When it comes to the internet, regulators around the world are looking through the wrong lens. They have shown an ability to extract fines, which regulators can always do, but they are failing to get to the root cause of Big Tech's ability to extract value in ways that are sometimes fair, but often are not.

It's possible regulators may stumble upon the actual source of tech's power in an internet age, but it's unlikely the way things are going.

An investigation of Amazon (AMZN) - Get Report , announced Wednesday by the European Commission's head of competition, Margrethe Vestager, is yet another attempt to look at internet companies in terms of industrial-age policy of the last hundred years that views everything as discrete goods and services and marketplaces.

But tech in an age of hyperlinks is about something more pervasive, namely the presence of buyers and sellers as digital profiles that are assembled via the constant monitoring of every single move by a person in the fabric of Web sites and mobile apps.

The proper domain of the regulation of e-commerce, and social media and keyword search is not competition but privacy. Nothing fundamental will change about Amazon's edge on competitors, or Facebook's (FB) - Get Report use of its database on citizens, or Alphabet's (GOOGL) - Get Report dominance of search, until more attention is paid to how all these entities monitor and extract value from every action by a person inside the system of observation of these venues.

Imagine walking into a conventional brick-and-mortar store where every move you make throughout the showroom floor, every object you pick up off the shelf and every casual remark you mutter under your breath to a friend about an item is being recorded. You would undoubtedly consider it an invasion of privacy, although also a rather astounding technical achievement in spying. 

But that level of surveillance is happening every time you browse through Amazon or "like" things on Facebook or search for something on Google. You are leaving digital fingerprints on every piece of content you come into contact with. It is that digital record of you that is valuable, more so than the static demographic data about you such as your income level and geographic location. 

The final transaction, such as posting a link on Facebook or clicking on a link on Google search results, or putting something in your Amazon shopping cart, is merely one move in that long chain of actions in a venue equipped with sensors to record everything you do. That rich stream of data constitutes your revealed preferences and proclivities, and is arguably more predictive of what you will do in the future than what you might consciously say about your own inclinations, or what a typical marketing database might claim about your preferences.

That data is owned by Amazon and Facebook and Google, for no other reason than that those entities run the software that you're spending your online on. The spies, because they run the techniques of spying, claim ownership of knowledge of you.

As they amass a database of your behavior over months, years, even decades, the tech giants can use the techniques of today's artificial intelligence software to produce all sorts of insights that are not evident from a cursory consideration of the data.

A.I., in the form of machine learning, can compare your digital fingerprints against the aggregate behavior of other people at the same time of day and with similar patterns as yours. Every problem in A.I. these days is one of embedding individual signals of shoppers or surfers or searchers within a collection of other signals, in order to amplify and reveal what's meaningful in each thing you do. 

Any truly forceful regulatory or legislative action against Big Tech will have to designate all those signals of users as being not the property of the Web sites of Amazon and the rest, but as the personal possession of the individuals who generate them. Then everyone would have to bargain for the privilege of mining your data. There would be no automatic advantage by tech giants; they would have to compete for your information like everyone else. 

That's unlikely to change anytime soon. The existing framework that focuses on marketplace competition, rather than privacy, satisfies regulators like a pellet satisfies a lab rat. It can be presented to courts in time-tested fashion, and so it allows regulators a degree of confidence that they can impose fines, declare victory and move on. 

As long as that's the case, investors in Big Tech can feel comfortable that the status quo will prevail, more or less unchanged, for their favorite companies.

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Amazon, Facebook and Alphabet are holdings in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells these stocks? Learn more now.

Tiernan Ray neither trades nor owns stocks of any companies mentioned in this article.