Facebook shares lead big-tech down as DOJ launches antitrust review
FAANG stocks dropped lower in after-hours trade following news that the Department of Justice will launch an antitrust review into big-tech.
Yesterday the US Department of Justice (DOJ) said they planned on launching a review into the practices of market-leading online platforms.
In response to the DOJ’s release, FAANG stocks dropped in after-hours trade - with Facebook's share price falling the hardest.
What will the DOJ review involve?
A central part of the DOJ's review will involve investigating how market-leading platforms such as Meta Platforms Inc (All Sessions) and Google ‘have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.’
The DOJ further pointed out that the review will examine ‘the widespread concerns that consumers, businesses, and entrepreneurs have expressed about search, social media, and some retail services online.’
Facebook share price hit hardest in after-hours trade
The potential to have their business models disrupted by regulation has always been a key concern for big-tech and their investors.
Unsurprisingly then, the FAANG stocks fell in after-hours trade following news of the DOJ review.
The Meta Platforms Inc (All Sessions) share price was hardest hit, dropping as much as 1.53% in after-hours trade.
This comes just a couple of weeks after the Federal Trade Commission (FTC) announced that Facebook would be struck with a record-breaking $5 billion fine for privacy violations.
As we previously reported, in the grand scheme of things, a $5 billion fine is likely to mean little to Facebook.
In saying that, it looks as if investors may believe that the US Department of Justice poses a greater threat to big-tech’s highly lucrative business models than the Federal Trade Commission does.
Google, Amazon and Apple all fall on the news
It wasn’t just Facebook’s share price down on the news of a DOJ antitrust review.
Google’s stock fell 0.96%, Amazon’s stock dropped 0.95% and Apple shares lost 0.44%.
With the potential benefits these companies reap from their market leading positions, the wide-spread after-hours losses are hardly shocking.
Moreover, while the DOJ review concerns US consumers, a 2018 report from Australia’s competition watchdog points out just how influential the likes of Facebook and Google have become.
For instance, according to the ACCC, for every hundred dollars spent on advertising: A$47 goes to Google, A$21 goes to Facebook and the remaining A$32 goes to other websites.
Although big-tech have always maintained that there is ample and fierce competition, the above statistics paint a picture that likely leaves consumers questioning such claims.
How will the DOJ proceed?
Given that big-tech has faced antitrust scrutiny in the past and suffered few consequences as a result, it will be interesting to see how the DOJ review inevitably unfolds.
On that front, the following comments from the DOJ may have been most concerning to investors, as the department pointed out that:
‘If violations of law are identified, the Department will proceed appropriately to seek redress.’
It will also be interesting so see what impact (if any) this antitrust review has on investors when Meta Platforms Inc (All Sessions), Amazon.com Inc (All Sessions) and Alphabet Inc - C (All Sessions) report their quarterly earnings later this week.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets