With investors and analysts worried about the potential fallout for Silicon Valley, one market watcher thinks that out of all the tech giants, one in particular could emerge as a winner: Apple.
“I think it’s just the sense of: Is big tech too big?” asked R ‘Ray’ Wang, founder and principle analyst at Constellation Research.
According to reports, regulators are targeting Facebook and Google based on antitrust grounds, suggesting that they might be forced to break up in a worst case scenario.
“That’s really what the DOJ probe and the FTC probes are, is trying to figure out what that right point of balance is going to be, in self-regulation, as well as putting the right rules in place, so that there’s a fair market for others to compete,” he told Yahoo Finance’s The Ticker on Monday.
Wang believed that the tech giants least at risk from the government’s probe are the ones actively taking steps to curb privacy abuses. That includes Apple, which announced new privacy changes at the WWDC conference on Monday.
The iPhone maker unveiled a slate of new privacy-focused tools that prevent apps from tracking a user’s location and an anonymous login system.
This is a design to differentiate itself from Google and Facebook, which have built their business on personal data, as Wang calls it, “data-driven digital networks.”
With a model sworn to protect user privacy, Apple is insisting that “they don’t want to share that data with advertisers or social media. and they’re building subscription revenue models against that, which is very different than the ad-supported model that’s out there,” he said.
The Amazon factor
According to eMarketer, Google and Facebook continue to hold onto their reigns as the digital duopoly, taking in a combined 60% of the digital ad market share as of February this year.
Given Google and Facebook’s immense market share of ad spending dollars, the two tech giants continue to reign as digital duopolies. For this reason, Wang believes there should be rules in place, in particular, around person data.
“There should be rules. Like who owns your personal data? For example, that’s an area an individual should own their personal data and see how they work,” Wang told Yahoo Finance.
However, “a lot of businesses are built on that personal data, we call it data-driven digital networks,” he said.
“Who gets to compete? The only one who can make it is Amazon who has just $10 billion in ads, who’s barely creeping in,” said Wang, referencing Google and Facebook’s ad spending market share.
Amazon is making headway into the pie in third place, but its hold on ad dollars is paltry compared to the two top dogs.
“They’re really big, but do we have the duopolies, do we have the oligopolies, and the space in order to compete on the global scale? That’s going to be an important background,” he added.
Surprisingly, one name that wasn’t among those mentioned in Monday’s talk of regulatory action could also take a hit, Wang said.
“The biggest one is going to be Amazon, because their market dominance is not just in one industry”— meaning it could soon land in the government’s crosshairs for a number of reasons, Wang said.
Wang also added that Microsoft (MSFT) —which ironically was the target of a government antitrust probe 20 years ago— was at the least risk of oversight, given their stance on privacy.
US vs China
The high-stakes battle between China and the U.S. is also weighing heavily on the tech sector, but Wang suggested that the U.S. has the edge.
When compared to American tech giants, “in terms of dominance in tech and dominance in intellectual property, [China’s] actually not too big,” Wang said.
Grete Suarez is producer at Yahoo Finance for YFi PM and The Ticker. Follow her on Twitter: @GreteSuarez