Big tech stocks have been some of the worst performing of 2022, with the NASDAQ moving negative nearly every day and even falling a whole 2% last Friday. To gain some more understanding of all this, 2021 is an important year to reflect on. What decisions did these companies make? And were they good or bad? Well, the common line running between these companies during 2021 appears to be their major investments and acquisitions in smaller companies. In fact, in 2021, Amazon, Microsoft and Alphabet all went on a buying spree with Google’s parent company Alphabet making 22 deals, Microsoft making 56 deals and Amazon making 29 deals in 2021.
One possible reason these companies are doing this is to stay a step ahead of Washington, as each and everyone of them faces antitrust scrutiny and vows from D.C to take on Big Tech. Erik Gordon, a professor at the University of Michigan’s Ross School of Business explained it well, stating: “Once a precedent is set in one courtroom by one judge it’s easier for other judges to follow that precedent.” and that Big Tech is “paying a lot of attention and would like to get deals done before the administration succeeds in getting new precedent”. The moves appear to be backed by the full force of these companies’ resources, with the likely reality being one in which they pay dozens of lawyers, to confirm the odds of a deal being approved. What do you think about the moves of these tech giants? And does Washington have a shot at stopping them?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.