Google Inc. and Microsoft Corp.’s shares dropped in European trading after the two giants recorded profits below the analyst’s estimates. The stock prices decline is a clear sign that the slowing economy may be weighing on demand for computer-related products.

Google fell 12% in after-hours trading yesterday. If that decrease holds, it would be the biggest plunge since the initial public offering in 2004. On the other hand, Microsoft plunged 6.8 % and just as in Google’s case, if it holds up in regular trading, it would be the biggest slump in more than two years.

The combined loss of the two companies would be of $36.9 billion in market value.

Analysts are concerned that the decline of the two giants may be a sign that customer demand in the online ad market is decreasing. The online ad market is dominated by Google, while the software industry is ruled by Microsoft.

According to Google CEO Eric Schmidt, the company is facing “a more challenging economic environment” for the first time and this shows that investors can't use technology as a refuge from the crumbling housing and financial-services markets.

Google’s shares decreased 7.9% to $491.05 (equivalent) as of 11:55 a.m. in German trading, after dropping as low as $470.55 in extended U.S. trading. The company’s shares closed at $533.44 yesterday on the Nasdaq Stock Exchange. Meanwhile, Microsoft plunged 5.4% to of $26.03, after declining to $25.65 in the U.S. Microsoft’s shares closed at $27.52 on the Nasdaq.