1. Tech backlash: Even some capitalists fear that Silicon Valley today resembles a playground basketball game: The players are refereeing themselves.
Bill Smead, a Seattle money manager, knows firsthand that things can get out of hand during neighborhood basketball games. And he thinks it’s time to crack down on Big Tech.
“We’re dealing with a game of far too much importance to have the rules officiated by the players,” Smead, the CEO of Smead Capital Management, told CNN Business.
“We are letting them call the fouls,” Smead said, “and in the process it’s ruining the competitive landscape that is so necessary in this democratic capitalist system.”Although that kind of critique of Silicon Valley is hard to find on Wall Street, it’s becoming commonplace on the political left. In fact, some Democrats are running on it.
Senator Elizabeth Warren unveiled a plan earlier this month to break up tech giants like Amazon (AMZN), Google and Facebook (FB) that haul in $25 billion or more in revenue. The presidential candidate’s plan would also aim to unwind landmark tech acquisitions, including Amazon’s purchase of Whole Foods, Google’s takeover of DoubleClick and Facebook’s savvy deals for Instagram and WhatsApp
“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy,” Warren wrote in a Medium post. “They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else.”Those words were met with eyerolls from some on Wall Street. But not Smead, who explained his position in a letter to clients (after first warning them to grab a “sturdy chair” to sit down on). The money manager supports rewriting the antitrust laws and then either breaking up or regulating Big Tech companies. He broadly supports Warren’s plan.
“I love competition,” Smead said. “But there are some things that are more important than just competing. And that is the survival of this wonderful system that has succeeded so well.”
Smead specifically called out Amazon, Google and Facebook as the prime suspects. He said the problem is that while supply and demand is normally balanced by price, far too often that doesn’t happen in today’s tech world.
“They have taken price out of social media, search and delivery. How can supply and demand work when there is no price?” Smead said. “It’s impossible.”