(Bloomberg) -- A rout in Alphabet Inc. as the U.S. Department of Justice mulls an antitrust probe into Google is weighing heavily on its peers in the telecommunications sector.
Stocks in the S&P 500 Communication Services Index fell as much as 2.7%, heading for the lowest close since February, after a report the Justice Department was preparing to open an antitrust investigation into Alphabet's Google sent the stock 6.7% lower and wiped out its gains for the year.
The move comes as politicians from both parties face increasing pressure to apply tougher regulation on tech and telecom giants like Alphabet and Facebook Inc. and even break up the companies -- which are among the largest in the U.S. For investors, tougher regulation most likely means a negative impact on profits, making it harder to justify the rich valuations of some of the world's highest-flying stocks.
Further reading: Alphabet Slides as Reported DOJ Review Compounds Growth Fears
Facebook, which is under scrutiny over its handling of user data, is down as much as 4.6%. Twitter Inc. is down as much as 2.5% and Netflix Inc. 2.9%.
Google, with a vast empire of businesses that could feasibly be targets, is in the dark about the focus of the investigation and hopes to learn more this week, according to a person familiar with the situation.
To contact the reporter on this story: Elena Popina in New York at epopina@bloomberg.net
To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Morwenna Coniam
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