Congress Is Preparing To Clash With Big Tech Giants

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Whitney Tilson’e email to investors discussing that the congress is preparing to clash with big tech; fire & fawning; tech is about power; Bezos and Amazon under scrutiny; crackdown on QAnon; Facebook: The Inside Story; Facebook announces plan to break up U.S. government.

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It's a big week for four of the five tech giants: Facebook (FB) reports earnings tomorrow, followed by Amazon (AMZN), Apple (AAPL), and Alphabet (GOOGL) on Thursday. In addition, the CEOs of all four companies – Mark Zuckerberg, Jeff Bezos, Tim Cook, and Sundar Pichai – respectively, will appear (virtually) tomorrow before the House Judiciary Antitrust Subcommittee. Microsoft (MSFT) reported earnings last week... and its CEO, Satya Nadella, managed to escape a Congressional grilling.

These are among the most dominant, richly valued companies in history, and have become interwoven into the lives of pretty much every human being on earth – both for better and for worse – so I think they warrant careful scrutiny by investors, the public, the media, and political leaders.

When all is said and done, do I think these companies are going to change much – or that regulators might force them to change or even break them up? Sadly, probably not – though even tweaks at the margin are better than nothing (for example, see the article below about the crackdown on QAnon). And their stocks are likely to continue to outperform...

Below are the most interesting articles I've read on them recently...

Congress Is Preparing To Clash With Big Tech

1) Here's a good overview of the hearing from the Washington Post: Congress has battled airlines, banks, tobacco and baseball. Now it's preparing to clash with Big Tech.

Fire And Fawning

2) Run, don't walk, to read NYU marketing professor Scott Galloway's blog post about the hearings: Fire & Fawning.

Few (if any) of Galloway's questions will be asked at tomorrow's hearing. But every American should demand that they be asked – and answered – before it's too late...

Tech Is About Power

3) Here's Kara Swisher's take in the New York Times: Tech Is About Power. And These Four Moguls Have Too Much of It.

Here's Swisher's July 1 article about this: Here Come the 4 Horsemen of the Techopolypse.

Tech CEOs Deserve an Apology

4) Wall Street Journal columnist Andy Kessler defends the tech giants: Tech CEOs Deserve an Apology. Excerpt:

It's tech success vs. lawyers and career politicians who probably have an aide print out their emails. Broadway is closed, so this will be must-see theater.

The CEOs' task is to disarm, dissuade and dissipate. No need to upstage congressmen, who are playing a weak hand. Antitrust is driven by consumer harm. Sure, there are screw-ups: Amazon favors its own products, Apple its own apps, Google its own YouTube videos; Facebook collects too much personal data. Yet none of these habits necessarily harm consumers and all could be easily fixed without decadeslong antitrust inquisitions. Lawyers are taught: "If you have facts on your side, hammer the facts. If you don't, hammer the table." Expect loud table banging.

Bezos And Amazon Are Coming Under Increased Scrutiny

5) Jeff Bezos and Amazon are coming under increased scrutiny, as these articles highlight:

Twitter Cracks Down On QAnon

6) No doubt the scrutiny the tech giants are under is a major reason why other social media companies are joining Twitter to remove conspiracy theories from their sites: Twitter crackdown on conspiracy theories could set agenda for other social media.

Facebook: The Inside Story

7) I look forward to reading this book: 'Facebook: The Inside Story' author Steven Levy on how the company compares to Apple and Google.

Facebook Announces Plan to Break Up U.S. Government

8) This parody from The Onion cracked me up: Facebook Announces Plan to Break Up U.S. Government Before It Becomes Too Powerful.

In an effort to curtail the organization's outsized influence, Facebook announced Monday that it would be implementing new steps to ensure the breakup of the U.S. government before it becomes too powerful. "It's long past time for us to take concrete actions against this behemoth of governance that has gone essentially unchecked since its inception," said Facebook CEO Mark Zuckerberg, noting that while the governing body may have begun with good intentions, its history showed a culture of recklessness and a dangerous disregard for the consequences of its decisions.

Best regards,