Category Archives: Big Tech

Insurance technology (Insurtech) has been evolving rapidly since the past few years. The COVID-19 outbreak has forced the sector to take a serious look at how it communicates with other industry professionals.

A new Insurtech report questions and looks into whether agents can work effectively from their homes following the Coronavirus crisis.

The report asks:

Are insurance processes resilient to unexpected changes? Do policyholders receive caring service? Is WOW-factor digital experience the way to keep todays time-strapped, multi-tasking insureds engaged and loyal?

The Capgemini team claims they interviewed 200 industry executives to find the answers to these questions and gain other insights from incumbents who revealed the COVID has compelled them to fast-track digitalization.

As stated in the report, COVID has had a significant impact on the insurance industry customer engagement KPIs as BigTechs define the CX (customer experience) north star.

The report notes that the pandemic was a high-impact black swan event that forced insurance providers to reevaluate or re-assess customer engage performance metrics.

Capgemini adds:

BigTechs are earning even more customer trust by offering resilient processes, real-time crisis response, intuitive customer care, and digital experience (DX) with WOW-factor appeal.

The Capgemini team further notes:

As incumbents fast-track their digitalization efforts, they are seeking support from Insurtechs, which translates into sudden demand and need to scale up. BigTechs and other non-traditional players are making their presence felt in the insurance industry. More than 60% of insurers and Insurtechs we interviewed said they are interested in working with BigTech firms.

The report also mentioned the boundaries that existed between traditional insurance providers, Insurtechs, BigTechs, and tech partners are now blurring as the sectors key players begin to explore new initiatives.

Vighnesh Shahane, MD and CEO at IDBI Federal Life Insurance Co. Ltd., stated:

Early signs of a hit in customer retention are being evidenced as we witness widespread job losses, wage cuts, and business failures. This will be exacerbated if the COVID-19 pandemic situation is protracted. Todays new normal will likely be tomorrows business-as-usual.'

In an interview with CI, Gonalo de Vasconcelos, co-founder at SyndicateRoom and founder of Insurtech Rnwl, which was previously a top securities crowdfunding platform in the UK and has now become an EIS fund, revealed why hes moved into the Insurtech sector.

He claims that Insurtech is where Fintech was when he launched SyndicateRoom. He said that in terms of innovation, the digitization of insurance is barely scratching the surface with plenty of room to grow.

de Vasconcelos said:

The same way I wanted to be, and was, at the forefront of innovation in Fintech, I now want to do the same but bigger and bolder in Insurtech. Its a fascinating space to be in right now, which I never thought Id be using such words about insurance

Read more from the original source:

Over 60% of Insurtech Firms are Now Interested in Working with BigTech Companies: Report - Crowdfund Insider

Barry Lynn is something of a canary in the coalmine for competition policy in the United States. He is the founder of the Open Markets Institute, a Washington D.C. think tank, and the author of several books on the topic many of which have become invaluable resources for legislators, regulators, and policymakers across the aisle. His latest book, Liberty from All Masters, will be published on September 29th.

A journalist by trade, Lynn first became involved with competition policy in the 90s while investigating supply chains for a magazine he ran called Global Business. An earthquake in Taiwan in 1999 shutdown the bulk of the worlds semiconductor companies that at the time supplied critical computer companies like Dell, Compaq, and IBM.

He wondered, how had we allowed such an important part of the supply chain to become so concentrated? The answer was U.S. policy changes toward competition and antimonopoly law here at home and internationally. His investigation led to a vital piece, Unmade in America, which was published in Harpers Magazine overseen by the editor at the time, Lewis H. Lapham.

This month, Lynn has dropped another bombshell investigative think-piece in Harpers Magazine, The Big Tech Extortion Racket. This time, Lynn sets his sights on the quickly evolving industry of big tech, specifically companies like Facebook, Apple, Amazon, Netflix, and Google. It is a conversation that has grown louder in recent months as seen in Congressional hearings with the tech CEOs on market power concerns.

Lynn knows first hand this is an uphill battle. Prior to founding Open Markets independently, Lynn oversaw the antimonopoly program as a senior fellow at the New America Foundation. The foundation had received millions of dollars from Google CEO, Eric Schmidt, over the past decades, and in a move that shocked even the most established members of the press, Lynn and his entire team of seven was fired.

Undeterred, Lynn has continued to press for open markets and the enforcement of antimonopoly legislation. He argues in his books that these monopolies in many cases are harmful to innovation, undermine freedom and democracy, and destabilize entire industries and financial systems. We spoke with Lynn on his journey with the Open Markets Institute, how we should think about monopolies and big tech, the political will for coming legislation, and what we can do about it.

NOT YOUR TYPICAL BOARD GAME

Mark Benjamin: Thanks for speaking with me today. Your article in Harpers was incredibly eye opening. What is the monopoly and why are they bad?

Barry Lynn: A monopoly is not necessarily a company where you have 100% of the market share. You can be an effective monopolist if you have 50% or even 30% of the market. That means that you have sufficient power to shape the market to serve your interests.

The key is that you are not subject to the market, but have power over the market. If you have 30% of the market and every other player has 2%, you can shape that market in a way that no one else can and really harm sellers and buyers

What makes monopolies bad?

Not all monopolies are bad. We have many monopolies in our lives that are largely beneficial. The power within some monopolies has been curbed in a way that makes them safe for our democracy and for our liberty. Back in the day, AT&T was a true monopoly. They had control over pretty much every telephone in the United States, every long distance line, and every local line. Theoretically, that gives you immense power over different people for pricing, but also to determine who you connect with who gets to talk with whom.

Theres really two things you can do with a monopoly. You can break it up. Or if you dont want to break it up, for whatever reason, you neutralize it.

But we regulated AT&T to ensure that power was entirely neutralized. It became a corporation that served people. Transportation and communication networks should be regarded as a form of monopoly. We shouldnt be afraid of monopoly per se, but we want to make sure that anytime when you do decide that this monopoly is necessary or wise to have, you have special rules applied to that corporation to make sure it treats everyone it serves the same.

Theres really two things you can do with a monopoly. You can break it up. Or if you dont want to break it up, for whatever reason, you neutralize it. Those are your basic rules.

MB: I want to talk about how they form. At least in the modern sense, it looks like what happens is you have a group of investors, whether it be a bank like SoftBank or a sovereign wealth fund, come together and say, this is a great idea. Usually, its in the tech space. Then they fund these companies to expand their technology and can run losses for years, or in Teslas case, a decade. This creates a wide moat and makes it anti-competitive as they gain substantial market share. Then they eventually monetize it with plenty of price control. Is that right?

BL: Yeah. You got it.

