The big tech firms’ stocks fell in after-hours trading yesterday, following a Justice Department confirmation of a Wall Street Journal report that the government has begun a broad antitrust review of companies dominating social media, search and ecommerce.
That could put a target on the backs of Google parent Alphabet, Facebook Inc., Amazon.com, Apple Inc. and possibly Twitter and others.
The Justice Department’s antitrust division “is reviewing whether and how market platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers,” the department announced.
The review’s goal is “to assess the competitive conditions in the online marketplace in an objective and fair-minded manner and ensure Americans have access to free markets in which companies compete on merits to provide services that users want,” the statement asserted. “If violations of law are identified, the department will proceed appropriately to seek redress.”
The Department of Justice's antitrust chief, Makan Delrahim, stated: “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands. The department’s antitrust review will explore these important issues.”
WSJ had previously reported that the Justice Department was preparing an investigation of whether Google engaged in illegal monopolistic practices, but that hadn’t been confirmed by the government.
Now, WSJ reports that both that probe and the broader probe will be conducted by the Justice Department. But the Department of Justice and the Federal Trade Commission in recent months agreed to split up which agency will lead investigations into various tech industry issues, so tech companies could now face probes from both agencies in some areas. Specific companies could eventually face more targeted inquiries.
The FTC formed a task force to monitor tech-sector competition back in February.
Facebook, Amazon, Alphabet and Apple did not comment to WSJ. The first two also declined to comment for a subsequent MarketWatch piece, but Apple cited an earlier statement by CEO Tim Cook (“We are not a monopoly”), and Google pointed to last week’s Congressional testimony by its director of economic policy, Adam Cohn.
The tech giants have been under siege by President Donald Trump. His public calls for government suits against Google and Facebook, and claims that Twitter and other social platforms are discriminating against conservative voices (which the platforms have denied), have potentially undermined the agencies’ ability to defend their objectivity in these matters going forward. He also hosted last month’s “tech summit,” dominated by conservative and right-wing attendees, including conspiracy theorists.
But an antitrust committee in the Democrat-led House is also examining the tech sector’s practices. Facebook, Apple, Amazon and Google executives testified in front of that committee last week.
Further, some Democratic presidential nomination contenders, including Sen. Elizabeth Warren (Mass.), have called for the breakup of the tech giants.
Facebook, Alphabet and Amazon stock prices fell by more than 1%, while Apple and Microsoft stocks fell by less than 1%, in after-hours trading on Tuesday.
Analysts’ reactions to the news ranged from warnings about potentially major impacts on the tech companies’ stocks to statements noting that the stocks have continued to flourish despite news of previous investigations over the years and recent pressures for regulatory actions.
Yesterday’s “limited” impacts on the stocks suggest that investors have “largely discounted many potential outcomes of ongoing regulatory scrutiny,” Evercore ISI analyst Lee Horowitz told MarketWatch.