Over the last several years, the question of breaking up large tech monopolies has been raised a number of times. Politicians from both sides of the aisle have expressed their concerns regarding this matter - Democratic Senator Elizabeth Warren and Republican Senator Ted Cruz have both accused companies like Facebook Inc. (FB, Financial) and Google parent Alphabet Inc. (GOOG, Financial) of behaving in anticompetitive ways.
But if these businesses are really anticompetitive monopolies, why is nothing being done about it? After all, U.S. antitrust laws have been on the books for more than a century at this point. Shareholders of these companies certainly don't seem to have any fear that regulators will bring down the hammer. Here's why.
Who is harmed?
The most significant problem for regulators and politicians who want to break up big tech companies is simple - consumers love them. In the old days, it was easy to identify when a monopoly was abusing its power - they would price gouge, consumers would suffer and the government would step in. But with a lot of today's tech giants, the consumer doesn't seem to be suffering (at least not directly). It's hard to make the argument that the average buyer of household supplies has not benefited from Amazon's (AMZN, Financial) low prices and ease of access - certainly most reasonable people would not be convinced by it.
As a result, there is actually relatively little will to break up these businesses. Lawmakers like Warren and Cruz are fighting an uphill battle in the court of public opinion. And it's easy to see that investors do not feel like there is a realistic chance these monopolies will be split up in the near future - as a group, the biggest tech stocks stocks (Facebook, Apple (AAPL, Financial), Amazon, Microsoft (MSFT, Financial) and Google) now make up an eye-watering 21% of the S&P 500.
In fact, these businesses have accounted for the lion's share of the returns generated by the S&P 500 since March. This year, the benchmark index is up around 9.5%, but the "Big Five" have accounted for almost 8.5%. In other words, these five companies account for 90% of the total gain in the entire 500-company index. If ever there was a sign of investor confidence, this is it.
Disclosure: The author owns no stocks mentioned.
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