Ill give you another example. This is an example of how you can do it in the real world and how it was done even before big tech. Mitt Romney used to be a principal at Bain Capital. One of the things that Bain did going all the way back to the early 80s was that all across America there were stationery and office supply stores. They were owned and run by families. In New York, they were all up and down Broadway. Usually, theyre run by one person or one family. This was true all across America.

What Bain Capital did, after a change in law that President Reagan put into place in the early 80s, is raise a big pot of money and give it to one company to roll up this whole business. They raised a bunch of money and gave it to the people that ran a small operation called Staples.

This second stage monopolization has resulted in a pyramiding of power where rather than having 500 super large corporations and banks in the United States, increasingly you have five.

The people who ran Staples then used that money to buy up or bankrupt hundreds and thousands of these independent stationary and office supply stores. At the end of the day, you end up with a corporation thats run by Wall Street capitalists in place of 5,000 or 10,000 independent stores that were owned by people in the community.

Its an economic revolution clearly. But its also a type of social revolution because suddenly it becomes essentially impossible for the independent entrepreneur to survive. That has effects on your community. It also affects all the people who want to start a business, who now find it much harder to do so.

Thats just one story about stationery stores and office supply stores, but this is true in every single corner of our political economy. Just about every part of our political economy has been radically concentrated over the last 35 years. Most sectors of the U.S. economy are now essentially owned by people on Wall Street.

THE AGE OF THE INTERNET CORPORATION

MB: And so how are the Internet and monopolies colliding at this point?

BL: One way to understand what happened in America and the world is that weve actually seen a two stage process of monopolization. In stage one, the Reagan folks came in the early 80s and overturned the traditional way we do anti-monopoly law. That unleashed the consolidation that led to the era of Walmart, Citibank, Goldman Sachs, Staples, and Monsanto.

By 2005, around the time of the Iraq war, the American economy was dominated by these super giant corporations. These were real world corporations. For example, it takes a long time to monopolize retail the way Walmart has because if you have 5,000 stores, you have to physically control 5,000 pieces of property. That requires a vast amount of capital and its a lot of work. It took 25 years from the change in law for these corporations to capture control over just about every key sector of the political economy. That was stage one.

Then with the crash of 2008 we saw The Great Recession and the collapse of the financial system which to that point had supported the first stage of monopolization. Thats when you saw Google, Amazon, and the Internet corporations really start to take off.

We look around at Trump and say, Oh, hes a fascist. But actually, the kind of fascism that we should really fear is when you have a pyramid of power in which the super large investor and the super large corporation executives are afraid to speak out about what Google is doing, what Facebook is doing, what Amazon is doing.

What youve seen over the last 10 years is the second stage of monopolization in which Google, Amazon, Facebook, Uber, and others captured control over many of the super large corporations of the last generation. These technology companies have become the platforms through which other people do business. This second stage monopolization has resulted in a pyramiding of power where rather than having 500 super large corporations and banks in the United States, increasingly you have five.

MB: I read the other day that 17.5% of the S&P 500 is now in tech stocks like Apple, Microsoft, Alphabet (Google), Amazon, and Facebook.

BL: I think its north of 20% at this point. The level of monopolization that we see today, its not good for even the largest capitalists of the last generation. Just to be clear, all of our money at the Open Markets Institute comes from philanthropy. We serve the public. What we do is we try to take money from places like the Ford Foundation, Rockefeller Brothers, and other bona fide philanthropies and use this money to study the effects of monopolization and what can we do about it from the point of view of the public.

We have had many corporations, very large corporations, come and try to give us money. Walmart will come to us and say, can you help us deal with Amazon? Well have NewsCorp come and say, can you help us deal with Google and Facebook? Our response is always, we cant take any money from you, but to the extent that our interests align, lets walk the path together.

What you see today is someone like Rupert Murdoch has now become afraid that someone is more powerful than he is, and that someone is Google and Facebook. Walmart used to be the all-powerful, the top-tier competitor. But now they look around and they see that every day and every year they lose ground to Amazon.

Thats one of the things that people should keep in mind. The concentration has gotten so extreme that even some of the biggest people out there are now afraid of somebody else. Thats a very dangerous point for our political economy.

We look around at Trump and say, Oh, hes a fascist. But actually, the kind of fascism that we should really fear is when you have a pyramid of power in which the super large investor and the super large corporation executives are afraid to speak out about what Google is doing, what Facebook is doing, what Amazon is doing. When Rupert Murdoch is afraid to speak out, thats a really dangerous place to be, politically. Thats where we are now.

One of the questions I wanted to answer in the Harpers piece is: what is the mechanism that Google, Facebook and Amazon use to capture control over and manipulate even some of the biggest of the big corporations in the world? The purpose was to show how bad it is, but also to show we actually have the tools we need to deal with this.

CAPITOL HILL, APPLE, AND FORTNITE

MB: A few weeks ago the big tech executives came out in front of Congress and addressed the antitrust subcommittee about questions of market share. Where is the political will currently to do something about this problem?

BL: Its one of the things that gives me real hope. Its been pushing twenty years since I realized that monopolization was a huge problem in America. Ten years ago, when I published Cornered, most people looked at me and said, Youre insane. This is cowboy capitalism here in America. We have no monopoly problem.

Now we have awareness of it on both sides of the aisle. We have people who are ready to fight. The hearings that you mentioned, thats the antitrust subcommittee in the House of Representatives. Thats run by a man named David Cicilline from Rhode Island.

Congressman Cicilline is a real hero. He has not just educated himself, but he and his staff have educated every member of that subcommittee. One of the things that we saw in that hearing was every single member of that subcommittee hammering on the CEOs. And they were largely in agreement, the Republicans and Democrats. They werent entirely in agreement, but they were largely in agreement about the nature of the problem and what to do about it.

Its reasonable to fear that its just showboating, but having watched this for as long as I have, I know that theyre moving towards doing something about it. The information that theyve published has already been used in this antitrust case that is being brought against Apple by Epic, the maker of the video game Fortnite.

When it comes to search, Google has north of 90% of search traffic. Through the entire ad technology chain Google, at every point you look, has between 60 and 90% control of the capacity.

Thats one of the things that has come out of the information that the subcommittee has brought forth. Theres going to be more information thats brought out, but this hearing and this report that theyre putting out this year, this is just the first stage. Assuming that the Democrats retain the house, Congressman Cicilline will remain in that seat and begin next year with a brand new investigation in which he takes this further.

If the Biden administration does not take this seriously, Congressman Cicilline has the power as a chair of an important subcommittee to force them to do so. Then you have Senator Warren. A Senator with seniority and an understanding of an issue and a willingness to fight for what she thinks is right. A Senator like that is an awesome power.

Cory Booker and Amy Klobuchar have become very good on these issues. We have worked with both. If youve got a group of senators, including Republicans, and a strong committed subcommittee in the House, they can bring an awesome amount of power to bear on the administration and on the agencies, in ways that force them to actually enforce the law.

