Stock Prices Drop
Meta’s share price fell more than 24%, triggering declines across the wider tech sector. Apple, Alphabet and Microsoft shares dropped between 2 and 3%, while Amazon fell 17.5%. Together, these losses wiped almost $1 trillion from the combined value of the major tech companies.
Analysts attribute the fall to a slowing global economy and rising cost pressures. Inflation and higher interest rates have reduced consumer spending and increased business costs. The timing is significant, as companies typically expect strong revenue in the run‑up to Christmas. Forecasts now suggest that seasonal revenue could fall as much as $15 billion below expectations.
The Digital Markets Act 2022
The Digital Markets Act 2022 (DMA) marks a major shift in European competition regulation. Proposed in 2020 and agreed in March 2022, the Regulation aims to create a fairer digital economy by addressing the dominance of large online platforms.
The DMA targets companies acting as “gatekeepers”, requiring them to make their platforms more open and interoperable. At present, ecosystems such as Apple’s iOS and Google’s Android limit competition by favouring their own apps and services. The DMA seeks to change this by preventing certain exclusionary practices and granting the European Commission stronger powers to investigate and sanction non‑compliance.
Messaging platforms such as WhatsApp and Facebook Messenger will be required to interoperate with smaller services. Personal data collected on these platforms may only be used with explicit consent. Penalties for breaches can reach up to 10% of global turnover, rising to 20% for repeated infringements.
The DMA came into force on 1 November 2022. Businesses operating in the digital space are expected to comply within six months.
The Digital Services Act
The Digital Services Act (DSA) will follow the DMA and introduce further obligations for large online platforms. Companies will be required to conduct risk assessments of certain algorithms and disclose information about automated decision‑making. The Act also introduces frameworks for independent audits, supervisory fees and procedural rules.
Large platforms will pay fees proportionate to their size, based on estimated annual costs. They must also undergo annual independent audits to verify compliance with due diligence obligations. Service providers have until 2024 to comply with the DSA’s provisions.
Big Tech and Financial Services
Although most Big Tech companies are not financial institutions, they are increasingly entering the financial services sector. Apple’s credit card and “buy now pay later” feature, along with Amazon’s online insurance offering, demonstrate growing interest in financial markets.
The FCA has warned that Big Tech’s involvement could reshape competition. While these companies may drive innovation and reduce costs, they also have the potential to exploit market power. Their access to vast amounts of consumer data could allow them to promote their own financial products and limit opportunities for smaller firms.
Payment services such as Google Pay and Apple Pay already place Alphabet and Apple in strong positions within financial technology. Their global brand recognition and customer reach could enable them to dominate financial markets rapidly.
To address these risks, the FCA has launched an inquiry into Big Tech’s role in financial services. Sheldon Mills, the FCA’s executive director of consumers and competition, stated that Big Tech could benefit the sector if risks of bias and discrimination are properly managed. Amazon, Apple, Alphabet and Meta have not yet commented on the inquiry.
Conclusion
The tech sector thrived during the Covid period, but rising living costs and recessionary pressures have hit Big Tech hard. Regulatory scrutiny is increasing, and competition authorities are preparing for a future where the largest platforms face stricter controls.
Despite these challenges, Big Tech continues to expand into financial services. Whether this strengthens or destabilises the market remains to be seen. The coming years will reveal whether regulation can keep pace with the ambitions of the world’s most powerful technology companies.
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