The four major US technology giants are under antitrust investigation. Which one is the safest?

Earlier this month, US regulators launched an antitrust investigation into four major technology giants, including Google, Apple, Facebook, and Amazon. The antitrust investigation into Facebook and Amazon will be conducted by the US Federal Trade Commission (FTC), while the investigation into Google and Apple will be conducted by the US Department of Justice (DOJ).

On June 23rd local time, MarketWatch reported that University of Pennsylvania professor Hovenkamp, ​​Harvard Business School professor Zuboff and several other experts jointly evaluated the size of the regulatory and "action-taking" risks faced by the four companies and ranked them.

1. Facebook

Facebook, which is now 15 years old, is a social media giant with more than 2 billion members. According to eMarketer, an internet data center, Facebook will account for 83% of total social media advertising spending in the United States this year, part of which is through acquisitions.

According to Tim Wu, a professor of law, science and technology at Columbia University, Facebook has acquired at least 92 companies since 2007, including competitors WhatsApp and Instagram. It is worth noting that Facebook has not encountered any obstacles from the federal government in the process of large-scale acquisitions. Tim Wu also said that Facebook has shut down 39 companies that it has successfully acquired, and some of them are likely to become Facebook's competitors in the future.

Recently, the most sensational thing Facebook has done is to launch the encrypted digital currency Libra. Once the news was released, many central banks said that they would "high standard supervision" on the currencies they promote, but the Federal Reserve's attitude was very "ambiguous". Outside analysts said that Facebook's launch of Libra may be an action manipulated by Wall Street to upgrade the international status of the US dollar and establish the US "digital hegemony".

Rebecca Allensworth, a law professor at Vanderbilt University, believes that Facebook is the most vulnerable of the four companies because the market in which it dominates is easier to define. The solution is also clear, which is to split WhatsApp and Instagram, which have social media properties.

2. Apple

In 2011, four iPhone users filed a lawsuit against Apple, accusing Apple of illegally monopolizing the iPhone app aftermarket and restricting users to only purchase apps from the App Store. If they purchase apps from other platforms, they have to pay a 30% fee, which is the famous "Apple tax." After eight years, the U.S. Supreme Court finally ruled in May this year to support consumers in continuing their long-term lawsuit against Apple.

At the same time, Apple is also under regulatory pressure from Europe. According to a report by the Financial Times in May, European regulators have begun investigating Apple's behavior since music streaming company Spotify Technology filed a lawsuit in Europe against Apple's charging practices in the App Store.

Antitrust experts believe that Apple's strategy with the App Store is vulnerable to regulatory action. Assistant Attorney General Makan Delrahim said in a speech last week that "while 'exclusivity' is not inherently 'anticompetitive,' some companies' may use exclusivity to substantially prevent competition by preventing competitors from entering or undermining the ability of competitors to expand."

Hovenkamp said, "For Apple's 'exclusive operation' with the App Store, (the relevant departments) may adopt an 'injunction' as a remedy, which is a very good idea."

Apple's "dominance" is not limited to this. Instinet analyst Christopher Eberle said that Apple also restricts competitors' advertising and low-priced subscriptions, and the 24% growth in App Store revenue in 2018 is likely due to this reason, and regulators may investigate this. "At Apple, the risks faced by fast-growing departments such as the App Store are far more than just the 30% fee that is subject to legal disputes," said Eberle.

3. Alphabet

Alphabet is the entity company that replaced Google after its reorganization and is also equivalent to the parent company of the "New Google". Alphabet currently owns a search engine, YouTube, other network subsidiaries and some R&D investment departments.

"After 270 acquisitions, the Silicon Valley giant's influence has expanded far beyond 'search engine' and 'social media' and now extends to 'artificial intelligence', 'robotics' and 'renewable energy'," said Tim Wu.

In 2010, Google acquired travel search company ITA. Although Google received conditional approval at the time, it is now being questioned by the US federal government.

Needham analyst Martin said, "Although the Federal Trade Commission (FTC) did not take any action in 2013 after investigation, it may not be so easy to get away with the more stringent Department of Justice (DOJ)."

As for Google's practice of forcing mobile phone manufacturers to pre-install Google applications on the Android operating system, Evercore ISI analyst Lee Horowitz said, "There are obvious similarities with the exclusivity issues in the Microsoft antitrust case."

It is worth noting that the Microsoft case is also a case frequently cited by Makan Delrahim, Assistant Attorney General of the U.S. Department of Justice (DOJ).

In addition, the lack of price competition between Google Play and other app stores may cause many digital innovations to be "stillborn." Delrahim believes that this uncompetitive market may also harm consumers.

Speaking of punitive measures, the EU has been the most involved in the fight against Google. So far, the EU Commission has fined Google more than $9 billion for its anti-competitive behavior. At the same time, the EU Commission has also explicitly banned these practices of Google, and experts believe that this has set a precedent for the US Department of Justice (DOJ).

Interestingly, some analysts have pointed out that splitting the company may only make Google stronger. Martin said that if the company is split, Google will benefit the most, with a stock price increase of about 148%, or $1,579 per share. "Google Search alone is worth about $600 per share, while YouTube is worth about $200 per share."

Regarding the specific split, Hovenkamp said, "It is possible that YouTube will be spun off, but it will also need to prove that the market will become more competitive as a result."

Safest: Amazon

Currently, the investigation into Amazon is also attracting much attention, and the pressure it faces mainly comes from the US Federal Trade Commission (FTC) and regulatory review in Europe.

But UBS analyst Sheridan said in a June 17 report that "given Amazon's low market share (as a percentage of total retail sales), we believe that Amazon would be less affected in this case and less likely to be touched by U.S. regulators."

Sheridan also noted that if the giants were to break up, the separate businesses of Google and Amazon would likely ensure they would have higher valuations after being split up.

However, there are also some doubters who believe that Amazon is not "absolutely safe." Margrethe Vestager, the European Commission's competition commissioner, said in April that the EU will launch a full investigation into Amazon's use of third-party merchant data later this year. Moreover, she is worried that Amazon may be suspected of using sensitive information about competitors' products for its own use.