The Wireless Fund (WIREX) that I manage was -2.4% today (Dec 9), which really hurt, although it’s still +37% this year. The greatest threat to tech stocks today was the suits filed by the Federal Trade Commission (FTC), state attorneys general that seeks to force Facebook (FB) to unwind its acquisitions of WhatsApp (purchased for $19B in 2014), and Instagram (bought for $1B in 2012, which may be the greatest tech deal ever). Even if the regulators get their wish, which I don’t think they will, FB’s parts may be worth more than they are together even today’s $792B market cap. We’ll see. It’s hard to be sympathetic toward FTC since it had approved these acquisitions. Also, FB made these companies. They weren’t menacing before they were bought. For example, WhatsApp lost $138M on only $10M in revenue the year before it was acquired.
I think Zuckerberg, although he’s as cuddly as a porcupine, and FB gets too much flak for their social media role in “manipulating” the public before, during, and after the election. Blame Section 230 of the 1996’s, which was in tech’s Dinosaur Age, Communications Decency Act, for giving the social media giants such sway. They’re considered Net platforms and not news agencies that must independently vet stories before publishing them. More important, FB at al. are legally protected as such. Unless you’re OK with European Competition Commissioner Margrethe Vestager making the rules for how Americans use social media and the net more broadly, you should beg for our regulators, Congress, or anyone with domestic authority to step up and clarify social media’s role. You should support this even if you’re a libertarian.
Want to know more about the tech world, check out my other article; Salesforce.com and Slack is a Bad Deal or Portfolio Manager Sees Another 10% Downside in Tech Stocks