Internet stocks are getting crushed.
Shares of Google parent Alphabet dropped by nearly 7% on Monday after the Wall Street Journal reported that the U.S. Justice Department was preparing an antitrust investigation against its Google subsidiary. The moves put pressure on the broader technology sector, with fellow giants Facebook and Amazon seeing meaningful declines.
Given how many times Alphabet has been investigated for issues like these, experts aren't totally bearish — yet. Here's what three of them had to say about the news:
Recode co-founder Kara Swisher recalled all of the previous probes the company has undergone:
"Google has undergone a lot of investigations, most of which, in the United States, it sailed out of, pretty much, and a ton in Europe, and a ton around the globe. So just keep that in mind. And many years ago, if you recall — 10 years ago, actually, in 2008 — the FTC was looking at it and there [were] subsequent investigations. So, I think I'd like to wait to see which one is going to stick, but right now, this DOJ investigation will obviously look at its power across a lot of things, probably in search and some other areas. In some other areas they're not as powerful, but I think we'll figure out which part they're looking at again and what remedies they're thinking about."
Brent Thill, a senior analyst at Jefferies who covers Alphabet, said this issue could weigh on the company if it doesn't continue to execute:
"This is the No. 1 issue facing the internet sector, and institutional investors continue to highlight this as a risk. So, this is somewhat in the stock, but, clearly, it'll be down on the news. Again, we think this is more of a speed bump, not a roadblock. It's another short-term setback for Google's multiple after they missed the first-quarter earnings, which makes the second quarter even more important that they put up a very good, clean quarter."
Jim Cramer, host of CNBC's "Mad Money," said Alphabet would take care not to make the same mistakes Microsoft did when it was investigated by the Justice Department almost 20 years ago:
"The Democrats want to break up Google. I was with a very big shareholder this weekend. You know what they said? 'Break 'em up. Break 'em up. Waymo's worth more.' Now, that's simplistic. … A lot of people are comparing this to Microsoft and, obviously, the browser. I don't think that's fair. There was a really anti-competitive nature, and also [former Microsoft CEO] Steve Ballmer antagonized the Justice Department. I don't see the people who run Alphabet making that same mistake."
