In the past few decades, the United States has seen the amount of goods that it exports to other countries decline. This is because of the high cost of production, which makes its goods more expensive than those from China. However, the volume of service exports has been on the rise. This has partly been driven by technology companies like Facebook, Microsoft, Adobe, and Google. Each of these companies dominate their industries and are some of the biggest companies in the world.
In recent months, the technology industry has been under attack by politicians and regulators around the world. In Europe, companies like Google and Facebook have been fined billions of dollars. Google has been fined for favoring its platforms in the search engine. Facebook is being investigated for violating the GDPR rules. Other companies like Amazon and Apple are also under investigation.
In the United States, the animosity towards the technology companies has been continuing. This voice of opposition increased after the Cambridge Analytica scandal. Last week, the Federal Trade Commission (FTC) fined the company $5 billion for exposing this data. Politicians in the left and right have been critical of the tech companies. Rightwing politicians like Donald Trump have accused companies like Facebook and Twitter for being biased against conservatives.
In the ongoing campaign season, politicians have been presenting their plan for regulating the tech industry. Elizabeth Warren, the democrat from Massachusetts has said that she will break down the big technology companies like Amazon and Google. She has been mostly focused about large tech companies that run marketplaces like Apple, Google, and Amazon.
Yesterday, the Department of Justice (DOJ) announced a broad antitrust investigation into online platforms. The department will look at how these companies got so big and whether they are ‘engaging in practices that have reduced competition, stifled innovation or otherwise harmed consumers’. The department said that it will look into widespread concerns expressed about search, social, and some retail services online. This resulted in a sharp decline in the stock prices of the big tech companies.
This decision by the US DOJ came a few weeks after European regulators signaled that they were looking into these companies. In a report published in April, the bloc recommended lowering the bar for companies that are considered dominant players. This will subject them to stricter antitrust rules. This month, France passed a bill that will see it collect taxes from technology companies like Facebook.
One way to play the coming regulations in the tech sector is through the Nasdaq index. While this index has companies in other sectors, it has a large concentration of technology companies. Yesterday, the index ended the day at $7965. This is slightly lower than the record high of $8,006 that was reached a week ago. This price is above the 21-day and 14-day moving averages. The RSI remains slightly below the overbought level. With the important tech earnings expected this week, the pair could see some increased volatity.