Breaking Up Is Hard to Do

Every once in a while some stalwart soul proposes “breaking up” the large tech companies—Google, Facebook, Amazon. I agree with them that the three companies are powerful, that they have monopolies which they have used illegally either to preserve their monopolies or to expand into other areas, both of which are illegal. What they haven’t proposed is how could they be broken up?

When John D. Rockefeller’s Standard Oil was broken up more than a century ago, it was done so along geographic lines. The same thing was done when the Bell System was broken up 35 years ago. How would you break Amazon? Geographically? The very idea is absurd.

That may be the reason that despite its bad behavior Microsoft was left intact. No one could figure out how to break the company up while letting the pieces remain viable. Basically, it was a mediocre operating system company joined with a mediocre development tools company joined with a mediocre office productivity applications company. The components mutually reinforced each other.

You could divide Amazon into a web services company and an online retailer. The online retailer might not last long on its own. It has lost money for most of its history and continues to just barely hold its own.

How about Google? Facebook?

IMO these tech giants can be regulated out of existence but there’s no practical way of breaking them up.

4 comments… add one
  • Ben Wolf

    1) Provide financing so workers can take the corporations private.

    2) Let the workers decide how best to break them up into a co-operative corporation similar to the structure of Mondragon.

    2a) This would actually be far more in line with the notion of a free market solution than anti-trust or allowing the firms to continue doing business as usual.

    No more corporate and state central planning.

  • It’s going to take a lot of education after more than a century of propaganda to convince people of that.

  • Guarneri

    “provide financing…to take private”

    The workers have insufficient equity. They have insufficient hard asset collateral to secure the debt. A cash flow underwriting is not warranted. The banks do not want to own and run the asset upon foreclosure.

  • Gustopher

    For Facebook, divide the company into content and advertising, where the content company sells advertising slots to all comers for the same price, with a randomized selection. Any number of companies then compete for filling advertising slots with ads, with Formerly Facebook Ads being just one of many.

    A similar approach works for separating Google’s Search and Ads. Don’t split by location, split by randomly farming out requests to fill ads slots.

    A problem both these would have is latency. An ads network far away is going to have less time to calculate the right ads for a given slot, because some of their allotted time will be used for network hops.

    For Amazon, splitting off AWS makes sense. See where it goes from there.

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