Check-In on Big Tech

May 20, 2022

By Tim Courtney, Chief Investment Officer


Over the past decade a lot of capital, both human and liquid, has been directed toward the tech sector. As a result, several tech and communication companies have produced impressive deliverables for consumers and earnings for investors. However, like other industries that in time came to be recognized by their size, such as “Big Banks,” “Big Oil” and “Big Pharma,” “Big Tech” is now attracting more attention.1

Amazon, Alphabet, Apple, Microsoft and Meta (Facebook) have grown to compose more than 20% of the stock market’s total worth2 and, up until now, have been more lightly regulated than older “smokestack” sectors like industrials and energy. That said, we now see news stories each week about regulators, both in the U.S. and abroad, taking a harder look at technology and communications companies.

The reach of these companies, combined with their size and our reliance on them to inform us has drawn notice from both political parties and caused some negative sentiment among the general population. A Gallup poll conducted last year on Americans’ confidence in the country’s institutions showed a growing distrust of large technology companies3, sliding into the bottom half of the rankings — closer to Big Business (third to last), Television News (next to last) and Congress (last).

One reason that many have given for their distrust is a perceived lack of competition.  Historically, companies have not continuously grown to be a larger component of the market because competitors would eventually appear to disrupt business models and outsized profitability. However, by the end of 2021, the stock market had become more concentrated in the 10 largest companies than ever.4

Monopolistic regulation hasn’t come into play because of the way anti-trust laws are enforced.  Because many of the services offered by these companies are “free” or at lower prices, harm to consumers has not been proven. As both political parties appear more willing to regulate and use the word “monopoly” in describing several companies, risks are rising that the government will eventually reach an agreement on the best way to regulate.5

It remains important to be well-diversified across sectors today in spite of the concentration we’re seeing in markets. Now that inflation has affected pricing in areas such as energy, materials and transportation, we may start to see renewed attention and capital spending there.  We still want to own those large technology companies since so much of the market’s profitability is generated from them.

Having a well-balanced portfolio that isn’t overly allocated to areas that are seeing increased regulatory risk is prudent. If you have any questions, please contact your Exencial advisor.


  1. Bloomberg (8/25/21) — Tech’s lobbying push follows market consolidation, study shows
  2. The New York Times (8/19/20) — Big tech’s domination of business reaches new heights
  3. Gallup (7/14/21) — Americans’ confidence in major U.S. institutions dips
  4. The Wall Street Journal (12/21/21) — Five big tech stocks are driving markets. That worries some investors.
  5. Time (4/20/22) — Congress is close to cracking down on big tech. But powerful obstacles remain



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