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If there was ever a year for a breakup of the Big Tech monopoly, it’s 2022. So many factors seem to be coming together at one time. Most importantly, consumer sentiment has shifted against social media companies like Facebook and Google. Once seen as innovative startups from Silicon Valley, they are now viewed by many as anti-privacy and anti-competition. And there’s also a new political administration in Washington that can push through legislation and regulation even without broad bipartisan support.
A change in sentiment
That might be the reason why recent U.S. Senate hearings in Washington, D.C. have received so much coverage from the media. It now looks like there is growing political appetite for robust anti-monopoly enforcement against companies like Google, Facebook and Amazon. These companies have become too powerful, too wealthy and too influential. Nearly every major political or economic question seems to feature these companies at the forefront. Take a look at the stock market – it’s completely driven by Big Tech. Take a look at any question about censorship, privacy or freedom of speech, and you have people like Mark Zuckerberg being forced to explain their actions in front of Congress.
So what would a breakup of Big Tech look like? There are basically three different scenarios, ranging from a “lite” scenario to a more robust scenario.
Scenario #1: Congress votes to beef up antitrust enforcement and close loopholes in current laws
In the past, Congress and U.S. government regulators have threatened to act, but there hasn’t been a lot of real progress here. But Congress could extend new powers to the Federal Trade Commission or other regulatory bodies, giving them more power to crack down on abuses of the system. You can think of this “lite” scenario as Congress chipping away at the power and influence of Big Tech, but without making any substantial changes to the system.
Scenario #2: Congress takes steps to prevent Big Tech from getting any bigger
This all starts with tightening up rules on mergers and acquisitions. In the past, the U.S. government basically turned a blind eye to every new merger request from the likes of Google and Facebook. Now look at where they are now – they are both dominant, monopoly-like players with broad influence within every major sector of the tech industry. The U.S. government might also ask Big Tech to divest non-core assets. For example, what exactly is Google doing with all of its AI and robotics investments? The company – formally known as Alphabet – is indeed an alphabet soup of tech investments.
Scenario #3: Congress takes steps to downsize Big Tech and take away profits
Look at what’s happening in Australia right now – there’s a lot of talk about forcing Big Tech to pay for news content produced by real news media outlets. That’s one way Congress could punish the likes of Google and Facebook. Or, taking more extreme steps, Congress could decide to breakup companies like Facebook into a lot of pieces, such as a separate Instagram company, a separate WhatsApp company, etc. In many ways, it would be like breaking up AT&T into seven different Baby Bells back in the 1980’s, or how the U.S. government has broken up the oil and gas and banking industries in the past.
Of course, all this assumes that there is enough political will in Washington, D.C. to make this happen. Remember – Big Tech is a huge lobbying presence in Washington right now. According to the latest studies, a handful of companies have spent a combined $500 million over the past decade to maintain the status quo via lobbying efforts. In 2019, for example, both Amazon and Facebook spent $17 million each on their lobbying efforts in Washington. Here is where consumer sentiment really matters – it’s the tens of millions of users around the nation who need to hold these companies responsible, no matter how much these companies are spending to maintain the status quo.
