Big Tech isn’t the same as Standard Oil or Ma Bell

But a new investigation by the United States, announced Tuesday, may very well lead into the same territory. The investigation will be looking into the anti-competitive practices of Facebook, Apple, Alphabet (Google), and Amazon. Antitrust and anticompetition refers to monopolistic practices, banned in most modern economies after it became common knowledge that monopolies are inherently bad for free markets.

Is Big Tech a monopoly?

In the strictest sense - it depends on the company. Platforms like Facebook and Amazon may be hard to sell as a monopoly - despite their obvious oversized influence. Some of the main grounds for establishing monopolies can be hard to apply to modern tech companies, though others - like exclusionary conduct, where one firm uses its dominance to interfere with a competitor, are a more straightforward example. (Google forcing smartphone makers to preload Google apps on their phones is one.)

What are the consequences?

Investigations like this can take years to resolve, and even longer to litigate, given the prodigious resources of the companies targeted. If, and when, there is a resolution, it will most likely entail a settlement and some minor policy changes. For example, Microsoft’s antitrust case at the turn of the millennium did not result in Microsoft breaking up - instead, Microsoft was liable for a cash settlement as well as the need to stop promoting Internet Explorer as its default browser for Windows.

Can Big Tech be broken up?

Well, like all things, it’s down to politics. The investigation and resulting cases will take time and effort. And outside of sweeping new laws and regulations passing Congress, there’s little chance the courts will take actions as significant as splitting up Alphabet or Apple. On the other hand, if there is a sea-change in US politics in the next year, like say the US presidential elections in 2020, then things may change rather quickly.

there’s little chance the courts will take actions as significant as splitting up Alphabet or Apple

Wut We Think

While tech stocks may have dipped on the news, they rebounded rather quickly as Q2 earnings came rolling in. Google jumped up 7%, while Amazon dropped about 1%. Earnings still play a bigger role than any long-running antitrust suit, and without any obvious signs of government intervention, tech stocks are expected to keep growing. Microsoft, another big tech name, has been curiously missing from the latest round of antitrust murmurs, and like Google, it’s posted quite encouraging Q2 numbers with positive guidance going forward. In other words, the sky isn’t falling, and while the law may have a long arm, it also has the agility of a sloth.

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