Antitrust in the Digital Age

On July 27th, the chief executives of four (Alphabet, Amazon, Apple and Facebook) of the world’s most prominent technology companies will appear before the US Congress as part of an ongoing antitrust investigation into their market power.[i] This is the latest in a series of developments that includes federal and state-level investigations in the US into the market practices of these companies. Back in 2018, as part of Sustainalytics publication, ESG Risks on the Horizon, our team had noted that the antitrust related scrutiny of major technology companies is likely to persist given the market concentration these companies had established within the digital economy. While there is significant uncertainty as to the ultimate regulatory response, given the outsized position of these four companies in the S&P 500 and sustainability indices, this type of regulatory and market scrutiny is an area that is important for investors to examine in terms of long-term risks to the enterprise value of these companies.

5G and Industry 4.0: Enabling Efficient and Resilient Infrastructure

There is significant hype associated with the rollout of 5G networks, which is largely tied to the incredible data transfer speeds 5G capable networks can offer. However, speed is only part of the equation. Beyond speed, key attributes of 5G also include lower latency, reduced cost per gigabyte and larger connection volumes. 5G, unlike previous network technology, will be software-defined, enabling networking functionality to be flexible and adaptable over time.[i] As a result, 5G is anticipated to create a new digital backbone to power future infrastructure needs – a topic we explored in Sustainalytics’ report, 10 for 2020: Creating Impact Through Thematic Investing.

Coronavirus: Flattening the Misinformation Curve

In February 2020, the WHO Director-General Tedros Ghebreyesus said misinformation about COVID-19 is just as dangerous as the virus itself. “We are not just fighting an epidemic; we are fighting an ‘infodemic.’ Fake news spreads faster and more easily than the virus and is just as dangerous.”[i]

Managing data privacy risk: comparing the FAANG+ stocks

Collecting and processing personal data has become one of the most significant drivers of financial value in today’s economy. But as the upside of personal data grows, so too does the downside risk associated with data security, management and privacy.

Cybersecurity: A Pervasive Risk

In 2017, in the wake of the WannaCry ransomware attack, we argued that the event should be seen as a cybersecurity wake up call. Since then, cybersecurity risks have remained a source of uncertainty for most companies, driven by the increasing intensity, both in volume and impact, of cyberattacks. These risks are compounded by the continuous expansion of critical infrastructure (energy grids, utilities, hospitals) to digital platforms and the breadth of sensitive information that is housed in online servers. As a result, the pool of lucrative targets for malicious actors continues to grow. This is reflected in the notable rise in the number cyber insurance claims. According to a study by AIG, 2018 had the same number of cyber insurance claims as the preceding two years combined.[i]

China’s Millennials and ESG

A country’s demographics has a strong influence on long-term social trends, including the development of ESG issues. With millennials becoming the dominant cohort among the workforce and consumers, we are witnessing the social transformations that come with a new generation. Although occurring globally, these transformations are particularly dramatic in China, due to the contrasting social environments experienced by China’s millennials and their parents.

The role of technology companies in technology addiction

As personal technology and social media platforms become ubiquitous in our personal and professional lives, we explore the role played by technology companies in technology addiction. The term ‘technology addiction’ is a catch-all phrase typically used to describe frequent and compulsive internet, smartphone, gaming and social media use.

Huawei and Beyond: Increasing Scrutiny of China’s Technology Sector

In December 2018, Canadian authorities arrested Meng Wanzhou, based on a U.S. extradition request. Ms. Wanzhou is the CFO of Huawei, the world’s largest telecom equipment provider and third largest mobile phone manufacturer. In January 2019, the U.S. Department of Justice (DOJ) charged Huawei and Meng with 23 counts of fraud related to alleged breaches of U.S. sanctions and trade secret theft.

Cyber Security and Data Privacy: The Downsides of the Network Effect

As investors assess their portfolios and develop engagement approaches, considering data privacy and security risks alongside traditional fundamental factors may be necessary to develop a fuller understanding of the risks facing a company’s enterprise value. In many cases, these risks may fly under the radar until there is a systemic failure, at which point it may already be too late to effectively mitigate the fallout.

Social Media Regulation: Latest developments and future trends

The internet’s burning issues have taken center stage, as regulators globally push for a crackdown on social media. In the wake of the 2016 US presidential election, tech companies such as Facebook, Twitter, and Google were criticized for having allegedly permitted the propagation of so-called “fake news” on their platforms.

Net Neutrality: Caught in a web of lobbying and regulatory uncertainty

In June 2018, the US Federal Communications Commission repealed the network neutrality rules (Open Internet Order) that required Internet Service Providers (ISPs)[1] to treat all content on the internet equally, and to not discriminate based on any characteristic, such as who owns or created the content.[2] Specifically, ISPs were not allowed to block, slow or give preferential treatment to certain content. In this blog, we explore the implications of this repeal to users and investors, particularly in light of the recently announced mergers between distributors and content creators in the US.

GDPR and the Right to Privacy

On May 25, 2018, General Data Protection Regulation (GDPR) will enter into force, repealing the 1995 non-legally binding European Union (EU) Data Protection Directive. GDPR enhances European citizens’ right to privacy by enshrining the “right to be forgotten,” establishing concepts like “privacy by design” and by setting aggressive timelines for businesses to report data breaches.

Facebook’s New Era: The Regulatory Implications of the Cambridge Analytica Incident

The collection and monetization of users’ data is a core part of Facebook’s strategy. However, Cambridge Analytica’s (CA) unauthorized collection and exploitation of this data exposes both the breadth and complexity of the information it has on individuals as well as the insidious nature of the methods used to collect it.

Meltdown and Spectre: Exposing the Achilles’ Heel of Chips

In January 2018, technology website The Register reported on security flaws in microchips that make a range of devices, from PC computers to servers and smartphones, more susceptible to hacking and could enable unrestricted access to sensitive information, such as passwords. What will this mean for chip manufacturers and how will it affect the broader technology value chain?

content governance scores graph

ESG Spotlight | Fake news, social media and the value of credible content

Social media networks, which currently have an estimated 2.3 billion users worldwide, are facilitating a surge in the dissemination of fake news.

Fox Sky Takeover: Why Content Governance Matters

The power of media companies to shape societal dialogue and act as gatekeepers of content is coming under increased scrutiny. This is starting to impact the industry as demonstrated in the challenges American media giant Twenty-First Century Fox (Fox) is facing in its proposed GBP 11.7 billion (USD 15 billion) takeover of UK broadcaster Sky plc.

computer screens

Poor Digital Rights Performance: Who Pays the Price?

Digital rights provide a framework for evaluating risks associated with the management and use of content and personal data by companies that provide highly valued digital services upon which people increasingly depend.

WannaCry: A Cybersecurity Wake Up Call

The recent Wanna, also called WannaCry, ransomware attack once again highlighted the importance of cybersecurity and protecting online data and systems. In our 10 for 2017 report, we argue that such attacks are likely to increase in frequency and intensity making it prudent for investors to integrate cybersecurity risk management into their investment decision making processes. Understanding these risks is crucial since most companies provide poor visibility into their ability to proactively manage such threats.