Google Inc. (GOOG) shares tumbled nearly 9 percent Friday as smoldering concerns ranging from a sluggish sector outlook to a legal spat with the U.S government burst into flame and helped sparked a drop in broader U.S. markets.

"The most obvious reason were the mixed earnings results from Yahoo," Standard & Poor's analyst Scott Kessler said of Tuesday's disappointing quarterly earnings report from Yahoo Inc. (YHOO).

Analysts said Yahoo's results suffered from higher investments in new product development that pose the threat of mounting competition for Google and other Web companies in the coming year. Google is due to report its results in late January.

Google shares ended the day at 399.46, down 36.98 points, or 8.47 percent.

"We are seeing a little bit of a rush to the exits," said Herb Kurlan, president of Vtrader LLC, an online trading company in San Francisco.

Google stock on Tuesday was trading at $470, representing a roughly 450 percent rise since its initial public offering in August 2004. "It was just a matter of time before there was some consolidation of these gains," Kessler said.

Kessler and analyst Scott Devitt of Stifel Nicolaus both downgraded Google shares to rare "sell" ratings this week, among the negative factors that may only now be figuring into the market's sharp reaction.

A sudden initial decline of 2 percent to 3 percent in early trading by Google stock first dragged down Internet peer eBay Inc. (EBAY), but initially left rival Yahoo and other major Internet names largely unperturbed.

The accelerating decline of Google stock eventually pulled down the whole Internet stock sector, and the broader Nasdaq 100 index with it.

Another issue is the brewing controversy between Google and the U.S. Justice Department. Google is resisting a request by the government for Web search data to help the United States make its case in support of a federal online pornography law.

"There are potentially concerns that Google could be in the cross-hairs of the Justice Department," Kessler said.

"Investors are worried about interest rates and inflation and they felt technology stocks like Google, Apple (Computer Inc.), Yahoo and others were able to withstand these kinds of pressure. But now that ability is in doubt," Kurlan said.