As per the report, in the upcoming 2020, the new Covid 19 pandemic is raging around the world and many companies have closed down, but the four major technology companies, Amazon, Apple, Facebook, and Google, have become larger and more valuable than ever.
But in the coming 2021, their life may be difficult. For the four major US technology companies Amazon, Apple, Facebook, and Google’s parent company Alphabet, 2020 is a year worthy of attention.
In a year when the global pandemic has caused many companies to go bankrupt, these market leaders have flourished, made huge profits, and pushed their stock prices soaring, making them more effective and more valuable than ever. But next year, its prospects will be very different.
These awesome giants are at risk in many ways, from increasing antitrust and regulatory issues to high valuations and a turbulent economy, all of which could undermine their prospects for 2021.
And it’s not just next year: the government’s growing concerns regarding the market power of these companies may force their businesses to change, with more lasting consequences.
In the ‘number’ aspect. With the approach of 2021, they will face a higher threshold to satisfy investors after experiencing this year’s stock market surge. For example, Amazon’s market-to-sales ratio is about 30% higher than the average of the past five years.
If its e-commerce or cloud computing business slows down, it may soon disappoint investors. For Apple’s latest iPhone series, it needs to far exceed sales expectations to justify its price-to-earnings ratio (twice the past).
As for Facebook and Alphabet, their valuation depends on whether the digital advertising market will recover strongly next year, but there is no guarantee at this time.
If TikTok can successfully solve the current problems, with 100 million US users, it is likely to become a stronger competitor in the digital advertising market next year.
However, the biggest threat is more about its survival. Over the years, competitors, regulators, and politicians have stated that these four technology giants should be regulated, but they have successfully avoided them.
But now they have become the targets of governments around the world. These governments stated that their market dominance hinders competition and harms consumers.
In Europe, government officials are considering passing new regulations that prohibit these companies from using the power of their platforms to favor their products and services.
If these draft laws are finally approved as laws (which currently seem to have broad political support), it will hurt the profitability of these companies, including Amazon’s private label products, Apple’s music services, and Google’s favoritism in search results. Ranking.
The U.S. Congress may follow suit. At present, the two parties have reached a consensus on several antitrust recommendations contained in the House of Representatives antitrust report.
For example, lowering the legal standards for regulatory agencies to prove that mergers are unfair competition and funding for antitrust agencies. Both of these reforms will strengthen supervision and greatly curb the industry’s ability to suppress competition by acquiring emerging start-ups.
For Google and Facebook, serious antitrust lawsuits filed by the US Department of Justice, state attorneys general, and the Federal Trade Commission (FTC) against Facebook are also pending.
In the case against Google, government prosecutors hope to prevent the Internet giant from using a paid exclusive distribution agreement to make its search engine the default option on mobile devices.
Additionally, they also want Google to provide search results based purely on relevance, rather than prioritizing the display of their own products and services.
When using Facebook, state attorneys general stated that the company dominates the social media field and may need to be split.
Although the court dispute may take several years to fully resolve, any sudden developments may damage investor sentiment.
To some extent, Amazon, Apple, Facebook, and Google have achieved such great success in 2020, but it is a burden.
After achieving such impressive financial results, the government can see the market dominance of each company more clearly. But for investors, also have higher expectations. This may plant the bane of disappointment.
(Via)
