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Michael Kern

Michael Kern

Safehaven

Michael Kern is a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Macro-Investing.com.

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Big Tech Bounces Back After Regulatory Worries

Big Tech

Silicon Valley's most prominent tech companies took a dive recently on restored worries of a regulatory crackdown, but investors appear to have taken the situation as a buying opportunity, with Google, Facebook and Amazon all recuperating their losses this week.

Four of Silicon Valley's biggest tech companies-- Google, Amazon, Facebook and Apple-- could face antitrust investigations from the Trump Administration and Congress.

The federal government's leading antitrust enforcers, the Department of Justice and Federal Trade Commission (FTC), have reached a contract on how to divide up their duties for examining Silicon Valley's most substantial businesses, with the Justice Department setting its sights on Apple and Google and the FTC taking the lead on Facebook and Amazon. The committees are said to be weighing whether to open formal investigations.

Scrutiny of the internet giants started to grow following the 2016 election, which likewise produced a legislature managed by Democrats and a swelling field of Democratic governmental candidates (led by Sen. Elizabeth Warren) who progressively favor antitrust enforcement.

Tech giants stumble before breaking higher

Last week provided some significant concerns for investors in the tech market, with stocks across the board slipping substantially.

Facebook's fall cut more than $38 billion from its market cap, prior to recuperating. Facebook is currently under investigation by the FTC over its handling of user data and is expecting a fine of roughly $5 billion.

Other tech stocks took a hit over similar problems. Amazon's stock fell 4.6 percent last Monday following a Washington Post report that the leading U.S. antitrust enforcement organizations have a new agreement on tech oversight. The drop shaved more than $40 billion from its market cap, though the company followed Facebook's lead, rebounding by the end of the week.

Facing separate issues, shares of Google parent company Alphabet were down 6.1 percent after the Journal reported Friday that the Justice Department is preparing an antitrust investigation of Google. The stock lost about $47 billion from its market cap before rallying back in premarket on Monday. Related: Beijing’s Plan To Disrupt Rare-Earth Exports

These moves come after the multiple reports stimulated fears that some of these tech companies might face more stringent guidelines in the future, with some investors even fearing a breakup of the behemoths may be in the pipeline. Regardless of the slipups, however, all three business have charged back with a vengeance as financiers piled in on what they viewed as a quick fire sale.

Could Congress break up Big Tech?

One of investors' primary worries is that legislators could step in and effectively force the tech giants to pull back some of their services.

The possibility of these companies being broken up are slim and their fundamentals suggest more long-term advancement. Consequently, this unanticipated drop was seen as an entry point for investors looking for fresh exposure to a few of the best-performing stocks in the last few years.

Up until now, the industry and its investors have actually been positive that the tech giants can quickly abide by any new privacy guidelines and absorb the most significant fines regulators can throw at them, with tech giants continuing to climb higher in the meantime.

By Michael Kern for Safehaven.com

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