The thing about Congress is if the agencies dont do it, if they fail, for whatever reason, Congress itself can do whatever it wants. Congress tomorrow could break up Google. Thats the nature of popular sovereignty in America.

This is also happening in Europe. Its happening with the states Attorney Generals here in the United States. We have turned the corner on this. We still have a long way to go. But from my point of view, were in a good position. We need to fight, we need to fight every day. But I am very encouraged.

POWER OVER THE PRESS

MB: Just to play devils advocate for a minute, the arguments that the tech executives put forth, for example, Facebook will say they have plenty of competitors such as Chinas ByteDance with TikTok. Google will say, Facebook is a formidable competitor. Apple has tons of competitors

BL: For online advertising, Google and Facebook together control probably about 70 to 75% of all online advertising and that percentage is growing. Certainly, when it comes to social media, Facebooks dominance is growing to 70 to 75%. When it comes to search, Google has north of 90% of search traffic. Through the entire ad technology chain Google, at every point you look, has between 60 and 90% control of the capacity. By any reasonable definition, these are monopolies. In fact, what we see here are multiple monopolies tied together. Thats especially true for Google. Google is a whole array of monopolies that have been lashed together.

MB: I want to talk about Facebook for a minute because its almost like a social contract has formed between society and this platform. It carries so much weight of the free press today, which has always been a cornerstone of our democracy. What is your take on where these monopolies meet the free press?

BL: One area the Open Markets Institute focuses on is any time monopolies are taking control over industries where its going to affect our ability to communicate with each other and share information with each other. There are two areas weve really focused on over the years: the way Amazons power affects book authors and book sellers and book publishers. And how Google and Facebook, how their power affects the reporter, the news editor, and the news publisher.

We hosted an event two years ago, where we had the CEO of the New York Times and the CEO of News Corp. onstage together along with Senator Klobuchar and the head of antitrust enforcement, Makan Delrahim, talking about how Google and Facebook were destroying the news media industry. They are destroying it by stealing all the advertising. Whether we like advertising or not, the fact is that from the beginning of our country, newspapers and magazines have been supported by advertising. Thats one of the things that makes them free, because if you have many advertisers, then youre not beholden to anyone, and youre not beholden to the government.

It has actually worked pretty well for American society over the course of a couple of hundred years. Now Google and Facebook are stealing all the money. There are a couple of exceptions, like the New York Times and the Wall Street Journal, who are doing okay. But for every other newspaper or magazine it has become fantastically difficult to make a living.

Eight years ago, Buzzfeed was running around saying, were beating the pants off of News Corp. and now Buzzfeed has realized its extremely hard to sell advertising when Google and Facebook stand in between you and the advertiser and stand in between you and the reader.

You live on someone elses plot of land, and you are going to pay rent to those people. There are no rules about how much rent they can charge. They can charge rent up to the point where youre essentially bankrupt and thats whats happening to all of these different corporations that we rely on for the news that we depend on to have a democracy.

MB: My theory is that it has forced media outlets, especially news, to go into more extremist niches to capture loyalty. Why is the media so polarized? I think a big part of it is because of economics. Theyve had the advertising revenues stripped from them and so theyre forced to create more insular views so as to have a dedicated readership, whereas before they could have been more broad with the tone of their reporting.

BL: Oh, youre absolutely right. Thats a huge part of what we see taking place right now. Even worse is that Facebooks business model exacerbates the polarization. They make money by getting people angry. The writers who do a better job of getting people angry at other people, theyre the ones that are going to get more traffic. Theyre the ones that get rewarded by Facebook, especially by their business model. Its not just the market itself, its not just the way in which reporters and editors are responding to the market. Its also actually the way in which Facebook and Google are structuring the market.

YOU CANT VOTE WITH YOUR DOLLAR

YOU CANT VOTE WITH YOUR FORK

BL: We do a lot of work with authors, musicians, photographers, and filmmakers and their trade groups and associations that help to promote their interests. There are a few artists who are doing extremely well right now. But its become much harder for most creators to get to a point where theyre making enough money to live, just to pay their bills. Its becoming harder to make the next documentary, to write the next book, to get the money together to make the kind of album that you want to make because of Netflix, Amazon, Spotify, you know, these monopolies.

This is the key thing that we have to understand. None of this is inevitable. All of this can be fixed. All of this we will fix. Were in the process of fixing all this now. But in order for people like Elizabeth Warren and Congressman Cicilline and Keith Ellison, the state attorney general in Minnesota, to succeed, we have to support them. These people are smart enough and understand history well enough and understand law well enough that they know how to win.

Everyone who cares about art, everyone cares about journalism, everyone who cares about film, everyone cares about the local community, we have to get together and give these people the support that they need to push this through. We should understand that we will win, but the only way that we will win is to get out there and fight and give the support to the people who know what theyre doing.

MB: I think its probably too late to delete these services, right? So, how can the average person show support for these policy changes?

BL: The thing to remember is its not really through boycotts that we win. Michael Pollan once said, vote with your fork. Milton Freidman years ago said, vote with your dollar. If you dont like what someones doing, move your dollar. But in the world of monopoly, you cant vote with your dollar. You cant vote with your fork because youre stuck under the power of the monopolists. In large parts of this country theres really only one place to shop for certain things. Boycott if you can. But if you cant, dont fret about it. But do make sure that youre supporting the people who are fighting for democracy.

One way to learn about these folks is through our website, the Open Markets Institute. We are connected with a huge number of these fights. Encourage your Congressperson, encourage your local legislators to fight the monopolies and reward them for doing so. Thats how we win.

Link:

Interview: Barry Lynn on the Fight Against Monopolies and Big Tech - RAIN Magazine

When Google earlier this year announced that it would stop making AI products for the oil and gas industry, prompted by a revelatory report by Greenpeace, it was a signal that, like banks, Big Tech may start distancing itself from the fossil fuel industry. But not everyone has been so suggestible: IBM just announced a partnership with Schlumberger in cloud computing. Tech and oil may still have a future together, and that might be good for everyone, even Greenpeace. The IBM-Schlumberger partnership, which also includes Red Hat, is focused on cloud services and aims to accelerate the oil industry's shift to a more digital mode of operation.

"The energy industry is transforming as organizations look for efficient new ways to power their operations, adopt digital technologies to create a competitive advantage, and innovate and integrate workflows to make faster and better decisions," the chief executive of Red Hat said in the press release announcing the tie-up.

Indeed, the energy industry is transforming, and the pandemic has been a sort of a kick in the backside to accelerate this transformation. As Covid-19 cases sent platform and field workers packing and emptied offices, many day-to-day operations in the industry went remote. This was possible thanks to digital technology, including cloud. In fact, some of the trends that the pandemic created may become long-term as they save costs at a time where every dollar matters.

