Google, Facebook and Netflix have bigger antitrust risks than Amazon, portfolio manager says

They’re big, they’re powerful and they may be getting slapped with antitrust suits for abusing their dominance in the tech and commerce fields.

Google, Facebook, Amazon, even Netflix don’t merely loom large over their competitors, they also own vast amounts of consumer data which only increases their reach and keeps them growing. That makes them potential investment risks, says Bryden Teich, portfolio manager with Avenue Investment Management in Toronto, who cautions that while Amazon’s tussle with the competition bureaus may still be a ways off, companies like Google and Facebook might face their moments of reckoning sooner rather than later.

“There’s a lot of risk, but I think the risk is bigger [with Google and Facebook] than with Amazon,” says Teich, speaking to BNN. “Especially with what’s going on in Europe. If that happens [to Amazon], it’ll be negative for them but I don’t think it’s going to happen anytime soon.”

Last year saw Europe’s competition commission hit Google with a 2.4 billion-euro penalty ($3.3 billion Cdn) for misusing the company’s search engine dominance to promote its own Google Shopping service, with more from the EU against Google expected in 2018.

But concerns about monopolies in the tech industry are nothing new, of course, with notables going back to IBM’s battle with the US government in the late 1960s and 70s over claims that it unfairly dominated the mainframe business and Microsoft’s lengthy court case in the late 1990s and 2000s over alleged competition-stifling regarding its Windows operating system.

In both of those cases, IBM and Microsoft were charged with purposefully bundled together products so as to starve out other players in the space — IBM with its mainframe computers, software and servicing contracts and Microsoft by requiring that PC-makers who wanted to feature Windows also needed to include Internet Explorer, Microsoft’s own web browser, as the sole option (thus, hurting competitors like Netscape).

The case against IBM was ultimately dismissed, and while Microsoft was originally found guilty and ordered to split up the company, that ruling was overturned on appeal, resulting in a (too light, by some accounts) settlement calling on Microsoft to adjust some of its practices.

But while coming out relatively unscathed, Microsoft’s brushes with antitrust suits have nevertheless had a dampening effect on the company, say industry experts. While still a prevailing force within high tech, Microsoft’s stance as top dog has been ceded to the likes of Google and Apple. Where it once commanded 90 per cent of the computer platform market, Microsoft Windows is now well behind Google’s Android and Apple’s iOS in the computer and device markets.

“Since the antitrust suit, [Microsoft] has become much more cautious and much less aggressive,” says Michael Cusumano, a professor at MIT Sloan School of Management, to the Seattle Times. “They’re afraid, it seems. Whether it’s antitrust in U.S. or in Europe, they seem to be slowly reacting to the world around them, rather than trying to get in there fast.”

It’s unknown how legal action against today’s tech giants will affect their progress going forward, nor how investors will react. Share prices for Alphabet Inc, for example, continue to trend skyward even in the face of more looming court cases in Europe. But whether a US antitrust case would turn out to be a similar non-event is unclear. For its part, Microsoft’s share price did take a nosedive in the early 2000s, but so did every other tech company’s during the dot-com crash.