Tech stocks should be viewed with caution
Investors should watch out for calls to regulate social media companies.

While the stock market remained pretty untouched after last week's debacle in Washington, DC when pro-Trump rioters stormed the Capitol, there may very well be consequences - at least for the tech companies that long behind the market rally. As part of his support for the mob that stormed the Capitol, Trump's social media accounts were banned and banned. Facebook, Twitter, Instagram, and YouTube have all taken steps to limit Trump's ability to use their platforms, some forever. PayPal also closed an account that raised funds for Trump supporters traveling to Washington, DC. Then Amazon suspended the pro-Trump social network Parler from its web hosting service, while Apple and Google removed the Parler app from their stores. All of this raises some questions about our tech giants at a time of political crisis, and stock prices may begin to reflect that. After the unrest, the Dow closed up 437 points, or 1.44%, to 30,829 and the S&P 500 gained 0.57% to 3,748. Both the Dow and S&P 500 hit intraday record highs after Congress confirmed Joe Biden's win in the presidential election. But on the flip side, tech companies sold heavily on Monday, with Twitter falling over 6%, Facebook 4% and others 2%. Americans seem unsure which animal to let out of its cage here - a situation that will further increase insecurity Trump's ban fuels investor concerns about future social media regulation and how they create and wield uncontrolled power. While the social media giant justified the action with the risk of further violence after the storming of the US Capitol, the action was still criticized by some Republicans for violating Trump's right to freedom of expression. But the criticism does not only come from the Trump camp: Both at home and abroad, the fears of anti-Trumpers are growing. What few seem to understand is that both scenarios mean uncontrolled power for these tech giants: whether they are used as a tool to incite violence and spread hate speech, or whether they become the top arbiter who single-handedly determines who can say what and when. The problem is not what they do, but how big they got. Meanwhile, investors have cause for concern that our beloved "FAANG" stocks may not only stop rallying but may come under pressure. And they have more reasons to worry than the recent Capitol break-in. The bosses of Facebook, Google, Amazon, and Apple testified before Congress last year as part of a larger investigation into their impact on the market. Last month, 48 state attorneys general and the Federal Trade Commission (FTC) filed the highly anticipated antitrust lawsuit against Facebook alleging the social media giant is illegally crowding out competition. In the lawsuit, the states allege that Facebook "illegally" and "predatory" bought up competitors in order to expand and maintain its market power. The lawsuits have been going on for years, with authorities lately trying to keep growing tech companies under their control. You are on the heels of a report released in October by a subcommittee on antitrust law for the US House of Representatives that found the social media giant has a monopoly. Again, it's not just about Facebook. The subcommittee concluded that big tech companies enjoy monopoly power and suggested that Congress amend antitrust laws to allow parts of their businesses to be segregated. In addition, Trump signed an executive order in May that will attempt to restrict legal protections for social media giants - in direct response to Twitter's warnings to fact-check its presidential tweets. "A small handful of social media monopolists control a large portion of all public and private communications in the United States," he claimed. "They have the uncontrolled power to censor, restrict, edit, shape, hide, and transform practically every form of communication between private citizens and a large public audience." In the executive order, Trump called for the abolition of Section 230 of the Communications Decency Act of 1996, which blocks liability claims against social media companies for user contributions to their pages.





