If Breaking Up Is the Answer, Then What Is the Question?

Antitrust and policy circles are abuzz with calls against the power, monopoly and other, held by large firms. If one is worried about a firm being too large, then the solution seems obvious: break up the firm and surely that will solve the problem. Any attempt to break up large firms is likely to face many practical and legal challenges. In this article I ask whether breakup is the correct answer, even if these challenges can be overcome.

By Aviv Nevo¹

In many policy circles big tech companies, usually meant to refer to Google, Amazon, Apple, and Facebook, are viewed as having too much power.² Despite such concerns, consumers continue to shop on Amazon, search using Google, connect with their friends using Facebook and Instagram, and purchase Apple devices and services. Consumers’ continued support of these companies could be an indication that the products and services offered by big tech have benefited consumers and are superior to alternatives, or they could be an indication that consumers are locked into choices and effectively denied alternative options and the benefits of healthy competition.

Critics of big tech clearly think it is the latter and have proposed solving the problem by making big tech somewhat smaller. This involves limiting future acquisitions as well as potentially breaking up existing business units. For example, some have called for separating Amazon the retailer from Amazon the marketplace, to undo Facebook’s acquisition of Instagram