Will Congress succeed in splitting up Big Tech – should it even try?

Congress Big Tech
Image credit | AVN Photolab

The long-awaited session between the US Congress and the four Big Tech companies took place on Wednesday but what, if anything, did it achieve?

The session took place via Webex, which did nothing for the atmosphere of the discussion. The tone of the Congress interrogators was accusatory, as you might expect. Their questions were, to a large extent, based on statements sent in from smaller competitors who had lost out or gone bust because of [insert name of Big Tech company]. These statements were supported by a variety of internal emails that, taken in the context of what is basically a courtroom, sound as if the Boards of Facebook, Google, Amazon and – to a lesser extent – Apple were actively plotting the downfall of their rivals.

But put these emails and statements in the context of a competitive environment and they look like any Board meeting.

You study your competitors, you make sure that your next product is better than theirs and cheaper. You develop services and you realise that others are developing similar ones, and so you decide whether you buy the company or build your own new service, based on competitive analysis.

The four ‘defendants’ had been briefed by lawyers who are now sitting on a beach in Barbados with their extra bonuses. They were deferential. If you had a dollar for every time they said ‘with respect’ or ‘I respect what Congress is trying to achieve’ you would be on the next door sun lounger to the lawyers.

And the defendants did a good job. You cannot run a huge company on the basis that you may be being unfair to others and therefore you don’t compete. Your shareholders would chase you across the deserts of Arizona.

There is also the question of succession planning – and not just people. Every tech company knows that what works now will not work in five years’ time. The question is what will the market look like, can we upgrade what we have or should we build a new [insert name of product]? Clever telecoms companies have been doing this for years.

The ecosystems that these companies have built are also extremely complex.

As Jeff Bezos put it, “I don’t care how good an entrepreneur you are, you’re not going to build an all-fibre Boeing 787 in your garage.” This was in a written statement.

So what really bothers Congress? Is it really about the little guy? Is the plight of the company owner who described working with Amazon as Amazon Heroin – you get strung along for a while and then you drop out or die – a real issue for busy Congressmen?

Or is it simply the fact that these four companies are worth $5 trillion when put together and that is scary?

And, even if they pass a law that says they should be broken up, could they, realistically? Does Congress have the teeth?

If Congress passed that law, it would take so long for the expected result to be achieved that the world would have moved on to the point that the exercise would seem ridiculous.

Of course, everyone cites Standard Oil as an example of Government breaking up a monopoly. And eventually, it became 34 different companies, several of them ‘monopolies’ in their own right. In fact, the order that Congress made back in 1911 to split up Standard Oil was only taken off the statute books last year and Congress only tried to enforce the break-up once.

And not only is the world a very different place that moves at a very different speed to the one that was around over 100 years ago, but it is global. Breaking up truly international companies would be almost impossible in any practical sense. As it is, each of these four companies are competing on different terms and with varying legislation governing how they can compete in different regions.

Congress might well want to break up these four – and probably more. It is unclear as to whether they have the teeth to do anything meaningful. If they try, it is more likely that free(ish) markets will produce their own giant killers, the next Google and Facebook, than if the Government tries to enforce the unenforceable.

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