Don’t expect any serious action on Tech Antitrust legislation until 2022.

Last week’s earnings reports from Alphabet, Facebook, Apple, and Amazon were amazing. Although Alphabet showed some losses in ad revenue, it still showed resilience. The other three just blew past market expectations.

As I tracked the earnings of these four, I was also looking at their market capitalizations. If you had told me even five years about that three of these companies would have trillion-dollar market caps by 2020, I would have scoffed and said you were crazy. Five years ago nobody saw this coming and only 18 months ago did it even seem possible that even one of these, Apple, could even hit that trillion-dollar market cap.

Axios created a chart that showed clearly the actual market caps of these four over the last four years.

If you look at this chart closely, you will see that the combined market caps of these four companies are close to $5 trillion.

Earlier this week, due to Apple earnings and a rise in share price, Apple hit a valuation of almost $1.9 trillion Monday Morning, Aug 3, 2020.

Even during a pandemic, with the economy contracting over 30 %, the four of them reported $773 billion combined revenue annualized to date.

Axios also put these annual earnings in perspective to other countries GDP:

• Facebook: $70.7 billion, in the same ballpark as Venezuela’s gross domestic product.
• Alphabet: $161.9 billion, a bit north of Ukraine’s GDP.
• Apple: $260.2 billion, close to Vietnam’s GDP.
• Amazon: $280.5 billion, around Pakistan’s GDP.

Together, revenue for all four adds up to roughly the GDP of Saudi Arabia.
And all four are cash-rich:

The combined cash pile of all four, taken from their last reports, is $420 billion.

$420 billion: the combined total cash pile of the four firms (per data from FactSet, from when they last reported earnings). That breaks down to about:

• $49.6 billion for Amazon
• $60.3 billion for Facebook
• $117.2 billion for Alphabet
• $192.8 billion for Apple

With this type of financial position, these companies have become increasingly powerful in their own right. They now have the scrutiny of governments around the world in terms of antitrust regulations and competition.

In the US, where last week’s hearings brought this antitrust issue to the forefront, it became clear that these major tech companies will have to deal with this antitrust threat for years to come.

Some of these congressional leaders asked good questions but left the hearing not giving any calls to action that had any teeth to it.

As I listened to these hearings, I became convinced that much of it was election posturing, and in the short term, meaning probably the next 18 months, not much will be done to challenge these firms in terms of trying to break them up or change much of their current business practices.

I have two reasons for this view. The first is that current Antitrust laws were not written for the digital age. They were written mostly for the Industrial Age. For any real changes to happen in an antitrust action, it needs new, well thought out laws written specifically for our digital times and make these actions meaningful and applicable to all digital properties in the future.

I have dealt with Washington for decades, and, from my experience, getting everyone on the same page for any real digital antitrust regulations will take time.

The second reason why I don’t see anything happening for at least 18 months, is tied to the Covid-19 Pandemic and the election and possible change in leadership.

Should Trump be reelected, he tends to side with business, even if they get too big. His focus, as we know from the attempt to ban TikTok, is focused on China and products that could feed info to the Chinese in any way, shape, or form. Also, he loves social media for what it allows him to do via its platforms. I have no faith that a Trump administration would force any new and meaningful antitrust laws against any tech company, at least in the first half of a reelected presidency.

If Biden is elected, he would have higher priorities, even if his Democratic colleagues would like to keep the fires lit on big tech and antitrust laws. His first 18 months would most likely be working on correcting the mistakes he feels were made in the past four years. I just don’t see him putting a lot of energy in meaningful tech anti-trust legislation until he and his team feel they have corrected other structural issues much more important to the US than breaking up big tech.

All of this leads me to believe that these four and others will not only weather the Covid-19 Pandemic well but, as they have proven so far, become even bigger. Yes, they will have to be looking over their shoulders at potential government action, but I doubt anything meaningful will happen until late 2021 or early 2022 at the earliest.