Tech shares slide as US regulators prepare for antitrust probes
US antitrust enforcers have carved up jurisdiction for possible investigations into Google, Facebook, Amazon and Apple, according to two people familiar with the matter, in a development that wiped more than $133bn from the market value of the technology giants on Monday.
The agreement between the Department of Justice and Federal Trade Commission has paved the way for antitrust investigations into the four companies, though it is unclear whether the agencies will ultimately open official probes, or how aggressively they intend to move.
The DoJ won jurisdiction for a potential inquiry into Google and Apple, while the FTC was granted purview for examining antitrust issues at Facebook and Amazon, the people said.
The two agencies share responsibility for antitrust enforcement in the US and must agree on jurisdiction before either launches an investigation.
Industry executives said it was unusual for the two organisations to clarify jurisdiction in such a way without there being an investigation, and suggested it might be a sign that probes would soon be launched.
But they added that any antitrust action could take years to come to fruition.
Facebook, Amazon and Google declined to comment. Apple did not respond to a request to do so.
Tech stocks were dragged lower on Monday on the news that US regulators appeared to be taking a tougher stance on digital competition. For years, the primary antitrust risk for large US tech groups had emanated from the EU.
The Nasdaq Composite was down 1.6 per cent, putting the index into a technical correction, defined as a 10 per cent drop from a recent peak.
Shares in Alphabet, the parent company of Google, tumbled as much as 7 per cent to $1,027.03 on Monday to their lowest level in five months. That briefly sent them into bear market territory as shares fell 20.8 per cent from the April peak. Alphabet shares ended the day down about 6 per cent.
Facebook shares closed down 7.5 per cent to $164.15, in their steepest one-day drop since July 2018. Amazon shares fell 4.6 per cent to $1,692.69, and Apple ended 1 per cent lower at $173.30 after rising earlier in the day on positive sentiment about the annual developers conference at which it unveils new products.
“While this latest report from the DoJ is a near-term gut punch for tech investors already dealing with market jitters and the US/China UFC battle, we do believe in the near-term the bark is worse than the bite for a DoJ antitrust case with Apple,” said Dan Ives, an analyst at Wedbush.
The focus of the justice department and FTC’s interest in the four companies was not immediately clear. Any official investigations would probably take years and may not result in any action by the regulators. Spokespeople for the agencies declined to comment.
Although customers and rivals of the four tech companies have found a warmer reception for their complaints from the European Commission in recent years, the political environment in the US has shifted as both Democrats and Republicans have grown wary of the power of Silicon Valley.
Antitrust has become a prominent issue in the race for the Democratic presidential nomination, with Elizabeth Warren promising to break up big tech companies if she is elected US president. On the right, Republicans such as Josh Hawley, the senator from Missouri, have emerged as strident critics of online platforms.
Both the justice department and the FTC have shown outward signs of responding to the political pressure. In May the DoJ held a roundtable on competition in digital advertising, and last year then-attorney general Jeff Sessions met officials from several US states to discuss whether social media companies were “hurting competition and intentionally stifling the free exchange of ideas”.