Big tech’s meteoric rise in 2021 could soon come crashing down to Earth amid the specter of new internet regulations and changes to the digital advertising landscape, analysts say.
Major tech and social media companies Facebook Inc., Apple Inc. and Alphabet Inc.-owned Google LLC handily beat analysts’ forecasts in the first quarter and continued to grow their key business segments. Facebook and Google posted double-digit year-over-year growth in their advertising businesses, while Apple delivered earnings that were powered not just by the iconic iPhone, but also by some of its less-flashy segments — Mac computers and services.
The companies’ seemingly boundless growth, however, has not gone unnoticed by U.S. lawmakers and regulators, who continue raising questions about their business practices and seek to rein in their market influence. At the same time, there are growing concerns within the industry about the impact of Apple’s latest operating system privacy update, which requires apps to seek users’ permission to collect and share data. Analysts warn the threat of looming regulation and Apple’s iOS14 update are two headwinds that major tech players are unlikely to overcome anytime soon.
Facebook executives on an April earnings call said that while Apple’s new privacy change is still in its early stages, the company expects the update to contribute to increased ad targeting headwinds in the current quarter. Under the privacy change, Apple users will have to…