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Tech Stocks Tank as the US Department of Justice Calls for New Antitrust Probe

Tech companies in the U.S. are facing increased scrutiny these days from the Department of Justice (DOJ). On Tuesday, July 23, stocks of Facebook, Google, Amazon and Apple plunged heavily after the Justice Department announced the opening of a new antitrust review to see whether the tech mammoths are using unlawful methods to stifle competition in the industry, reports the Wall Street Journal.

Big tech under pressure after hours with the DOJ announcing a new antitrust review of the biggest players. Here's what @LoupVentures' Gene Munster says is ahead for $FB $AMZN $AAPL $NFLX $GOOGL pic.twitter.com/XDcnu2mz0i

— CNBC's Fast Money (@CNBCFastMoney) July 23, 2019

The DOJ said that it is planning to monitor companies which are dominant in the internet space as well as social media and retail services. Attorney General William Barr will be leading the antitrust inquiry which could put additional regulatory pressure on the already distressed tech firms.

The DOJ will be working with the Federal Trade Commission (FTC) as both these agencies share the antitrust enforcement authority. The two regulators will further decide on who would take a leading role to address different issues involving these big tech companies.

However, there are some companies who face scrutiny from both – DOJ and FTC – and the new antitrust review will just bolster the regulatory pressure. The FTC website explains: “Before opening an investigation, the agencies consult with one another to avoid duplicating efforts.” Note that while the FTC has the right to initiate a probe for the big tech companies, it is only the DOJ which can levy any sanctions.

The DOJ will look after tech firms who have grown magnanimously over the last few years as well new businesses in the tech space. It will also look into how the Big Tech companies have leveraged their massive user-base, said the department. An unnamed official from the DOJ said that there’s no specific guideline on the review of the Big Tech but stressed that they certainly do have antitrust issues which need addressing.

Justice Department antitrust chief Makan Delrahim said in a statement:

“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.”

Note that the Justice Department has already stepped-up measures to see if Google is indulging in any unlawful monopolistic activities. The DOJ says that the new antitrust issue will be separate from the earlier raised scrutiny.

The next year will be interesting to watch for the tech giants as both the Democratic and Republican lawmakers are in support for the tech breakups.

Earlier this month, PayPal co-founder Peter Thiel asked the Trump administration to investigate Google citing some “seemingly treasonous” interactions with the Chinese government. President Trump quickly tweeted in response.

“Billionaire Tech Investor Peter Thiel believes Google should be investigated for treason. He accuses Google of working with the Chinese Government.” @foxandfriends A great and brilliant guy who knows this subject better than anyone! The Trump Administration will take a look!

— Donald J. Trump (@realDonaldTrump) July 16, 2019

While speaking to the CBS publication, Apple CEO Tim Cook said that “anybody reasonable” won’t call Apple a monopoly. But one thing is sure that the lawmakers are closely watching the tech giants’ activities and any notoriety could lead to unwanted consequences.

Tech Stocks Tank as the US Department of Justice Calls for New Antitrust Probe

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