Inside money, markets, and big tech

Big Tech told Congress there’s loads of competition. This chart says otherwise

The antitrust crew have dominated the market post-COVID crash

The chief execs of Facebook, Amazon, Apple, and Alphabet (FAAA) took turns defending their business practices during an antitrust hearing in Congress on Wednesday.

Each CEO faced scrutiny over slightly different matters, but they generally projected the same idea: their successes are simply the result of their own ingenuity, and not due any monopolistic power-plays despite the mounting evidence.

“The retail market we participate in is extraordinarily large and competitive,” said Amazon’s Jeff Bezos, according to the Wall Street Journal. Bezos, by far the world’s richest person, broke records earlier this month when his fortune grew by $13 billion in a single day, thanks to surging Amazon stock.

Apple is the antitrust crew’s best performing tech giant

But the divide between the US tech giants and smaller firms is severe since the enormous stock market crash that occurred in March.

The graph below charts the past year’s market performance of Facebook, Amazon, Apple, and Alphabet against the S&P Small Cap 600 Information Technology index, as tracked by Invesco’s corresponding ETF (PSCT).

PSCT follows 74 companies valued between $300 million and $1.4 billion, and serves as a benchmark for the smaller (but investable) fish in US tech.

First, note how well Apple stock has performed, both pre- and post-COVID crash. $AAPL is up more than 80% since this time last year despite the market turmoil.

This added nearly $694 billion to its market value, solidifying the iPhone maker’s position as the most valuable US company, tech or otherwise.

Overall, the data shows US tech small caps have recovered far slower than FAAA, which is up 46% since this time last year.

faaa, amazon, apple, alphabet, google, facebook
FAAA represents the equal-weighted price performance of Facebook, Amazon, Apple, and Alphabet.

But check how US tech small caps performed in the first half of the chart. PSCT tracked pretty well alongside Facebook and Alphabet, and was even way ahead of Amazon at the start of 2020  right up until February, when the COVID-19 threat began to coalesce in the West.

The difference is most apparent when comparing FAAA’s market performance against their small cap counterparts over the year-to-date.

Amazon (59%), Apple (26%), Alphabet (10%), and Facebook (10%) are all well in the green in 2020, while PSCT is still looking heavy, down more than 6%.

[Read: Anatomy of the FANTAMAN, the tech stock amalgam worth more than Germany’s GDP]

As for what will alleviate FAAA’s apparent control over the market, House Antitrust Committee Chairman David Cicilline maintained that tech giants present a modern problem that requires specialized regulation.

“Some need to be broken up, all need to be properly regulated and held accountable. We need to ensure the antitrust laws first written more than a century ago work in the digital age,” concluded Cicilline.

Published July 30, 2020 — 15:53 UTC