US Justice Department Puts Big Tech Under The Microscope

By Glenn Dyer | More Articles by Glenn Dyer

Standby for some nervous times ahead in the stock market after the US Justice Department revealed a sweeping inquiry into the market power of big techs.

The Justice Department statement did not mention any company by name but analysts say the three chief targets will be Facebook, Alphabet, and Amazon.

The investigation came after Wall Street closed and less than a day before Facebook revealed its June quarter figures and two days before Alphabet (Google) and Amazon report.

But some after-hours trading was happening and the shares of mega techs fell (after rising during the regular session).

Shares Amazon, Alphabet, and Facebook fell more than 1%, while shares in Apple and Microsoft dropped by less than 1%.

Netflix and Microsoft have already released their June figures (Microsoft has already been the subject of a similar inquiry nearly two decades ago). Apple releases its figures in July.

The Justice Department said the inquiry would look into “widespread concerns” that have been expressed about “search, social media, and some retail services online” — suggesting that Google, Facebook, and Amazon will be at the centre of the review.

“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,” the Justice Department announced.

“The goal of the Department’s review is to assess the competitive conditions in the online marketplace in an objective and fair-minded manner and to ensure Americans have access to free markets in which companies compete on the merits to provide services that users want,” the announcement concluded. “If violations of law are identified, the Department will proceed appropriately to seek redress.”

Marketwatch.com reported: that the “scope of the now-formal investigation constitutes a major shot across the bow for FAANG stocks and a cause for increased concern among investors”, Wedbush Securities analyst Daniel Ives said in a note late Tuesday.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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