[ FAANGs ]
“The biggest threat is greater government regulation:
investigations of their power in the marketplace and
increases in taxes”
This is a view echoed by Walter Price,
manager of the Allianz Technology
Trust, although he warns it isn’t just
limited to the likes of Facebook.
“The biggest threat is greater
government regulation: investigations
of their power in the marketplace and
increases in taxes,” he says.
Pulling up the ladder
“I think you’re going to get more of
that. Just like you have sales taxes
on Amazon, you are going to see
advertising taxes on Facebook, Google
and Apple, because governments
need money and you’re displacing
other forms of revenue. That’s
definitely going to happen.”
Another reason he thinks increased
government intervention is inevitable
is many of these companies operate
as “quasi monopolies”, preventing
smaller competitors from taking a
foothold in the market.
The manager points to Google as
the best example of this: it has a 70
per cent share of internet searches
in the US and 90 per cent in Europe,
meaning any company with an online
presence has no choice but to use
this platform, even if it knows any
information it shares will be used
against it.
“If you look at the travel space, for
example, or the restaurant space,
Google optimises its own revenue and
its own growth,” Price continues.
“It takes ideas from companies
like Yelp and Booking.com and
disintermediates their business by
moving their customers. Then it
replaces their functionality in its
search algorithms – it has the ability
to just go in and take away good ideas
from competitors.
“It has this monopolistic control
over where things are on the page,
how users react to its products. And
if it is in a position of prioritising its
products over your products, then
you’re in trouble.”
What doesn’t kill you
Robin Geffen, manager of the
Liontrust Global Technology
fund, agrees the biggest threat to
the FAANGs is from government
intervention. However, he says that in
the event they were forced to split up
their businesses to assuage monopoly
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