Undoubtedly, technology stocks have been a favourite of execution only short-term/day traders for some time. This is because they tend to turn quickly with the market sentiment, and profits and prospects can change at the drop of a hat. In these fast-moving markets, low latency execution-only services have proved crucial. However, the recent announcement by the Competition and Markets Authority (CMA) could lead to even greater volatility!
Investigation into mobile browsers and cloud gaming restrictions
It will come as no surprise to learn that the two tech giants in question are Google and Apple, companies which dominate multiple markets. While some may suggest that the authorities have allowed these companies too much free rein, others point to their often restrictive terms and conditions. Ironically, the likes of Google and Apple emerged in a time of limited restrictions and free-flowing tech investment funding. So are they really restricting the emergence of the up-and-coming tech giants of tomorrow?
Mobile browsers and cloud gaming
After a one-year investigation into the industry, the CMA is currently consulting on the launch of an investigation into mobile browsers and restrictions on cloud gaming. This will not surprise those operating in the industry, but many investors may not have seen this coming.
Mobile browsers
The CMA has identified two alarming facts when it comes to mobile browsers:-
- In 2021, 97% of all mobile browsing activity was through either an Apple or Google-powered search engine
- These two companies supply 90% of all mobile browsing software in the UK
The fact that the remaining 10% of third-party mobile browsing software accounted for just 3% of browsing activity in 2021 says everything. This is just the latest in a long line of international investigations into various tech companies which have built dominant positions across multiple markets.
Cloud gaming
Those who follow Apple shares will know that the company receives significant revenue from cloud gaming services in its App Store. These are highly innovative games which are streamed rather than downloaded. Apple is alleged to have blocked the emergence of new third-party cloud gaming services, which many believe will be detrimental to the industry in the future. Numerous experts have identified this area as having potential for enormous growth, but there are fears that restrictions will limit the emergence of competition to Apple.
Additional investigation into Google Play Store
There is also an additional investigation into Google’s Play Store concerning the rules and regulations regarding how apps can access the popular store. There are also concerns about restrictions on in-app payments for digital products. This investigation mirrors an earlier one opened into Apple amid similar allegations of anti-competitive behaviour.
The added dangers/attractions of tech shares
As many tech shares can take some time to break into profit, rumours and speculation can lead to significant price swings. However, for many execution-only day traders, this is the food that keeps them going. It looks as if they will soon be served a feast if, as many expect, this is just the tip of the investigative iceberg.
Over the years we have invested significant funds into our dealing platforms, allowing short-term traders the ability to access low latency execution-only trading services. This is crucial in times of volatile markets, offering the ability to take advantage of often fleeting overbought and oversold situations. When you consider Apple shares, for example, have traded between $126 and $182 over the last 12 months, this perfectly illustrates the volatility, even in tech giants.
Conclusion
While it will no doubt take some time for the CMA to report on their findings, and the outcome may involve significant legal wrangling, it is a wake-up call for some of those trading tech shares. As we await more speculation and counter speculation, low latency execution-only services will be in demand by day traders looking for a quick return.