It seems that oil and tech go pretty well together. IBM is not the only tech giant to team up with an oil major recently. Just a month ago, Microsoft opened up its cloud platform to Petrobras. The Brazilian company had been testing the platform even before the crisis, but when it struck, and the company had to have staff work from home, it fast-tracked the deployment of the platform, an industry executive told Bloomberg in August.

What these partnerships basically do for oil is they make exploration drilling a lot more accurate and production much more efficient. This is, of course, good for the industry because it ultimately saves costs. But accurate exploration drilling and efficient production is also good from an environmental standpoint: it means less drilling and cleaner drilling.

Microsoft was also a target of Greenpeace criticism in May when the organization published its "How Tech Companies are Helping Big Oil Profit from Climate Destruction" report that led to Google'spartialpullout from the oil and gas industry. Unlike it, Microsoft stood its ground.

Related: Citi Bank Sees $60 Oil In 2021

"The significance and complexity of the task ahead is incredible and will require contributions from every person and organization on the planet," the tech giant said in a blog post in January this year, in which it pledged to become carbon negative by 2030.

"That's why we are committed to continuing to work with all our customers, including those in the oil and gas business, to help them meet today's business demands while innovating together to achieve the business needs of a net zero carbon future. Continued improvement in standards of living around the world will require more energy, not less. It's imperative that we enable energy companies to transition, including to renewable energy and to the development and use of negative emission technologies like carbon capture and storage and direct air capture."

Some might say this is simply a justification for Microsoft's continued business with the oil industry, but the company certainly has a point: global energy demand, despite the pandemic, will continue rising over the long term. Every authority on energy, including the IEA, agrees that this demand will be impossible to satisfy with solar and wind farms alone. It makes sense, then, to help oil and gas companies become cleaner.

The IBM-Schlumberger partnership promises "seamless access to a hybrid cloud platform in all countries across the globe for deployment in any basin, for any operator," according to Schlumberger CEO Olivier Le Peuch. This would certainly help streamline many operations, and streamlining operations tends to reduce carbon emissions by its very definition. And there are other things with which Big Tech can help Big Oil: carbon trackers, for example, are all the rage now that investors are pressuring oil companies into making their carbon footprint public.

Greenpeace applauded Google's decision to stop making AI products for Big Oil. But the move meant Google willingly gave up Big Oil's business. The company is large enough to not feel any negative effect from this, perhaps. Still, it appears that at least two of Google's peers are of a more pragmatic bend. The industry's shift to a lower-carbon footprint hinges on digital technology. Some of it Schlumberger and the rest of the majors can develop on their own, but it's always betterand things happen fasterif you have help. The marriage of Big Oil and Big Tech has the potential to benefit everyone, not just the two industries involved in it.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

Read the rest here:

Big Tech Still Loves The Oil Business - OilPrice.com

Battle royale evokes images of professional wrestlers engaged in a free-for-all brawl in which combatants eventually turn on one another until there is an eventual winner. With apologies to Hulk Hogan and Andre the Giant, Big Tech is taking on the same trappings as companies turn on one another amid multiple antitrust investigations and issues.

As the Justice Department, Federal Trade Commission, Congress and state attorneys general dig deeper into their probes, and as Apple Inc. AAPL, -1.12% and Epic Games Inc. duke it out in court, some of the companies targeted are taking a page out of the squared circle and turning on one another.

A quick recap: Facebook Inc. FB, +1.80% is targeting Apple amid its fight with Epic over 30% fees on the App Store. In TV commercials and brand messaging, Apple repeatedly takes swipes at the privacy policies of Facebook in its pursuit of targeted advertising. High-profile names in tech, meanwhile, question business systems at Google and Amazon ahead of charges against those companies that are expected soon. All the while, Big Tech employees and executives increasingly are grumbling about Microsoft Corp. MSFT, +1.08% seemingly getting a free pass from the Trump administration.

In a closed-door meeting with Facebook employees in late August, Chief Executive Mark Zuckerberg said Apple charge[d] monopoly rents which blocks innovation, blocks competition. He further upped the ante Tuesday, suggesting in an interview with Axios that the government should investigate the App Store. I think some of the behavior certainly raises questions, he said. And I do think its something that deserves scrutiny.

Not to be excluded, Microsoft claimed Apples threat to revoke Epics developer account would have far-reaching effects harmful to the videogame industry.

If Unreal Engine cannot support games for iOS or macOS, Microsoft would be required to choose between abandoning its customers and potential customers on the iOS and macOS platforms or choosing a different game engine when preparing to develop new games, Kevin Gammill, Microsofts general manager for Gaming Developer Experiences, said in a statement. Apples discontinuation of Epics ability to develop and support Unreal Engine for iOS or macOS will harm game creators and gamers.

Read more: Microsoft says Apples threat against Fortnite maker would hurt entire videogame industry

Complicating matters, Apple on Friday imposed changes to its App Store that could severely hamper game-streaming services from Google Stadia and Microsofts xCloud. Among the revisions to iOS 14, the latest version of the iPhone operating system expected later this month, one would require games offered in the service to be downloaded directly from App Store not from an all-in-one app like Alphabet Inc. GOOGL, +1.53% GOOG, +1.28% and Microsoft are offering.

In another wrinkle to the Apple-Facebook standoff, Instagram CEO Adam Mosseri on Friday told CNBC that the company strongly objects to a planned change to iOS that would impact how it and other mobile advertisers track users. On Thursday, Apple said it will delay until early next year changes to its privacy policy that Facebook and others claim will eviscerate advertising sales targeting users on iPhones and iPads.

Read more: Apple delays privacy policy change, much to the relief of Facebook, mobile ad sellers

Even those who helped create some of techs most important properties are aghast at what they have become. In August, YouTube co-founder Chad Hurley asked via Twitter if YouTube become the Amazon of video? If so, where is the Shopify of video?

What if I told you the obnoxiously high 30% App Store fee was a deal? This is the story of a video site that uses its size and power to take nearly double that, he wrote.

A long list of former Facebook employees and advisers among them, co-founder Chris Hughes, ex-Chief Security Officer Alex Stamos and venture capitalist Roger McNamee have commented with distress about the companys impact on society. Hughes went so far last year as to advocate breaking up the company.

A circular firing squad

The finger-pointing and name-calling belies long-simmering competition between four companies Apple, Google parent Alphabet, Amazon.com Inc. AMZN, +1.50% , and Facebook that are under scrutiny from a phalanx of investigative bodies over their business practices and vast influence in multiple markets. Antitrust experts jokingly refer to those under investigation as GAFA.

More important, the circular firing squad could portend a slew of forthcoming actions on the antitrust front: The Justice Department is expected to bring charges against Google as early as this month, a person familiar with the investigation told MarketWatch. The House Judiciary Committees antitrust subcommittee, meanwhile, could issue a report this month on its recommendations following its July 29 hearing on Big Tech, two people close to the situation told MarketWatch.

