Since Bill Clinton strategist James Carville pronounced, “It’s the economy, stupid,” to explain how Democrats would take advantage of a recession in the 1992 election, the existing economic condition of the country has been considered pivotal in predicting an incumbent win versus a change of administration or flipping the majority party in Congress.
That puts Democrats in a tough spot this election year, as the so-called Magnificent Seven tech firms drive gains in the economy and simultaneously remain a political target for many on the Left.
The Magnificent Seven include Apple, Microsoft, Alphabet (Google’s parent company), Amazon, artificial intelligence leader Nvidia, Tesla, and Meta (formerly Facebook). In 2023, their combined stock added more than $5 trillion to the S&P 500. They add up to 28% of the S&P 500’s performance and 39% of the Nasdaq 100’s performance.
Last week’s earnings report from Meta saw the company’s market cap increase by $197 billion, the largest single gain for any company in history. It surpassed similar record-setting one-day gains by Microsoft and Nvidia in 2023 and Apple, Amazon, and Tesla in 2022.
According to a 2023 Gallup poll, 61% of adults either own individual stocks, have a mutual fund with stocks, or have a self-directed 401(k) or individual retirement account. By party identification, 66% of Republicans, 64% of Democrats, and 55% of independents are stock owners.
A strong economy would be helpful to Democratic incumbents looking for another four years of President Joe Biden’s administration and retaining control of the Senate. But some of the party’s legislative and regulatory priorities would harm the financial performance of many of the same large tech firms propping up America’s stock portfolios.
The Biden administration’s Federal Trade Commission and Department of Justice have taken an aggressive stance on antitrust enforcement in the tech space. Amazon is defending itself at trial against the FTC over allegations of consumer harm and illegal business dealing with third-party sellers on its Marketplace platform. A ruling for the government could result in the breakup of Amazon. The FTC is also seeking to unwind Meta’s acquisitions of Instagram and WhatsApp. The FTC challenged Nvidia’s planned purchase of microprocessor technologies provider Arm Limited. The deal fell apart due to regulatory scrutiny in the U.S. and abroad in 2021. Fellow Magnificent Seven member Microsoft was able to successfully fend off an FTC challenge to its $68.7 billion acquisition of Fortnite video game maker Activision Blizzard last year.
Biden’s DOJ has multiple lawsuits against Google, most notably one involving the company’s pre-installed search contracts and another accusing the firm of illegally maintaining a monopoly in digital search. Media reports indicate that the DOJ is in the late stages of an investigation of Apple’s actions to keep its iPhone dominant in the smartphone market. A lawsuit could be filed as soon as the first half of this year.
It remains to be seen if Elon Musk’s journey from being favored by the Left for making electric cars cool to becoming a hero of the Right for changing content moderation policies on X will result in increased regulatory scrutiny for the auto company. Elon Musk is Tesla’s largest shareholder and its CEO.
A recent hearing on children’s online safety highlights the tension between Big Tech as a driver of the economy and an agenda that might harm these companies’ bottom lines in the Senate. Sen. Amy Klobuchar (D-MN), leading the Judiciary subcommittee hearing, was outspoken about her support of opening up platforms to more financial liability for alleged user harms. In her opening remarks, she stated, “I think the time for all of this immunity is done because I think money talks even stronger than we talk up here.” Klobuchar is up for reelection this fall. Political analysts consider her seat to be a relatively safe bet for the incumbent, but there could be collateral damage to others running in her party if the legislative actions she supports hurt voters’ financial investments.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Similarly, the chairman of the Senate Judiciary Committee, Sen. Dick Durbin (D-IL), told MSNBC that the hearing represented the “decision as to whether an industry which for decades now has escaped liability for any wrongdoing, it’s finally going to be held accountable.” Many bills Durbin supports would lead to a flood of lawsuits at significant cost to social media platforms. Those expenses would not only change the operating practices of social media companies but also affect their value to shareholders.
Election results in November will provide an insight into voters’ concern over Big Tech versus their wallets.
