"US Democrats and Biden Also Struggle to Regulate IT Giants... Due to China Containment"

Stock volatility possible... but excessive regulation concerns are 'groundless'
Amid intensified digital competition with China, difficult to push out domestic IT companies
Many pro-IT forces among top donors to Democratic Party-supporting 'Super PAC'

CEOs of IT giants such as Apple, Amazon, Google, and Facebook remotely appeared and took the witness oath at the U.S. House Judiciary Subcommittee's antitrust hearing on July 29 (local time).
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The U.S. House of Representatives is currently discussing antitrust regulations targeting major information technology (IT) companies. There are concerns that such regulations could become a reality if pro-business President Donald Trump fails to secure re-election. However, analysts argue that these concerns are unfounded. Given the intensifying competition with China in the digital economy, even if Democratic presidential candidate Joe Biden wins and the Democratic Party gains a majority in Congress, pushing through such regulations would be difficult.

On the 11th, KTB Investment & Securities provided this assessment regarding the recent controversy over antitrust regulations on major IT companies. Since President Trump's tax cut policies contributed to the rise in stock prices of large IT firms, there remains a possibility that Biden’s proposed tax policies, such as raising corporate tax rates, could increase stock price volatility. However, it is pointed out that implementing substantial regulations would be practically challenging.

Earlier, on the 6th (local time), the Antitrust Subcommittee of the U.S. House Judiciary Committee released an investigative report on competition within the digital market. Completed over approximately 16 months, the 450-page report criticized the monopolistic practices of the four major 'IT giants'?Amazon, Apple, Facebook, and Google. With Biden advocating for reforming Trump’s tax cuts and mentioning tax increases on the wealthy, the emergence of this Democratic-led report has heightened concerns about regulations on IT giants. Especially with less than a month remaining before the U.S. presidential election, the widening gap in support between Biden and Trump, along with the possibility of the Democrats securing majorities in both chambers of Congress, has intensified these concerns.

The Digital War with China is Ongoing... Difficult to Abandon IT Giants

Nevertheless, these concerns may be exaggerated. Hyeyoon Lim, a researcher at KTB Investment & Securities, stated, "Even if Biden wins and the Democrats secure majorities in both chambers, the likelihood of drastic changes is low," emphasizing that "competition with China in the digital economy will intensify, and discussions on the tax system for digital companies are not matters for a single country alone."

The antitrust subcommittee report pointed out the abuse of digital platform dominance by the four major IT companies. Proposed solutions included structural separation of platforms and strengthening antitrust laws. However, it is important not to overlook the fact that both Biden and the Democrats aim to maintain U.S. hegemony. Researcher Lim noted, "Biden has referred to China as a 'real threat' and indicated a tough stance, and the Democratic Party platform explicitly states a commitment to counter unfair practices and intellectual property theft by China," concluding, "Given the strong external competitor China represents, it will not be easy to clip the wings of IT companies that are central to the digital economy."

The CEOs of the four major IT companies have made similar appeals based on this logic. At an antitrust hearing hosted by the House Judiciary Committee in July, they emphasized the intense competition they face, with Facebook CEO Mark Zuckerberg directly mentioning the challenge posed by China. Even if antitrust regulations are discussed, the process is expected to be gradual, and the likelihood of radical changes like those proposed in the antitrust subcommittee report is considered low.

Biden Also Wants to Maintain U.S. Hegemony... Key Supporters Favor 'IT Giants'

Moreover, Biden’s perspective on taxing digital companies is not significantly different from President Trump’s. Digital taxation has been discussed since 2012 under the leadership of the Organisation for Economic Co-operation and Development (OECD). The OECD is conducting a project (BEPS?Base Erosion and Profit Shifting) to develop reasonable taxation methods for multinational IT companies. This project addresses taxation issues arising from the ability to generate profits without a fixed establishment due to the increasing share of digital companies, as well as issues related to measuring profits from intangible assets. In response, the Trump administration announced in June that it would withdraw from the discussions, arguing that the project’s burden would disproportionately affect U.S. IT companies. This indicates that the U.S. intends to lead the taxation of its IT companies independently.

Biden’s ultimate goal is to maintain U.S. hegemony and ensure the well-being of American citizens. Even if Biden is elected, it is unlikely that this fundamental stance will change drastically. The competitiveness of IT giants is also necessary to counter China. Hedge funds with large investments in the IT sector and workers at major IT companies rank high among super PAC donors supporting Biden. This is why concerns about IT giants are considered to be overestimated.

This content was produced with the assistance of AI translation services.