Technology giants such as Google and Amazon have sluggish growth

Sina Technology News Beijing time on the evening of February 13, according to reports, as large technology companies are facing sluggish growth and an unfavorable economic outlook that may prevent them from regaining market dominance, increased antitrust scrutiny seems to be the last thing they need. of. But some investors disagree.

　　At present, while the possibility of breaking up these large technology companies is unlikely, it is not an empty question. Conducting antitrust reviews on them has become a common goal of both parties in the United States. Last week, U.S. President Joe Biden called for legislation to crack down on Big Tech. It also means that, for the first time since 1979, the word "antitrust" appears in a president's State of the Union address.

　　Breaking up big tech companies could unlock value in companies like Amazon or Alphabet, both of which have strong businesses but potential overshadowed by their sprawling corporate structures. Proponents argue that if it were split into separate businesses, the combined stock value of the new company could be worth more than the current parent company.

　　"Amazon and Alphabet have been underperforming, and a split would unlock the greatest value," said Eric Clark, a portfolio manager at investment firm Accuvest Global Advisors.

　　Clark expects Amazon's stock price to rise 50% if it is split, and Alphabet's stock price to rise as much as 30%. Both stocks have underperformed the Nasdaq 100 since the start of last year. Alphabet shares have tumbled in recent days amid concerns that Microsoft's artificial intelligence initiatives could erode Google's dominance in search.

It was reported earlier this month that the US Federal Trade Commission (FTC) was preparing to file an antitrust lawsuit against Amazon. Last month, the U.S. Department of Justice joined eight states in suing Google to break up its ad technology business.

　　Clarke said: "I welcome more antitrust action from regulators, because it may release these companies from lagging behind and provide investors with a series of better options. I would rather choose individual new businesses after spin-offs. "

　　Analyst Laura Martin (Laura Martin) believes that after Alphabet is split, it will be more valuable than it is currently, so regulators are welcome to split Google. Martin predicts that splitting Alphabet could boost the stock price by 10% to 20%. If YouTube traded alone, its market value would be $300 billion, almost double that of Netflix.

Amazon has three businesses, namely e-commerce, Amazon AWS cloud services and advertising services. The size of each business dwarfs most other companies. AWS, for example, generated $80 billion in revenue last year, equivalent to Procter & Gamble's total sales.

　　According to Bloomberg Intelligence, AWS could be worth between $1.5 trillion and $2 trillion, while some others have predicted as much as $3 trillion. By comparison, Amazon's current market cap as a whole is only about $1 trillion.

　　Plus, even if these companies are already undervalued, the prospect of protracted litigation or anti-tech legislation could weigh on sentiment toward these stocks. Moreover, antitrust action may also hit these companies' core profit sources or growth areas.

　　Currently, the British antitrust regulator is investigating Apple's position in the mobile ecosystem. At the same time, lawyers for the U.S. Department of Justice are also drafting an antitrust lawsuit against Apple. Analysts believe that the Apple App Store does have the risk of being sued.

　　In addition, regulators in many countries have questioned Microsoft's acquisition of Activision Blizzard on competition grounds. Denny Fish, an executive at asset managers, said it was a difficult question for these firms.