Google parent Alphabet is top of mind for antitrust enforcement of Big Tech in the U.S., according to investment bank Needham.
Needham spent several days last week in Washington, D.C. It met with regulators, staff, lobbyists and lawyers to get views about regulation risks for Big Tech in 2023. Big Tech includes the so-called FAANG stocks of Facebook parent Meta Platforms, Amazon, Apple, Netflix and Google owner Alphabet.
"In 100% of conversations, folks brought up Google; 50% brought up Meta; 25% wanted to discuss Amazon and zero introduced Apple into the conversation (which surprised us)," Needham analyst Laura Martin said in a report Tuesday.
However, the Washington insiders said Google "does the best job in D.C. of cleverly using alliances and lobbyists to argue their point of view and get it heard," Martin said. Google is facing government scrutiny for possible anticompetitive business practices involving online search and advertising.
Meanwhile, Meta does "the worst job" of lobbying in Washington among Big Tech firms, she said. It is "tone deaf" on the issues affecting it, insiders told Needham.
Top Big Tech Issues: Kid Safety Online, China
But Meta has fallen off the radar screen of legislators and regulators, given its business struggles lately, Martin said.
"Strangely, several people mentioned that legislators and regulators have become less focused on Meta as its market cap has halved over the past 18 months," Martin said. "Their view is that many D.C. regulators believe only that 'big is bad' — no economist or investor would view this as a reasonable metric for regulation, in our view."
The two highest consensus issues on the legislative front impacting Big Tech now are online safety for kids and China security issues, Martin said. Concerns about China-based social network TikTok is included in both.
Among the Big Tech stocks, Needham has buy ratings on Alphabet, Amazon and Apple. It rates Netflix as hold and Meta as underperform.
Google Safe For Now In Washington
In a follow-up report Wednesday, Needham's Martin said Google is probably safe from Washington interference this year.
"Our top investment conclusion from our meetings in Washington, D.C., last week is that nothing bad will happen to Google on the legislative, regulatory or litigation fronts during 2023," Martin said.
She does not believe Section 230 of the Communications Decency Act will be reformed through legislation this year. Also, the Supreme Court might be unwilling to tinker with the delicate balance set by Section 230 between free speech and content moderation, she said.
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