Star Trek: The Wrath Of Khan poster reimagined with new FTC Chairwoman Lina Khan as Khan and Google co-founder Larry Page and Amazon founder Jeff Bezos awaiting her wrath. Image via the Portfolio Armor art department.
Judiciary Votes To Break Up Big Tech
When we wrote about the anti-monopoly theorist Lina Khan’s appointment as chairwoman of the Federal Trade Commission a couple of weeks ago (The Wrath Of Khan), we said that chance of big tech monopolies being broken up was still low, but no longer zero. Some readers were even more skeptical, commenting that no chance anything would change. They may want to reconsider in light of last week’s developments.
Last week, Congress’s Judiciary Committee passed six bills related to antitrust, including one to break up Amazon, (AMZN), Google (GOOG), and Apple (AAPL).
Putting This In Perspective
The break-up bill would need to be passed by the full House and then a version of it passed by the Senate as well, so it getting passed by the House Judiciary Committee is the beginning of the process rather than the end of it. But monopoly scholar Matt Stoller is optimistic about the end result. In his Substack post on it (linked to in his tweet below), Stoller drills down on all six bills passed by the Judiciary Committee last week.
Stoller notes that the break-up bill passed with bipartisan support, with both progressive Democrats and rightwing Republicans voting for it, and establishment Democrats and Republicans voting against. Stoller concludes:
Does this mean these bills in a reasonable form will end up signed into law this session? Well the funding and jurisdiction bills, yes. The other four will take more time, because there’s clearly not yet a consensus. But the pressure to deal with monopolies across the board is only going up. So over the next five years, it’s hard to imagine these firms remain in one piece, and that our markets remain as concentrated as they are.
It’s understandable to be less optimistic about this than Stoller, but, objectively, the odds of material antitrust action against the Google and the rest have gone up this month. If you own shares of Google and are looking to limit your downside risk in case that happens, we look at a few ways of optimally hedging it in the video below.
Adding Downside Protection To Google
Although Stoller wrote that a Big Tech breakup might take five years to happen, the longest-dated options on Google currently go out to January of 2023. In the video below, we use the Portfolio Armor iPhone app to scan for optimal hedges expiring that month as well as in December and October of this year.
Of course, those hedges would also protect your Google shares if the stock declined for some other reason, such as a broad market downturn.
