Many technology giants face “turbulence” in the first half of 2022

EU tightens control of big technology companies

In Europe, the pressure on big technology firms continues to increase strongly in the first half of 2022. In January, Google announced an appeal to the European court of justice for an antitrust fine of up to 2, 8 billion USD. Only 1 month later, the American company was again faced with the case antitrust lawsuit worth $2.4 billion from a Swedish company. Google also has to agree to pay more than 300 news publishers in Europe to end a long-standing copyright war with the newspaper industry.

Another big name, Apple, also struggled. In March, Apple faced a fine of up to $ 55 million in the Netherlands for allegedly violating antitrust laws. In early May, EU authorities dealt another blow, accusing Apple of abusing its dominant position in the mobile payments sector, along with the risk of facing fines of up to 10% of revenue per year. globally, equivalent to tens of billions of dollars.

Margrethe Vestager, Vice President of the European Commission (EC), said: “By excluding other companies, Apple has created an unfair competitive advantage for its electronic wallet Apple Pay. If confirmed. , this can be considered an abuse of a dominant position in the market. This is illegal under European regulations.”

In addition to individual penalties, the EU is also stepping up legal efforts to bring big technology firms into the framework. In March, the EU reached an agreement on the Digital Markets Act (DMA) – a landmark move to limit the power of technology “giants”. It is expected that the DMA will be applied to companies with a market capitalization of 75 billion euros, annual revenue of 7.5 billion euros and at least 45 million monthly users.

Mr. Thierry Breton, EU Commissioner for Internal Markets, said: “Some people have likened the market to the wild west, where it belongs entirely to the tech companies. We’ve regained the right. control and tell them you are still welcome in the EU market and now the digital market but have to follow our rules.”

The DMA is expected to come into force as early as 2023. Violating tech companies will face hefty fines of up to 10% of annual global revenue, and possibly up to 20% if relapse.

Many tech companies struggle with stocks

Not only having trouble with the government, in the past few months we have also seen a series of other big technology companies also suffer in stocks, in terms of service subscriptions.

For example, Netflix, in April, Netflix stock fell 40%, blowing away nearly $ 60 billion in market capitalization or like Facebook’s parent company Meta. In just one day in early February, Meta lost 230 billion USD in market capitalization because the stock fell 20%.

E-commerce company Amazon also fell 14% in the trading session on April 29, its darkest trading day since 2006. Besides, the company was also entangled in the controversy for employees to leave their jobs. the reason for the apparatus is too much manpower.

So, what’s going on with tech stocks? Is this group no longer invincible? To answer this question, reporter VTV Digital contacted Mr. Raj Shah, a digital transformation expert of Publicis Sapient corporation in the US. Mr. Shah has some remarkable comments about what he calls “the bumpy road of the tech world.”

Thank you Mr. Shah for interviewing with VTV Digital. What’s going on with technology stocks, sir? Why are the first few months of the year so difficult?

Mr. Raj Shah, Head of Telecommunications and Technology North America, Publicis Sapient Group: There are many pressures coming from many sides, but the most important is capital flow. In the time of COVID-19, economies are pumped a lot of money to be able to weather the pandemic and a large part of that money flows into technology corporations, technology startups. But now, stock investors are starting to ask: When will their investment pay off?

Meanwhile, people around the world are starting to return to a new normal. So many technology services like Netflix or Zoom or Peloton began to lose customers. The Russian-Ukrainian war caused the price of goods to increase. Investors are even more anxious about their money pouring into tech companies. Tech companies are forced to come up with good profit and revenue numbers, and they’re not ready to do that. In my opinion, this is the reason why the growth momentum of technology companies is somewhat restrained.

As an investor, I am still not satisfied with the expert’s explanation. Netflix or Zoom is too obvious, the pandemic is over, life is back to normal, they lose customers. For example, what about Meta – the parent company of Facebook? For what reason, losing up to 230 billion USD in just 1 day?

Mr. Raj Shah, Head of Telecom and Technology North America, Publicis Sapient Group: Technology corporations should not be considered as a solid block, but must look at each company specifically. They have different strategies and business models. There are big companies like Microsoft or Amazon, their services go into every corner of life, so even if the market fluctuates, their stocks still stand. Their balance sheet is still good, revenue, profit is okay. As for Facebook’s Meta, they are pioneering a new area – the Metaverse. But they already dominate the social media arena. Investors will feel a bit confused and doubtful because they don’t know if this new direction will bring profits quickly. This is the reason that Meta’s stock will enter a bumpy and uneven road and it will be more difficult for Meta to raise capital to pour into the new project than before.

Investing in tech stocks should go a long way, not just looking for quick returns, according to expert Raj Shah. Of course, shares of corporations whose services are always needed, like Microsoft or Amazon, would be a low-risk choice. If you are investing in newer technology models, then you need to look at the profitability of the company and see if it is in the money-consuming stage.

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