Alphabet shares sank on Monday following reports that the U.S. Justice Department is ready to launch an antitrust probe against Google.
The company’s shares fell 6.11% on Monday
A Wall Street Journal report out on Friday indicated that the DOJ investigation intended to look into the tech company’s search practices as well as into other related businesses.
The WSJ cites sources as saying that the Justice Department had received complaints from third-party critics regarding Google’s practices. It was not immediately clear, however, whether the DOJ had gone on to contact Google.
The alleged antitrust probe against the company comes at a time there is much talk and debate concerning the issue of whether regulators would have to come in and break up these global tech companies.
In March, one presidential candidate suggested this should happen. Sen. Elizabeth Warren, (D-Massachusetts) wrote at the time that she would call on regulators to act on the so-called “anti-competitive mergers.” An example of these tie-ups includes Google’s acquisition of smaller firms like Nest and Waze.
Kevin Rippey, an analyst at Everscore ISI, noted on Monday that the potential investigation may be troubling to Google investors.
According to Rippey, the probe would be coming at a time Alphabet shares’ bull case is facing a test brought on by the company’s “abrupt revenue slowdown” reported in the first quarter.
But he also noted that the GOOGL stock has managed to emerge from an antitrust investigation before, doing so when the company was probed between 2011 and 2013. It emerged from the probe unscathed, with FTC voting 5-0 in favor of not pursuing further action.
Google has been found before to be very much in control of search results directions, but the probe on the scale that may happen could challenge the company’s dominance and possibly impact any multiple expansion plans.
Rippey also cut his price target, slashing it from $1,250 per share to $1,200. On Monday, the company’s Class A shares traded at $1,040.58.