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    FAANG, good days are over?

    2019-03-14 08:17:22

    International Finance News

    For the 2020 US presidential election, candidates are eager to come up with a variety of suggestions to increase their influence. Some time ago, the discussion of the rich tax accounted for the headlines of the major media, and recently, the technology giant has been pushed to the forefront.

    Recently, US Democratic Senator Elizabeth Warren posted an article on social media entitled"How do we split a large technology company"Article, she said,If she wins in the 2020 general election, she will spin off large-scale technology companies such as Amazon and Facebook, and then carry out major structural reforms in the technology industry to promote healthy competition..

    According to a survey by Bank of America Merrill Lynch, US active stock fund managers have reduced the ratio of technology stocks to the lowest level since May 2016, and the US technology stock market has been enthusiastic.

    0 1 Technology giant into a politician target

    In Warren's view, technology giants have too many resources and powers. They use the Internet to suppress small businesses and innovations and replace the broader interests of the American people with their own economic interests. What she has to do is to break this monopoly and let the market return to a healthy competitive relationship.

    Her plan mainly involves two parts:

    The first part, through legislation, requires that large-scale technology companies with annual global incomes of more than $25 billion cannot have both the management rights of the platform and the businesses of the platform. For example, Google cannot have an ad exchange at the same time, and has its own business on the platform;

    In the second part, there should be more resistance to the acquisition of small companies by technology giants, and even the cancellation of some mergers and acquisitions that have already been completed. For example, Facebook should split Instagram and WhatsApp. The spin-off of these companies will promote healthy competition in the market and will pressure the technology giants to respond more positively to users' concerns and privacy.

    Warren used Microsoft as an example. In the 1990s, it was the anti-monopoly department that did not allow Microsoft to extend the monopoly of the operating system to the browser and the Internet, giving the company such as Google and Facebook a chance to prosper. This shows fairness. The importance of competition.

    Other presidential candidates have the idea of ​​“starting” with technology companies: Democratic Senator Amy Klobuchar expressed concern about the sharing of information between Facebook and third-party companies and proposed legislation to protect users' data; Vermont Senator Bernie Sanders asked Amazon to raise salaries and benefits for its employees, but none of Warren’s proposals were sharp. The spin-off plan is by far the clearest recommendation to limit the growth of Silicon Valley companies.

    The plan sparked dissatisfaction in the technology industry, and Facebook was the most fierce. March 11th,Facebook once deleted Warren’s campaign ads about split technology giants and then resumed. That night, Warren seized the handle on social media to respond to the election campaign was deleted, saying that this is evidence of Facebook's excessive power.

    Instagram co-founders Mike Krieger and Kevin Systrom believe that spin-off tech companies may not be able to solve the problem. Krieg said that there is a reasonable side for people to be dissatisfied with technology companies. For example, rents near the technology center are raised, and Russians interfere with the US election. But Strom said: "In our time, the public's anger against large technology companies has increased tenfold. But this does not mean that the spin-off is the solution. The proposal for the spin-off may be just that politicians are using today. The society’s resentment against technology companies, they should come up with real solutions to solve real problems.”

    According to The Information Technology and Innovation Foundation,Warren’s proposal reflects an ideology of “big or bad, small and beautiful”. Rob Atkinson, president of the foundation, said: "This proposal ignores the fact that many large technology companies are now offering free consumer services. They are split only because of the size of large Internet companies. , does not help consumers. This will reduce convenience, reduce service quality and innovation, and in some cases introduce pricing services, causing damage to large enterprises."

    0 2 Antitrust and digital tax shadows

    At present, Google monopolizes the search and related industries, Facebook monopolizes social media, and Amazon monopolizes e-commerce. Although there are still some competitors who have come from behind, their status cannot be compared with the above-mentioned technology giants. This has also made the technology giant gradually become the core observation object of the regulatory authorities.

    The US Federal Trade Commission has announced at the end of last month that it will investigate Internet giants to see if they have monopolistic behaviors, and past industry mergers and acquisitions have also been included in the survey.

    At the same time, the Japanese government plans to set up a new anti-monopoly agency to focus on reviewing these large technology companies because consumers are concerned about the monopolistic behavior of these large technology companies and the way they handle personal data.

    In the past few years, EU anti-monopoly regulators have also issued many high-priced penalties to technology companies.

    In 2017, Google was accused of giving priority to its own shopping service in search engines.EUA fine of 2.4 billion euros was imposed on it and “proposed the possibility of splitting Google”; in August last year, Google adopted “unlawful restrictions” to strengthen its dominant position in search engines, and the EU issued a 4.34 billion euro ticket. .

    Last year, the EU introduced"General Data Protection Act"(GDPR), it is proposed to adjust the taxation rules for large Internet companies. According to this proposal, any EU member state can tax the profits generated by domestic Internet business.

    March 7th,FranceThe government announced that it will impose digital taxes on more than 30 global Internet giants such as Google, Amazon, and Facebook to ensure that large multinational corporations pay the same tax as local companies. In addition to France,United KingdomIt was also announced last year that it would impose a digital tax on large multinational technology companies.

    Currently, the Organization for Economic Co-operation and Development (OECD) is studying digital taxes worldwide.

    0 3 Branch shares fell out of favor

    In addition to the “special care” of regulators, fund managers’ preference for the technology sector has also decreased.

    In the past decade, technology stocks have been the vane of the US stock market. The technology stocks in the S&P 500 have performed much better than the broader market and other sectors, so they have won the favor of various funds.

    However, since the fourth quarter of last year, due to the sharp correction of technology stocks, many well-known hedge funds such as Tiger Fund have reduced their positions. According to the "Financial Times" report, Bank of America Merrill Lynch recently launched a fund manager survey results show thatUS active equity fund managers have reduced their technology stock position ratio to the lowest level since May 2016. Currently, technology stocks rank only fourth in the fund manager's most popular asset rankings.

    Savita Subramanian, a stock and quantitative strategist at Bank of America Merrill Lynch, pointed out that technology companies represented by “FAANG” have reached the limit in profit growth, and as industry competition intensifies, technology companies’ profit margins will continue over time. Sliding down.

    Bloomberg believes that although the technology companies represented by "FAANG" have promoted the bull market of US stocks in the past 10 years, their best days may have passed, "because their ability to squeeze profits has reached the limit."

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    Editor in charge: Robot RF13015

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