Fueling the acrimony is genuine concern from the far-right to the far-left. Big Tech is big oil. It is a bipartisan issue, Anurag Chandra, a partner at venture-capital firm Fort Ross Ventures, told MarketWatch. These guys have gotten massive. We have to get involved with public policy over privacy and use of personal data.

Google and Amazon would seem to be first in line for actions, he added. They create and operate forums, and then compete in them. By putting their thumbs on the scale, that sounds like grounds for antitrust actions.

Fueling the accelerated timetable is the increasing willingness among smaller companies to speak up against the Big Four.

You will also see non-GAFA companies air their grievances more publicly because they arent in danger of being punished with so much attention on their business practices, said Joel Mitnick, a former FTC trial lawyer who specializes in antitrust and global litigation. It is out in the ether now. What is more important is the entire regulatory machinery around the world is gearing up against the Big Four. The infighting is background noise.

A possible timeline

Google is likely to face charges as early as this month under the aggressive directive of U.S. Attorney General William Barr, according to a person familiar with the investigation and at least two recent reports.

The Justice Department and a group of state attorneys general may file antitrust lawsuits focusing broadly on how Google leverages its dominant search business to stifle competition, according to a Wall Street Journal report. At the same time, the Justice Department and state attorneys general are also investigating the pricing and operations of Googles Network division, a business that sells services that handle almost every step a digital ad takes, said a Bloomberg report.

Of course, the political calculus of such moves during a presidential election year could complicate matters, says V.C. Chandra. Im growing skeptical that we will see anything definitive regarding an antitrust action before the election, he said. The administration, despite its feelings about monopolization, needs a strong economy. A concrete action against Big Tech could drive down their stock and blunt market momentum that has been aided by tech companies.

Facebook is even more immune to imminent government activity between now and Nov. 3 because it is a political hot potato for both a get-out-the-vote push on its properties at the same time conservative groups and pages thrive on Facebooks digital platform, Chandra said. (In the same interview with Axios, Zuckerberg refuted a narrative that Facebook is an echo chamber for right-wing views.)

Despite the relatively civil relationship between Zuckerberg and President Donald Trump, it might only take a mild disciplinary action by Facebook over Trumps profile feed to raise his ire and prompt regulatory punishment, Chandra added. Last week, the company said it would ban new political ads in the week preceding Nov. 3.

Gaming the system

An already epic battle brewing in antitrust against Big Tech became downright Epic when the eponymous videogame maker sued Apple and Google in August. This has led to a pile-on of Apple by companies like Microsoft, Spotify Technology Inc. SPOT, -0.16% and Facebook over its App Store policies. Last week, Epic filed a preliminary injunction against Apple in its latest attempt to bring Fortnite back to Apple devices.

Many companies have huge components of their business reliant on mobile apps and the supporting toolsets, Adam Landis, CEO of mobile-analytics company AdLibertas Inc., told MarketWatch. Apple trying to block a major toolset should set anyone reliant on mobile apps on edge. Imagine waking up to find business operations halted or your apps no longer functional. I wouldnt be surprised if Facebook intends to lob a lawsuit of their own against Apple.

Apple countersued Epic on Tuesday, seeking punitive damages. The cases next hearing is Sept. 28.

Google, too, has been a lightning rod of criticism from longtime rivals.

Days after the congressional hearing in late July, Tripadvisor Inc. TRIP, -1.31% CEO Steve Kaufer called for further investigation into Googles search-ranking practices to rein in its deceptive efforts to [keep] users on Googles sites even if Google doesnt have the most relevant information.

Luther Lowe, senior vice president of public policy at Yelp Inc. YELP, +1.18% , told MarketWatch he was pleasantly surprised to see House members grill Google for allegedly stealing content from developers, such as restaurant reviews from Yelp.

Read more: Fortnites impact could be Epic on antitrust investigations of Big Tech

Why not Microsoft?

Through all the infighting and accusatory claims, Microsoft has been notably excluded from antitrust talk which is surprising given its long and tortured history with federal antitrust investigations. During the Microsoft investigation more than 20 years ago, the government dropped the effort to break up the tech giant before eventually settling the case with a consent decree.

For more: Big Tech was built by the same type of antitrust actions that could now tear it down

By the time the government reached a settlement with Microsoft, however, many years had passed and the tech market had seen the emergence of new markets for mobile and cloud, as well as the transformation of Microsoft into a cloud and gaming behemoth.

Ultimately, federal authorities were successful in changing Microsofts behavior toward competitors, prompting it to soften its ruthless ways and indirectly fomenting competition in the emerging fields of search, social media and e-commerce. The man leading the push acknowledged that historical record in a speech in June 2019.

The governments successful antitrust case against Microsoft arguably paved the way for companies like Google, Yahoo, and Apple to enter the market with their own desktop and mobile products, said Makan Delrahim, the Justice Departments antitrust chief, told MarketWatch in an interview late last year.

Which brings us to today, and Microsofts unique standing. The company last week was awarded a 10-year, $10 billion cloud-computing contract by the Defense Department over Amazon, and it is a favorite to acquire video-sharing service TikTok.

Those developments have left many in tech wondering if Microsoft, as well as Facebook and Oracle Corp. ORCL, +2.52% , have been favored by the Trump White House while Amazon and Google are punished for political reasons. (Amazon CEO Jeff Bezos owns the Washington Post, a fierce critic of the president, while Google has largely ignored entreaties from lawmakers to testify until recently.)

Antitrust lawyer Paul Swanson points out Microsoft does not run big-time marketplaces for apps (like Apple and Google, for example) or for advertising (such as Google, Facebook, and Amazon) or for goods (like Amazon).

What makes the Big Four so interesting, he says, is they dont just have market power in the markets where they compete they created and control the forum for competition, and then (at least for Amazon and Google) they compete within those competitive spaces that they operate and control.

Its a little like Microsoft in the 90s, which controlled the forum (Windows) for competition among third-party software developers (Novell, Netscape) and used its control over the forum to favor itself in competition with those developers (WordPerfect, Explorer v. Navigator), Swanson said.

After taking on a lot of water in antitrust litigation back then, Microsoft seems to have charted a more careful course, he said.

A lone voice of dissent toward Microsoft, aside from Amazon over the government contract, is Slack Technologies Inc. WORK, +0.15% It filed a competition complaint in Europe in July.

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Big Tech is turning on one another amid antitrust probes and litigation - MarketWatch

Paul Gallant, managing director of the Cowen Washington Research Group

H/O: Paul Gallant

A View from the Top is a Q&A series exclusively available onCNBC Pro. CNBC reporters will regularly speak with a business leader about decision-making, investing and industry news.

