Facebook, Google tarnishing tech stocks

By Jessica Yun
 — 1 minute read

Anti-competition concerns about the dominance of tech giants like Facebook and Google parent Alphabet are casting a shadow over sector, says a Morningstar affiliate.

In a statement on the Morningstar website, ESG ratings specialist Sustainalytics – which the research house holds a 40 per cent stake in – said a growing lack of trust in a handful of major tech companies was threatening to undermine the whole technology sector in general.

“Using ideas originally hatched in garages, major players like Google's parent company Alphabet, Facebook and Microsoft have leveraged platform scale to generate extraordinary growth and now stand as lynchpins in the global economy,” the statement said.


But the sheer size, scale and market power of these major industry players meant they were drawing too much attention to themselves amid growing concerns that these “software and services giants may need to be broken up”.

“The past year has seen an uptick in anti-trust sentiment within the tech industry,” it said.

“These concerns are being driven by the perceived abuse of control of a dominant company or set of companies, which negatively impact the general software and services market by excluding smaller competitors from offering comparable goods and services, fixing prices and reducing consumer choice.”

The statement from Sustainalytics indicated that “platforms, and the proprietary algorithms that fuel them” facilitated third-party services, stifled competition and helped the company move into secondary markets.

“By reducing market access and dynamism, benefits to consumers are called into question.”

Controversies and concerns regarding “anti-competitive practices, data privacy and security, and media ethics” were indicators of “future trajectories of company exposure to antitrust concerns”.

Google parent company Alphabet and Facebook were the top two companies to have the most “antitrust-related incidences” between 2013 and 2017.

Last Monday, Lonsec Investment Solutions chief investment officer Lukasz de Pourbaix cautioned against painting entire technology sector with a broad brush, recommending the need for a more “balanced approach”.

The must-attend event for financial advisers is back in 2022: the ESG Summit, coming to Sydney and Melbourne in February. Walk away with vital knowledge on a number of key ESG areas to help you make informed ESG strategy decisions and to better communicate and integrate the growing ESG space to clients. Visit the website to secure your place.


Facebook, Google tarnishing tech stocks
ID logo


related articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.