Google’s Antitrust Decision: What It Teaches Us About Big Tech And The Stock Market
Google has recently lost an appeal at the European Court of Justice to have an antitrust fine overturned. This means that the tech giant now has to pay a $2.8bn fine to the European Union. Although you may have thought that this would be a cause for concern for them, the truth could not be more different.
Read on to find out how Google’s shares were affected and what this means for the company’s long term share prices.
Google’s Shares Fall, But Only Briefly
The impact on Google (or more specifically their parent company, Alphabet) in terms of market adjustment was relatively minimal when the decision came through.
The share fell narrowly by just over 2% on the first day and has remained at a consistent level since while the market goes through a readjustment period. Whilst this may seem significant, it is far from the negative effect that many market analysts were expecting.
This is likely due to the minor effect that a fine like this has on Google.
Whilst fines in the billions of dollars would be impossible to recover from for most companies, tech giants like Google, Facebook and other social media conglomerates are likely to see a very minimal impact on their bank balance. While the company’s balance sheet might take a small dent, they’ll recover from it with relative ease.
What Does This Mean For Investors?
For investors, this has a very clear message. While Tesla is still seen as an extremely volatile stock to be invested in thanks to Elon Musk’s Twitter activities, companies with a heavy board influence and strong PR control over their directors should remain unharmed by fines such as this.
Google, Facebook, Amazon and their rivals will likely still see consistent profits throughout court cases and simply absorb the fines. For an investor, the best advice is to fall back on fundamentals during tumultuous times, as medium-term outcomes will almost always be profitable.