It's still anyone's guess whether and when U.S. law enforcement will bring antitrust charges against the nation's Big Tech companies, but Paul Gallant, a managing director of the Cowen Washington Research Group, has been trying to determine the odds.

Gallant has been closely tracking the tech scrutiny ofAmazon, Apple, Facebook and Google parent Alphabet as federal and state enforcers probe their businesses for potential violations of the U.S. antitrust laws. Along the way, he's analyzed the likelihood of enforcement action against the four giants. In a November report, Gallant and his colleagues predicted the chances of antitrust lawsuits from federal or state enforcers depending on the outcome of the 2020 presidential election. What they found was:

Gallant's prediction that Google will face an antitrust lawsuit may soon pan out. The New York Times and Washington Post reported that Attorney General William Barr is pushing the Antitrust Division to announce a case against Google by the end of the month.

In a late August interview, Gallant said certain factors could still change the calculus of his predictions for the other tech companies. Epic Games' recent lawsuit against Apple alleging anti-competitive behavior, for example, could turn the tide against the smartphone maker if the suit serves as a "catalyst" for other opponents to air their own grievances, Gallant said.

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A top Washington analyst weighs the risks of antitrust actions against Big Tech - CNBC

It seems that every week is a big week for Big Tech these days. Sometimes hitting record highs, sometimes taking a big hit.

But I wouldnt be worried about market jitters. The real Sword of Damocles for Big Tech could come as early as this week, when a supposedly free-market Trump administration could launch a landmark lawsuit against one of the biggest and most successful companies not just in technology, but in any industry ever created on American soil.

The company is Google, the worlds greatest search engine, which has been in the crosshairs of politicians of both parties. Barring something dramatic, it will soon be the target of litigation brought by the Trump Department of Justice and many states attorneys general for alleged antitrust abuses.

Google doesnt fit the classic definition of an antitrust target by costing consumer money its a free service for consumers that makes much of its money on advertising. But what makes Google enticing for class warriors is its size ($1 trillion market cap), massive profitability and omnipotence as everyones favorite search engine, which also allows it to allegedly play dirty.

Its been accused of skewing search results to advertisers and giving top billing to search results that favor progressive political thought, not to mention mining user data for its business.

Given the politics of the moment, Google may be the first, but probably not the last, tech company to get roasted at the hands of the government not for doing anything terribly wrong, mind you, but for simply being too big and successful and the latest whipping boy for politicians in both parties.

Ive seen this before with the banks after the 2008 financial crisis, though at least the banks created the financial crisis that led to the Great Recession some 10 years ago. Big Tech ushered in an economic renaissance and helped keep our economy from falling into another Great Depression during the pandemic.

I say this not as a Pollyanna about tech or any big company using its might to push for laws that benefit its bottom line (see the support Big Tech gave to net neutrality, which was essentially a free ride on cable operators backs). I have no doubt that there are plenty of lefty programmers out there working for Google or Facebook or Twitter who would love to push political commentary that seems to support their wokeness, though for some reason, Im never at a loss for commentary that appeals to my libertarian leanings.

And yes, I worry about my privacy, as any American who read Orwell would about centralized power keeping tabs on us all.

But Google or Facebook or Apple isnt the government; theyre tracking my web searches to sell me stuff, which is why I keep getting ads for chin-up bars and hairy-chest dad-bod hoodies. (I bought one as a birthday gift for my pal and Fox Business colleague Neil Cavuto.)

Sorry, Im more worried about politicians looking for an easy scapegoat to make us all forget the real problems we have to face in the months and years ahead and destroying an American business success story. It doesnt take a Karl Rove political genius to figure out that politicians on both sides of the aisle have screwed up stuff royally during the pandemic, and yet Im supposed to believe a crackdown on Google for showing preferences in its search engine to its advertisers will help cure COVID or get the economy running full steam ahead.

It will obviously do neither, and will make achieving the latter a lot more difficult. A little context: Apple, Amazon, Alphabet (Googles parent), Microsoft and Facebook are the largest companies in the stock market and their strength and size only grew during the pandemic. Tech represents about 12 percent of GDP, and $1.3 trillion in wages, according to Price Waterhouse.

That may make them a monopoly in the eyes of Elizabeth Warren, but it also made them a massive employer, a payer of a lot of taxes and a useful and cheap tool for consumers during a difficult time.

The football season is now upon us, and like many fans of the sport, it couldnt come soon enough for me. But the games number crunchers are worried. COVID forcing many stadiums to go fanless is one concern with football being able to produce decent revenues this season. So are plans by the NFL to politicize the game.

I spoke with some football business executives and heres how they broke down the leagues difficult finances in 2020. Football is a $16 billion-a-year sport, with about $8 billion of its revenues coming from television rights, according to John Tatum, CEO of the Dallas-based Genesco Sports Enterprises.

So keeping decent television ratings is key. The lack of excitement from the crowds will likely turn away some viewers. Another likely turnoff: Decisions by the NFL Commissioner Roger Goodell to embrace social-justice slogans on the field and even on helmets as the season opens this week.

Football fans may be all in on social justice, but if history is any guide, they also hate politics being part of the game. The last time the NFL embraced political messaging, with widespread kneeling by players, TV viewership fell dramatically. But at least the league had fans in the stands to make up the difference.

Which means woke football could be a money-losing proposition.

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Feds can't scapegoat Google and Big Tech as anti-trust targets forever - New York Post

Calling a market top has wrongfooted pundits through the ages, but this weeks first correction in large US tech stocks since March has stirred the debate again.

Given the outsized influence that tech names and other growth stocks hold over the S&P 500 blue-chip index, their performance from here matters greatly for the broader equity market and for any investors tracking Wall Street with exchange traded funds.

Recent buyers of big tech stocks, alongside retail punters and institutions involved in speculative equity call option activity, are enduring the most heat at the moment. The tech-heavy Nasdaq 100 index has taken a hit and measures of market volatility remain elevated. A further shake-out of option trades means stocks are likely to remain choppy. To add to the mix, US presidential and congressional elections are just weeks away.

So far this has not rattled broader investor sentiment too badly. Fund managers largely agree that the market had been in need of a healthy correction to blow some of the froth off Big Tech and provide a fresh buying opportunity at more attractive prices.

This attitude also reflects a level of comfort among tech investors. A buyer of the March low in the Nasdaq 100 a bet which appears to have been led by hedge funds at the expense of other traditional managers holds a gain of nearly 60 per cent, even after the latest bout of selling. Investment portfolios that have ridden the tech and growth stock juggernaut for much of the past decade, and particularly from early 2016, have a far bigger cushion to soften short-term blows.

