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Highlights:
- US tech giants are eyeing offering financial services in the UK.
- The FCA is considering regulating them, as they may build dominant positions due to their huge user base.
Several US technology giants have been keen on exploring other global financial services to expand. Leading firms such as Apple's recent credit card have planned to extend their offerings such as "buy now pay later", etc. Similarly, e-commerce giant Amazon has already launched an online insurance store in Britain.
While this could provide innovations in the financial services sector, UK's financial watchdog, the Financial Conduct Authority (FCA), fears that the firms may build dominant positions and lead to potential market power exploitation.
The watchdog is now considering formulating a plan to regulate big tech firms.
An analysis by the regulator shows that while UK consumers will benefit from big tech firms' entry into the financial markets, these benefits may be eroded if these firms harm healthy competition by creating or exploiting entrenched market power.
Image source: ESB Professional,Shutterstock
The FCA also expressed concerns that these firms may become "gatekeepers" to financial services in the UK as they already have the upper hand because of their global scale and huge user bases. Further, they have access to "rich" data about their users, so they will be able to set default options on consumer devices. The analysis said this would allow them to push their products and exclude others.
Amid this development, let's explore some of the London-listed tech stocks and how they have been faring.
AVEVA Group Plc (LON: AVV)
The multinational IT consulting company is headquartered in Cambridge, England, and offers operational industrial software. The company has a market cap of £9,498.13 million and a negative EPS of -0.21. The stock's 12-month and year-to-date (YTD) returns are also red at -14.53% and -7.70%, respectively. The FTSE constituent’s shares traded 0.10% lower at GBX 3,142.00 as of 10:30 AM (GMT+1) on 25 October.
Spectris Plc (LON: SXS)
The FTSE 250 constituent supplies precision instrumentation and controls. Its market cap presently stands at £3,008.82 million, while the EPS is in the positive territory at 3.05. The stock's 12-month and YTD return stands at -23.97% and -21.87%, respectively. As of 10:40 am GMT+1 on 25 October, the stock was trading at GBX 2,858.00, down 0.28%.
Darktrace Plc (LON: DARK)
The independent artificial intelligence (AI) technology company specializes in cyber-defence. Darktrace Plc boasts a market cap of £2,454.75 million as of Tuesday. The stock value has depreciated by more than -64% over the past year, while on a YTD basis, it has slumped by more than -19%. Shares of the company were down 1.20% at GBX 337.70 as of 10:42 am GMT+1 on 25 October.
Note: The above content constitutes a very preliminary observation or view based on industry trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
