The tech sector has been one of the most rapidly growing industries in the world, fueled by the innovation of tech giants such as Apple, Amazon, and Google. However, in recent times, the sector has experienced a sharp drop in stock prices following government intervention.
The issue began when regulators and lawmakers in the United States began scrutinizing the tech giants’ business practices, particularly regarding privacy, data security, and antitrust concerns. This caused a sharp drop in the share prices of these companies as investors began to worry about the government’s potential regulatory clampdown.
For instance, in September 2020, the US Department of Justice filed an antitrust lawsuit against Google, accusing the tech giant of illegally monopolizing the search engine market. This led to Google’s parent company, Alphabet, experiencing a 5% drop in stock prices within hours of the lawsuit’s announcement.
Similarly, in July 2019, the Federal Trade Commission (FTC) imposed a $5 billion fine on Facebook for its role in the Cambridge Analytica data scandal. The fine resulted in a sharp drop in Facebook’s stock prices, with the company losing $120 billion in market value within a day.
Furthermore, the tension between the US and China with regards to trade, technology, and cybersecurity has also impacted the tech sector’s stock prices. The Trump administration’s executive orders banning US companies from conducting business with Chinese tech companies such as Huawei and ZTE, for instance, caused a significant drop in their stock prices.
The recent U.S election of Joe Biden as President also contributed to the decline. Although President Biden has not been overt in his criticisms of big tech companies, he has stated his intent to hold them accountable for their role in spreading misinformation and disinformation, which could lead to tighter regulations.
Overall, tech sector stocks have experienced a noticeable drop following increased government intervention. However, analysts are optimistic that the sector will eventually recover as companies adjust their practices to comply with regulatory standards. Nonetheless, it will be a watch and see situation as the administration of President Biden’s regulatory interventions are a vast unknown.