One big problem for those keen to bet on a bigger tech correction: what is the alternative? Tech still offers solid growth prospects and the potential for a significant return on equity. It still looks good for a while yet, reflecting the acceleration of digital trends for business, education and households in the wake of the pandemic. The premium for owning best-in-class stocks is arguably justified, given a business cycle supported by low interest rates and modest inflation pressure over the next few years.

Even in the event of a vaccine for Covid-19 arriving, shifts in behaviour inspired by the pandemic will keep rewarding innovation and disruption qualities that define tech companies.

Still, elevated valuations require vindication in the form of robust earnings growth over the coming quarters.

Before the latest wave of selling, the tech herd had effortlessly propelled price-to-earnings multiples a common valuation measure for equity leaders and the Nasdaq 100 into the danger zone associated with the dotcom bubble. For example, the US equity team at Citigroup calculates that once lower corporate tax rates are factored into valuations, the top 10 US tech companies are trading at a trailing 12-month price-to-earnings ratio of 75 times, almost precisely in line with the turn of the century.

It is natural, therefore, to draw comparisons with the crashes that followed other market peaks, particularly those of 2000 and 2007. But those market heights were followed by a protracted decline in earnings growth over ensuing quarters, whereas the hit from the pandemic appears less extensive. Wall Street analysts expect a recovery during the second half of 2020 that gains momentum into 2021.

The safest bet, perhaps, is for a middling performance from here. Aside from valuation concerns, certain tech names with strong business models may have to contend with a stronger antitrust regulatory line from governments in the coming months. The prospect of higher corporate taxes and even levies on windfall profits is serious.

But here is what keeps Wall Street bulls going: Unless earnings decline noticeably and prove high valuations wrong, stocks do not drop in any persistent way, observes Nicholas Colas, co-founder of DataTrek.

And of course, the interest-rate environment of 2020 is unprecedented. True, the Nasdaq 100 trades around a hefty 40 times earnings for the next 12 months, according to the CME Group. But turn that PE ratio upside down to get the earnings yield for these stocks, at 2.5 per cent. Unlike 2000, this proxy measure of returns sits well above the current 1.4 per cent on offer from the 30-year Treasury bond.

That makes it hard to call time on big tech and the equity growth bull run. A meaningful decline would require a profound shift in well-established economic and financial trends. It would also require a break in monetary policy that few consider to be realistic. Ultimately, other sectors of the stock market will play catch-up with tech only when there is evidence of a broader economic recovery and the rekindling of inflation pressure. Dont hold your breath.

michael.mackenzie@ft.com

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Why big tech stocks can weather the storm - Financial Times

The six biggest tech stocks have lost more than $1 trillion over the last three days alone, but it's really just a dent coming off a huge rally that peaked last week.

Apple, which hit a $2 trillion market cap on Aug. 19, is down about $325 billion in that time period. Microsoft's down $219 billion, Amazon fell $191 billion, Alphabet cratered by $135 billion, and Tesla, which fell 21% on Tuesday to mark its worst single-day loss in its history, is down $109 billion in the last three days. Finally, Facebook is off by $89 billion.

"In general, if you think about the market cap loss over the last 3 days for Apple, it's about $325 billion. To help put that in perspective, that's about 1.5 Salesforces, and equivalent to Apple's projected revenues for the next calendar year," Jefferies' Jared Weisfeld told CNBC's "Fast Money" on Tuesday.

Despite the huge number, it's worth keeping in perspective given the tech giants' massive rise in value this year.

At the beginning of 2020, the six largest tech companies were worth about $5 trillion. On Wednesday, Sept. 2, they peaked with a value of $8.2 trillion. After Tuesday's close, they have a combined market cap of $7.1 trillion. While it's a big loss over a few days, these six companies are still worth $2.1 trillion more than they were at the beginning of the year -- despite the global coronavirus pandemic and record job losses in the U.S.

"I certainly haven't sensed any panic with clients and investors I've spoken with over the past couple of days... but no doubt about it the large cap tech has led us lower and today's action was certainly dramatic evidenced by Apple dropping below the $2 trillion market cap," Weisfeld said.

CNBC"s Robert Hum contributed to this report.

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The six biggest tech stocks have lost more than $1 trillion in value in three days - CNBC

By Ari Altstedter and P R SanjaiBig Tech is clamoring for a bigger piece of Indias booming internet space, but that increasingly seems to mean going through the countrys richest man, Mukesh Ambani.

Ambanis Reliance Industries Ltd. is said to be offering to sell a stake of about $20 billion in its retail business to Amazon.com Inc., Bloomberg News reported this week. If Ambani succeeds in pulling off such a deal, it would mark another victory for the billionaire, who in recent months has secured $20 billion of investment in his digital unit from marquee names including Facebook Inc. and Google Inc.

The mere possibility of an Amazon investment reveals not only Ambanis market clout, but also how Indias business climate is changing as Prime Minister Narendra Modi cranks up nationalist rhetoric while the nation hurtles toward the first annual economic contraction in 40 years. Having seen multiple regulatory roadblocks thrown in their way, a tie-up with a powerful Indian ally has never looked more crucial for the worlds biggest internet companies. And no business person carries more heft in India -- known for its complicated bureaucracy and red tape -- than Ambani.

Better to CooperateI suspect the government somewhere is signalling that its better for multinational companies to come in with some Indian partner, said Arun Kumar, an economist and the Malcolm Adiseshiah Chair at the Institute of Social Sciences. So Amazon might decide its better to cooperate with Reliance than compete against it.

The 63-year-old Indian tycoon has identified technology and retail as future growth areas in a pivot away from the energy businesses he inherited from his father who died in 2002. Retail is the next frontier for Ambani, whose ambitions include creating a home-grown e-commerce giant like Chinas Alibaba Group Holding Ltd.

Lifes MantraIn one 33-minute address to the nation recently, Modi used the word self-reliance 17 times. The corona crisis has taught us the value of local manufacturing, local markets and local supply chains, Modi went on to say. Local is not only our need it is also our responsibility. Time has taught us that we will simply have to make local our lifes mantra.

Even so, India is increasingly important to Silicon Valley because its a one billion-plus person market thats still largely untapped. China is dominated by homegrown e-commerce players and largely shuts out global tech companies, while established markets in the West offer limited growth opportunities.

Though Amazon is already Indias largest e-commerce player, its ability to compete with domestic firms was hamstrung by an abrupt rule change in 2018 that limited foreign players to operating as e-Bay style marketplaces, rather than selling their own stock.

Entering E-CommerceNot long after, Ambani announced that his own sprawling conglomerate, Reliance Industries, would make an entry into e-commerce, leveraging its control of both Indias largest mobile carrier and biggest network of brick-and-mortar stores.

In response, Amazon tried to bolster its presence on the ground with an investment in Indias second biggest physical retailer, cash-strapped Future Group. But the rules restricting foreign ownership in that sector meant its investment was too little to halt Future Groups slide into financial distress.

