Stocks in the world’s biggest tech companies soared last night as the prospect of a Republican Senate dampened worries of heavy legislation on the industry.
Investors are banking that, while Democratic nominee Joe Biden is likely to occupy the White House, a gridlocked upper house could prevent him from imposing any meaningful change on a sector that has witnessed enormous growth in its valuation this year.
Facebook shares jumped more than 8pc on Wednesday as the fate of the election became increasingly clear, while Alphabet rose 6pc and Amazon rose 5.8pc. Californian giant Apple reported a 4pc bump in its price.
Wall Street’s main indexes also surged to close at their highest levels in more than a week, with the benchmark S&P 500 posting its best day since June and the tech-heavy Nasdaq since April.
Both Republicans and Democrats have their sights set on regulating Big Tech. Republicans have long held the view that the West Coast-based behemoths hold an inherent liberal view, which has resulted in more conservative posts being removed from social media sites.
Democrats, meanwhile, have sought to break up the likes of Facebook and Google, and it was a fundamental policy of Elizabeth Warren’s campaign. However, a Democrat president paired with a Republican Senate dampens the chances of sizeable competition changes.
“We likely do not see Congress agreeing on legislation unless both houses and the presidency are controlled by the same party, as both parties have had difficulty racing consensus on more pressing issues,” says Dan Ives, an analyst at Wedbush.
Common ground has become an increasingly rare occurrence in US politics with many claiming the country has never been more divided.
Breaking up big tech | Who wants to curb the power of FAANG?
Despite those differences there are a range of ongoing threats to Big Tech from regulators. The Department of Justice filed a landmark monopoly suit against Google, while further cases against Facebook, Apple, and Amazon are all said to be on the cards centring on various antitrust violations.
Pollsters had long-tipped a Blue Wave to consume much of this week’s vote — spreading fear among tech backers that a Biden-dominant legislature was imminent. Biden and his running mate, Kamala Harris, have both spoken of stricter competition rules as well as more intense online privacy requirements.
Trump meanwhile has taken aim at tech’s so-called “privacy shield” that exists under Section 230 of the 1996 Communications Decency Act. The section gives social media firms broad legal immunity for content posted on their sites.
“The result does seem to take some of the wind out of the sails of the regulation of tech,” says Sam Bowman, director of competition policy at the International Centre for Law and Economics.
“The biggest danger is a grand bargain between Democrats who want regulation and Republicans who believe that Google, Facebook, and Twitter are suppressing conservative speech on their platforms and who may be willing to trade economic regulation for the removal of or changes to Section 230.”
Bowman says the removal of Section of 230 would “cripple much of the internet as we know it”.
“It would mean platforms would have to moderate any user content before it’s posted,” he says.
“But some Republicans are so angry at digital platforms over their perceived mistreatment of conservatives, that it might be a price they’re willing to pay.”
Securing the Senate is key to passing laws in the US and while Biden may be able to reach some common ground on the moderation of content, any deal on corporation tax is considerably less likely.
Chief among Trump’s achievements in office to date has been the radical overhaul of the country’s tax system. The multitude of changes, which represented the biggest amendment to the code in nearly 30 years, included the creation of a single corporate tax rate of 21pc. The rate reduction, down from 35pc, was welcomed by large corporations while the Trump administration argued that it would enrich household income.
By contrast, Biden intends on raising tax revenue by $3.3 trillion (£2.49 trillion) over the next decade. Hiking corporation tax back up to 28pc is a central part of that plan.
Big Tech will undoubtedly be pleased by the results of the election to date. With Biden in the White House hamstrung by a Republican Senate, it could represent a political grey area for the giants to revel in.
But even with the positive results it seems unlikely that they will avoid some form of clampdown across either tax, competition or content.
Свежие комментарии