kelly Armstrong (R, N.Dak.) threw him a few softballs in the second round just to even things out. (Sample Q: “Is Apple more of a hardware business, a software business or a platform business?”)