Last month, it was Ambani who was waiting to snap up the majority of the companys operations for $3.4 billion. Faced with a regulatory disadvantage and a competitor only seeming to grow stronger, its not hard to see why Amazon might be tempted to make a peace offering now.

Reliance has brick and mortar, logistics, warehousing, and now online build out with its recent deals, said Chakri Lokapriya, chief investment officer at TCG Asset Management in Mumbai. It will take years of operational infrastructure for Amazon or other multinational companies to recreate that, and hence Reliance Industries is the preferred partner choice for their entry into India.

Regulatory LimboFacebook may have made a similar calculation. Its plans to turn its wildly popular WhatsApp messaging platform into a nationwide payments system have been stuck in Indian regulatory limbo for more than two years now.

Meanwhile, Reliance is pushing ahead with its own payment system, with its almost 400 million mobile subscribers as a built-in user base. But since their deal, Facebook and Reliance have announced that WhatsApp will at least be the main platform for Ambanis online grocery store, his flagship e-commerce offering, ensuring the social networking giant has a toehold in the Indian e-commerce market it covets.

Google, meanwhile, has announced plans to roll out a low-cost phone with Ambani which will run on its Android operating system. Previously Ambani had been selling his own low cost phones, which ran on a different operating system. Google, like Facebook, may have decided it was better to work with Ambani than against him. Amazon may wind up doing the same.

Business in India is taking the monopolistic approach, said Mathew Antony, managing partner of Aditya Consulting, a boutique legal advisory firm in Mumbai. It is increasingly becoming evident with the Facebook and similar investment deals that the large foreign business investments into the country is by default having a first right of refusal at the Reliance doors.

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Big Tech wants a bigger pie in India, but it just can't seem to bypass Mukesh Ambani - Economic Times

In financially uncertain times, regulators should be attentive to Facebooks plan to issue a cryptocurrency.

Brace yourself: A new financial crisis is on the way. In addition to the economic effects of the novel coronavirus pandemic, economic experts predict that other financial troubles will arrive sooner rather than later as the world economy, struggling to get out of the 2008 recession danger zone, is now stuck in a deep low-growth curve. Financial regulators should be more cautious with local and global markets behavior and act before time runs out.

In 2019, China signaled the acceleration of its efforts to create a national cryptocurrency in response to Facebooks endeavors to issue its own digital currency, Libra. Facebook announced a goal to reinvent money for the internet age, creating a global financial system based on its own cryptocurrency.

Although the media mainly expressed concerns over data collection practices within this race, I assert that regulators must also address serious and urgent financial regulation issues when considering the current worldwide financial instability, especially with the growing importance of digital payment methods and currencies due to social distancing practices.

This urgency arises from the fact that China, the worlds second economic power, is still rushing to keep up with Facebooks effort over the issuance of a cryptocurrency as if Libra were a threat. If Libra is in fact a menace to Chinas power, then regulators should acknowledge this peril and respond efficiently to avoid dragging the economic growth curve deeper in depression.

More objective issues, however, should prompt U.S. monetary and financial regulators overseeing Facebooks activity, such as the Federal Reserve System, to take action on the Libra project. To appreciate basic insights on how a cryptocurrency can jeopardize economic stability, compare the Libra plan to Bitcoins growth as an important cryptocurrency in the past decade. The Libra may become too powerful and economically unpredictable if issued.

Considering Bitcoins market strength, Libra may become too big to fail. Currently, the market capitalization of Bitcoin is around $190 billion, and the value of the 30 most valuable traded cryptocurrencies exceeds one-third of the market capitalization of Facebook. Moreover, around 5 percent of Americans invest in Bitcoins. If Bitcoin failed or suddenly became regulated in a way that limits its operation, it would undoubtedly have a substantial impact in the local financial system.

Facebook has over 2 billion monthly active users, while Bitcoin has only about 7 million active users. If only 1 percent of Facebooks active monthly users invest in Libra, it will already surpass the number of Bitcoin investors. Hence, if users already consider the Bitcoin system too big to fail, with a 2008 bailout-like call for the former largest Bitcoin exchange that faced bankruptcy in 2014, the hypothetical failure of an even larger Libra could shake the global economy.

For this reason, senators at a U.S. Senate Committee on Banking, Housing and Urban Affairs hearing in July 2019 questioned Facebook executives over the plan to create Libra. Although the hearing centered on the illicit possibilities of digital currencies, senators expressed the concern that Facebook could become the largest banking institution overnight. As several senators suggested, the major problem is that the company would shift its businesss main objective to currency provision, thus shifting the existing too-big-to-fail concern from the core of the financial sector to the tech area.

Although Facebook walked back plans for Libra in April 2020 in response to stakeholder pressure, opting instead for Libra to act more like a digital payment than a global monetary alternative, concerns remain about the projects scope.

Taking into account the Bitcoin outcome, Libra has real potential to reshape the financial system in an unpredictable way. The emergence of Bitcoin has already hindered central banks ability to regulate the financial system, due to a new technological system that regulation can hardly reachthe blockchain. Also, businesses, industries, and services beginning to accept cryptocurrencies as a payment method has hampered central banks abilities to regulate their national currency.

In addition, if the other three big tech companies decide to stand in competition against Libra, what could happen to the U.S. financial system? The four major U.S. tech companies together have a market capitalization of around one-fourth of Chinas GDP. Considering such values, such a worst-case scenario could change the global economy beyond modern predictions or expectations.

Accordingly, in a U.S. House Committee on Financial Services hearing last year, Federal Reserve Chair Jerome Powell reportedly expressed the same concerns when addressing the Libra plan. Powell signaled consternation about financial stability and consumer protection, considering the size of Facebook and the unforeseeable effects of the currencys issuance on the market.

Crypto-asset advocates, on the other hand, claim that Bitcoin could actually be a way out during financial crisis, as Bitcoins system exists unbound by any particular national economic system. Bitcoin might function as a safe haven for investors in unstable market environments. At the same time, Libra developers advertise that the projects mission is to promote economic empowerment and financial inclusion, ultimately leading to financial stability by increasing consumer welfare and strengthening national economies.

In any case, innovation should be welcomed and viewed with optimism. Prudence, however, is a virtue that regulators should fully exercise, especially in times of uncertainty.

If now is a time for economic awareness to endure a long financial winter that may arrive, it is also time for regulators to focus maximum attention on initiatives that may destabilize the financial system. In addition, regulators must follow up and understand quickly adjustments to these technological innovations, such as Facebooks recent pivot on its vision for Libra, to achieve proactive oversight of substantial financial ventures before it is too late.

Gustavo Costa is a 2020 LLM graduate of the University of Pennsylvania Law School.

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When Tech Giants Want to Play Banker - The Regulatory Review