Displaying items by tag: regulation

(San Francisco)

Tech stocks have had a poor last couple of months. March was especially brutal, with tech falling 4%. And while some think tech stocks still look like a good bet, Barron’s has put out an article based on a BAML opinion which contends that tech stocks look very vulnerable. The key reason why is what the piece calls an “Occupy Silicon Valley” mindset (recalling the Occupy Wall Street movement from several years ago). This mindset leaves the Valley at risk in two very core ways. Firstly, by regulation, which the government (and the public) seem increasingly intent upon delivering. And secondly, to a tax raid, especially if government finances continue to deteriorate.

FINSUM: We are of a mixed mind on tech right now. On the one hand, these arguments hold water with us. But on the other, the underlying businesses of tech companies are strong and this could all blow over.

(Washington)

The Wall Street Journal says that the source of Donald Trump’s push to regulate Amazon has nothing to do with tech industry issues or the Post Office. They say it is personal. In particular, the WSJ contends that Trump’s anger is personally directed toward Amazon CEO Jeff Bezos, who owns the Washington Post, a publication with which there is mutual ire with Trump. The president dislikes the Post’s coverage of him, so he attacking Amazon as a proxy, says the WSJ.

FINSUM: If you are in investor in Amazon, then this is likely good news, as Trump’s ire might just be hot air that doesn’t materialize into any new rules.

(Washington)

Amazon has been in President Trump’s crosshairs since the election, but the president has recently upped his rhetoric about bringing regulation to the company and the tech industry. The push has spooked stock markets. However, news is out that Amazon is making a push of its own. The retailer is building a huge army of lobbyists in Washington to combat the rising risk of regulation. Since Trump’s election, the company has doubled its staff of in-house lobbyists to 28, giving it more than double Google’s manpower.

FINSUM: The rumors coming out of the White House—that this is all just rhetoric—seems encouraging (if you are an investor). However, Amazon seems to be taking the risk seriously, which it should.

(San Francisco)

Tech has been doing very poorly lately. Between the heat on Facebook and the growing threat of regulation to Amazon and other big tech companies, things look bleak. However, they may not be as bad as they seem. The reason why is two-fold. Firstly, many experts think any tech regulation won’t be hugely disruptive to the industry. Secondly, the underlying businesses look strong and the worries about regulation have not really dented earnings expectations. All of this leads many to believe that the whole selloff is overdone and things will blow over.

FINSUM: We can’t see any major tech regulations coming out that would really dent the industry, so all else equal, we do think the selloff might be overdone.

(Washington)

In what could either be a big worry for tech or a pile of unwarranted hot air, there are rumors circulating that President Trump may be obsessed with regulating Amazon. Last week, the president escalated his calls for regulating the company, tweeting “I have stated my concerns with Amazon long before the Election … Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”. Trump has also repeatedly attacked the Washington Post, which is owned by Amazon CEO Jeff Bezos. Trump’s 2020 campaign manager said in a tweet that “Amazon has probably 10x the data on every American that Facebook does. All that data and own a political newspaper, The Washington Post. Hmm.....”.

FINSUM: Our other perspectives aside, we do think governments may need to adopt updated views of when regulation is called for. In Amazon’s case, the company is clearly not a monopoly in any sector, but the data it has does give it heightened importance. The context of monopoly laws, which are essentially modeled on 19th century ideas, don’t seem to have much scope to account for this.