Microsoft stock (MSFT) fell as much as 0.8% early Friday, lagging the broader market after news broke late Wednesday that the Federal Trade Commission has opened a broad antitrust probe into the tech giant.
But at least one Wall Street analyst sees the news coming as no surprise and expects changes at the FTC under the Trump administration to make antitrust worries in the tech space fade away.
“In our view as the dark days for tech with Lina [Khan] at the FTC appear numbered now with a Trump White House, it is not a complete shocker that Wednesday after the bell the FTC announced a broad sweeping investigation into Microsoft as a final shot across the bow at Big Tech from Kahn before she departs,” Wedbush analyst Dan Ives wrote in a note to clients on Friday.
Ives added this probe “is much more bark than bite” and will become a secondary concern for the company once President-elect Donald Trump names a new FTC leader.
According to Bloomberg, which broke the story, the FTC’s request to Microsoft is “hundreds of pages long” and focuses, among other things, on how the company bundles its cloud services with other software, like its productivity suite (Word, Outlook, Excel) and security offerings.
Current FTC Chair Lina Khan has aggressively pursued antitrust actions against tech giants, including Alphabet (GOOG, GOOGL), Apple (AAPL), and now Microsoft.
The stocks of Apple, Microsoft, and Alphabet are all trailing the S&P 500’s (^GSPC) 26% year-to-date gain.
Alphabet is currently facing the most serious threat, with a federal judge finding earlier this year that the company’s Google search engine was run as an illegal monopoly. Earlier this month, the DOJ asked the company to sell its Chrome browser and divest its Android mobile operating system.
Following Trump’s election win, investor optimism grew that these various antitrust threats would disappear under his administration. Some legal experts, however, are less confident, as Yahoo Finance’s Alexis Keenan reported.
Ives, for his part, sees the recent era in which regulators sought to limit Big Tech deals and scrutinize the world’s largest companies as one that is coming to an end.
“We believe there will be major shifts in policy against Big Tech over the coming years with Trump in the White House and Khan out at the FTC … we believe [it is] just a matter of time and will remove a huge thorn in the side of the tech world,” Ives wrote.
“As someone that has covered tech throughout the Microsoft vs. US Government trial/soap opera for many years in the 1990’s into an ultimate win for Redmond, we believe negotiations and remedies will be much smaller than the fears for Google, Apple, MSFT, Meta and Big Tech.”