Antitrust Investigation Of Big Tech Ordered By Trump Would 'Act As A Cover' For Election Loss, Says Height Capital Markets

President Donald Trump is upping the ante in his criticism of major U.S. tech companies. Trump is reportedly preparing an executive order that calls for antitrust investigations of tech companies such as Alphabet Inc GOOG GOOGL, Facebook, Inc. FB and Twitter Inc TWTR.

What Happened

On Friday, Bloomberg obtained a copy of an executive order draft directing federal authorities to investigate whether tech companies have violated antitrust laws and/or censored content on the basis of political bias.

No companies were named in the draft, and White House press secretary Lindsay Walters said the document in question is not yet part of the “official White House policymaking process," according to Bloomberg. 

Why It’s Important

Section 230 of the Communications Decency Act of 1996 generally protects online platforms against third-party content published on their sites. Height Capital Markets analyst Stefanie Miller said in a Monday note that the new executive order could ultimately lead to a modification of Section 230 that would increase tech companies’ liability.

Trump has bashed Twitter for banning conservative accounts as part of its efforts to clean up its site by removing spam, bots and foreign propaganda. He has also criticized Google for politically biased search results.

What’s Next?

The good news for tech stock investors is that the antitrust executive order may be mostly for show.

“We believe this is an attempt to bolster Trump's base, which thinks social media platforms and search engines are biased against them,” Miller said. 

“The EO would also act as cover in the event of significant Republican losses in the November midterm elections.”

While Miller said the odds of an amendment to Section 230 are currently only about 45 percent, a direct antitrust investigation into at least one major tech company is extremely likely at this point, the analyst said. The uncertainty surrounding the content of the executive order, whether it will be enacted and what type of fallout there could be in Silicon Valley may weigh on tech stocks, she said. 

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