Even as regulators bear down on the top technology companies and some lawmakers seek to break them up, Big Tech is bigger than ever.
On Thursday, Alphabet topped $1 trillion in market value, becoming the fourth U.S. technology company to reach that level, after Apple, Microsoft and Amazon, which has slipped back to about $930 billion.
Adding Facebook into that group, the five most valuable U.S. tech companies are now worth a staggering $5.2 trillion, accounting for over 17% of the S&P 500, according to FactSet. That’s up from 11% five years ago, with about two-thirds of the value, or $3.5 trillion, accruing over that stretch.
Whether at home or in the workplace, the same companies are surrounding us like never before, capturing our attention and increasing amounts of spending from businesses, consumers and advertisers. With all that momentum, investors are mostly shrugging off news of probes by the Department of Justice, Federal Trade Commission and state law enforcement into the potential anti-competitive practices of Big Tech as well as declarations by presidential candidates Elizabeth Warren and Bernie Sanders that the companies should be split apart.
Specific to Alphabet, state attorneys general are investigating the dominant search business and the company’s Android operating system, which comes with numerous Google apps pre-installed. Google has continued to thrive despite billions of dollars in past fines from the European Union, while privacy-related regulations like Europe’s General Data Protection Regulation have generally worked in Google’s favor and hurt smaller businesses that have fewer ways to adapt and gather data.
“They have the resources and means to be able to meet those needs whereas not every competitor can do that,” said Kevin Walkush, a portfolio manager at Jensen Quality Growth Fund, which oversees about $8.5 billion and counts Alphabet, Microsoft and Apple among its top holdings. For Google, “it has headline risk, but we think they have the resources to meet whatever regulatory hurdles they face. There’s a high likelihood that they could come out better,” Walkush said.
Google also had to overcome an abundance of internal turmoil. The company faces an investigation into how executives handled claims of sexual harassment and other misconduct as well as worker protests related to mistrust of leadership and the ways they’ve fired certain employees.