Google, apple, facebook: the days of 2021 are even harder in 2020
According to reports, in the next 2020, the new crown virus epidemic raging around the world, many companies closed down, but Amazon, Apple, Facebook and Google, the four major technology companies have become bigger and more valuable than ever. But in the coming 2021, their lives may be tough.
The year 2020 is a year of concern for Amazon, Apple, Facebook and Google’s parent Alphabet, the four largest U.S. technology companies. In the year that the global epidemic led to the bankruptcy of many companies, these market leaders flourished, made a lot of profits, and drove their share prices to soar, making them stronger and more valuable than ever before. But next year, the outlook will be very different.
These awesome giants are at risk in many ways, from growing antitrust and regulatory problems to overvalued and volatile economies, all of which have the potential to undermine their 2021 prospects. And not just next year: growing government concerns about the market power of these companies could force their businesses to change, with more lasting consequences.
First of all, in the “number” aspect. With 2021 coming, after this year’s stock market rally, they will face a higher threshold to meet investors. For example, Amazon’s market sales rate is about 30% higher than the average of the past five years, and if its e-commerce or cloud computing business slows, it may soon disappoint investors. For Apple’s latest iPhone series, it needs to be far beyond sales expectations to justify its price-to-earnings ratio, which is twice that of the past.
Facebook and Alphabet, their valuations depend on a strong recovery in the digital advertising market next year, but there is no guarantee. If TikTok can solve the current problem smoothly, with 100 million American users, next year is likely to become a stronger competitor in the digital advertising market.
However, the biggest threat is more about its survival. For years, competitors, regulators and politicians have said the four tech giants should be regulated, but they have successfully avoided it. But now they are the targets of governments around the world. These governments say their market dominance hinders competition and hurts consumers.
In Europe, government officials are considering new regulations that would prohibit companies from using the power of their platforms to favor their products and services. If the draft laws are finally approved into law (which now seems to have broad political support), they will undermine the profitability of these companies, including Amazon’s own-brand products, Apple’s music services, and Google’s preference for its service rankings in search results.
The U.S. Congress may also follow. At present, the two parties have reached a consensus on several anti-monopoly proposals contained in the House antitrust report. For example, lowering the regulatory body’s legal standards to prove that mergers are unfair competition, and allocating funds to antitrust agencies, etc. Both reforms will strengthen regulation and significantly curb the industry’s ability to curb competition by acquiring emerging start-ups.
The U.S. Department of Justice, state attorneys general, and the Federal Trade Commission (FTC) have also pending serious antitrust lawsuits against Facebook for Google and Facebook. In the case against google, government prosecutors want to block the internet giant from using paid exclusive distribution agreements, making its search engine the default option on mobile devices.
In addition, they want Google to provide purely relevance-based search results rather than prioritize their own products and services. At the time of the prosecution of the Facebook, state attorneys general said the company was dominant in social media and might need to be split. While court battles may take years to resolve, any sudden development could hurt investor sentiment.
At some point, Amazon, Apple, Facebook and Google achieved such great success in 2020, but it was a burden. With such impressive financial performance, the government can see more clearly the market dominance of each company. But investors also have higher expectations. This may have laid the groundwork for disappointment.