Big technology companies face not one. Not two. But, three hearings in Congress today.
Representatives from Facebook (FB), Alphabet (GOOGL), Amazon.com (AMZN) and Apple (AAPL) are scheduled to appear before the House of Representatives and Senate today. The committees will cover a range of subjects and are run by both parties.
FB gets the ball rolling at 10 a.m. ET when executive David Marcus appears before the Senate’s Committee on Banking, Housing and Urban Affairs. Questions will focus on the social network’s Project Libra cryptocurrency. Republicans control this panel.
Lawmakers are already demanding a halt to the program until they can study it. Federal Reserve Chairman, President Trump and other officials have also expressed concerns.
Still, FB has pushed higher as investors hope legislators will come to accept Libra — even if they bash it first. Don’t forget Mark Zuckerberg’s company has a track record of rolling out successful initiatives, like mobile ads. FB has also overcome regulatory challenges such as the Cambridge Analytica privacy breach, settled for a $5 billion wrist-slap last week.
Antitrust in the House
The biggest hearing follows in the House of Representatives at 2 p.m. ET. Executives from FB, GOOGL, AMZN and AAPL will appear before the Subcommittee on Antitrust, Commercial and Administrative Law. Democrats control the panel.
This event will focus on potentially monopolistic business practices. It comes six weeks after reports that the Department of Justice was probing GOOGL, which also dragged down FB and AMZN at the time. Coincidentally, the hearing falls on the second day of AMZN’s longest-ever Prime Day.
The third hearing is at 2:30 p.m. ET in the Senate’s Subcommittee on the Constitution. It will focus entirely on GOOGL’s search-engine practices and accusations of political bias. Former Presidential candidate Ted Cruz, a Republican, will lead the hearings.
The Likely Impact
FB’s initial appearance is likely to be the most important. Investors will monitor the proceedings for evidence of lawmakers accepting Project Libra. If they sense things are going smoothly, it could help turn one of the world’s busiest websites into a provider of financial services.
So far, FB’s Marcus has taken the unusual step of asking the government for regulations his company can follow. It may prove a wise political strategy that minimizes friction and ensures success over the long run. After all, Libra won’t go live until sometime next year.
The other two committees will probably have less importance on trading. Antitrust actions fall under the executive, not legislature. And, most observers consider the Senate hearing on GOOGL’s free-speech practices to be more political theater than significant for business.
One final thought is that today’s political scrutiny results from Silicon Valley’s successes, rather than business-threatening abuses. No industry can grow as much as big tech in the last 20-30 years without upsetting someone. That inevitably leads to attention and calls for regulation.
In conclusion, it’s an unusually busy day for big tech firms. Hopefully this post helps you know the key events and issues to watch.