What would a Big Tech breakup look like?

The US House of Representatives has 5 bills in the works to take on Alphabet, Amazon, Apple, and Facebook.


July 8, 2021

The phrase “Break up Big Tech” is like the word “turducken.”

It’s easy to say, but describing what it actually means is something else altogether.

US regulators recently found this out the hard way when a DC court dismissed 2 separate lawsuits intended to break apart Facebook.

Change is clearly coming, though

Last month, the House Judiciary Committee received ultra-rare bipartisan support on 5 separate bills to rein in Big Tech, including potential breakups.

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The Wall Street Journal’s Christopher Mims highlights what it might look for:

Facebook

While Zucky McLucky beat back the aforementioned lawsuits, new regulation could include:

  • Blocking future acquisitions, so FB can’t acquire competitors before they become a threat (like it did with Instagram and WhatsApp)
  • Facilitate transfer of user data to other social networks

Amazon

A breakup of Amazon could separate the company’s 4 core business lines:

  • Retail operation
  • 3rd-party marketplace
  • (Incredibly profitable) cloud computing business
  • Fulfillment and logistics

Amazon says separating these complementary operations would harm small businesses looking to sell on its platform and benefit from offerings like free shipping.

Sounds like fun for the company’s new CEO Andy Jassy.

Apple

There are 1B+ iPhone users. And Apple fully controls their experiences via its software and App Store, where it takes a 30% cut on app sales over $1m.

Apple is facing various lawsuits (e.g., Epic Games, Spotify) for its App Store control. Per Mims, the company may have to “[divest] its own App Store” or let users “load apps from anyplace they like.”

Alphabet (Google’s parent company)

Interestingly, a number of US states just sued Google for its Play app store, charging that the fees violate antitrust law.

The bigger issue is search domination (it controls 92% of the market). A “breakup” could prevent Google from prioritizing its own products (e.g., maps, videos, restaurant reviews) at the top of search results.

The EU actually fined Alphabet $9B for its search practices, but with little real change to the business.

Google contends that the results it shows are the best. (To its credit, we Googled “turducken” and got a useful recipe.)

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