US tech stocks took a hit after the US government finally confirmed its investigation of the biggest US technology companies for alleged anticompetitive practices.
Such investigation could result to antitrust charges. This comes after months of speculations an reports as to whether the government is probing big tech.
According to previous reports, the Justice Department and Federal Trade Commission had worked hand-in-hand to split up various investigations against Alphabet Inc., Apple Inc., and Amazon.com Inc.
Now, reports have confirmed that the Justice Department is conducting an inquiry into the operations of the companies.
“The Department’s antitrust division is reviewing whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers,” announced the Justice Department.
The Justice Department said that its goal is to assess the competitive conditions in the online marketplace “in an objective and fair-minded manner.”
“If violations of law are identified, the Department will proceed appropriately to seek redress,” it said.
In after-hours trading, shares of the largest US tech companies declined, with stocks in Alphabet, Amazon, and Facebook falling more than 1%. Shares in Apple and Microsoft Corp. lost less than 1%.
Apple and Microsoft have already faced antitrust charges a couple of decades ago.
Facebook has lost 1.3% to $199.65, while Apple lost 0.6% to $207.70. Amazon.com shed 1% to $1,975, while Netflix dropped 0.3% to trade at $306.27. Google-parent Alphabet Inc. declined 1.1% to $1,135.
As to the investigations, Facebook and Amazon both declined to issue a comment. A Google spokeswoman, meanwhile, referred to the statement given by Adam Cohn, who is the company’s director of policy, in which he defended the company’s business practices.
According to one analyst, the investigation constitutes “a major shot across the bow” for FAANG stocks. It would also give rise to “near-term uncertainty” among investors.
On the flipside, another analyst said that the limited after-hours decline suggested that traders have “largely discounted many potential outcomes of ongoing regulatory scrutiny.”
The scrutiny toward big tech companies has manifested itself in recent weeks. For instance, the government recently conducted four intense hearings on the influence of the biggest hearings.
As a result, Rep. David Cicilline, who is the chairman of the House Antitrust Subcommittee, sent letters to Facebook, Amazon, and Google, requiring them to provide more information on their market power and business practices.
“I was deeply troubled by the evasive, incomplete, or misleading answers received to basic questions directed to these companies by Members of the Subcommittee,” said Cicilline in a statement.
Meanwhile, presidential candidate Sen. Elizabeth Warren also had something to say about big tech.
“Big companies like Amazon, Facebook, and Google wield enormous, monopolistic power. I’ve been saying that we need to #BreakUpBigTech for a long time and I support a legitimate antitrust investigation into these companies,” Warren said.
In an interview last June, Apple CEO Tim Cook said that he doesn’t think that anyone would “come to the conclusion that Apple’s a monopoly” because “we don’t have a dominant position in any market.”