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U.S. Senate Takes on Big Tech, Plus "Merger Monday"

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Monday, June 24, 2019

Lately, we’ve been getting “Merger Monday” news in dribs and drabs — Pfizer (PFE - Free Report) buying biopharma Array (ARRY - Free Report) and United Technologies (UTX - Free Report) coming together with Raytheon (RTN - Free Report) being the last two examples — and this morning is no exception: Eldorado Resorts (ERI - Free Report) has agreed to buy Caesars (CZR - Free Report) for $8.6 billion.

The cash and stock deal, priced at $12.75 per share, would create one of the biggest gaming entertainment companies in the domestic market. Activist investor Carl Icahn, who had come aboard Caesars, praised its board of directors for “acting decisively” on the deal. Eldorado shares are down 7.2% in today’s pre-market, while Caesars share are up 12.7%.

The Senate & Big Tech User Data

A bipartisan bill in the U.S. Senate has been drawn up by Mark Warner (D-VA) and Josh Hawley (R-MO), whereby Big Tech firms like Facebook (FB - Free Report) , Alphabet (GOOGL - Free Report) , Amazon (AMZN - Free Report) , etc. would be required to calculate the value of all data collected, and release the results annually. This would apply to social media companies with a base of more than 100 million active users. The SEC would create the formula for determining the user value for these companies, and there would also be an opt-out feature where users might delete their data.

Putting a price tag on this information may be a step toward proving these Big Tech firms enjoy something akin to “monopoly status,” which in turn might make them easier to be broken up into different entities. This is already an issue being taken up by some Democratic presidential candidates for 2020. Even major tech investors like Roger McNamee have compared these companies to the Ma Bell monopoly of the 1980s, which was broken up and uncorked millions of dollars in additional profit potential more than 30 years ago.

This is the very early stages for Congress acting demonstrably on this subject. For years, hearings have been held trying to gain an understanding for how these “free” platforms like Facebook are able to accrue so much wealth so fast. Now that there seems to be a handle on this, we would do well to keep an eye on developments here going into next year’s campaign season.

Mark Vickery
Senior Editor

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