The Stock Market is Dominated by Just a Handful of Companies and the Biden Administration is Worried
The dominance of Big Tech companies in the stock market has raised concerns about potential monopolistic behaviour, with just seven stocks – Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Nvidia (NVDA), Tesla (TSLA) and Meta Platforms (META) comprising nearly $11 trillion in market value and contributing significantly to the S&P 500’s returns in the first half of 2023, according to a Bank of America report.
The Federal Trade Commission (FTC) and the Biden administration are alarmed by the growth of these tech giants, commonly referred to as the “magnificent seven,” and fear they could stifle competition by acquiring and suppressing potential rivals. The FTC’s current chair, Lina Khan, known for her progressive stance on antitrust issues, aims to challenge the lenient approach towards mergers and acquisitions that allowed tech giants to dominate the market.
Despite her efforts, Khan has faced setbacks in court battles against major tech acquisitions. Apple, now valued at $3 trillion, stands as the only company to achieve this milestone, while the FTC’s attempts to block deals such as Microsoft’s acquisition of Activision Blizzard and Meta Platforms’ purchase of Within Unlimited have not succeeded.
Undeterred, Khan recently released draft updates to the nation’s merger guidelines, proposing significant changes to how the US government reviews and regulates mergers and acquisitions. These changes could have far-reaching implications for identifying and challenging anticompetitive deals.
While some in the business community criticize these potential changes, Khan remains firm in her approach, defending the FTC’s actions at The Economic Club of New York. She clarified that the goal is not to prevent companies from becoming monopolies per se but to ensure that they do not attain monopoly status through illegal tactics.
Looking ahead, Khan is preparing to take on Amazon with a major antitrust suit in the coming months. The FTC has already brought forward three cases against the e-commerce giant, but a new suit will focus on Amazon’s core marketplace business, alleging anticompetitive practices related to its logistics services.
In addition to the ongoing antitrust battles, tech earnings reports are highly anticipated this week. Alphabet and Microsoft are scheduled to report on Tuesday afternoon, with Meta following on Wednesday. As these tech giants continue to soar in value and influence, regulatory scrutiny and the fight against potential monopolies are expected to remain in the spotlight.
