The Big Five tech companies — Amazon, Apple, Facebook, Microsoft and Google owner Alphabet — have come under serious scrutiny in the past few years.
Accusations of anti-competitive behavior and growing concerns over data privacy have convinced many that these companies have too much power over how consumers shop, search, get their news and stay connected with others.
For some, breaking up these businesses seems necessary. However, even for advocates of a Big Tech breakup, it’s not always clear who has the power to do so, or what consequences the move may have.
Polling suggests that a majority of voters in key battleground states have become wary of the power that Big Tech has amassed — and 49% say they want Congress to break them up or strongly regulate them.
Already, a number of U.S. lawmakers have indicated they want to break up the Big Five. In 2019, the team of U.S. Senator Elizabeth Warren has long called for the breakup of Big Tech. In 2021, Senator Josh Hawley introduced the Bust Up Big Tech Act, which would break up major tech companies and ban businesses that offer services like search engines from using their technology to promote their brand.
The U.S. government is the only entity with enough power to break up the Big Five.
Either antitrust legislation or an antitrust lawsuit would be necessary to break apart one of the Big Tech companies. Legislation could target a number of companies or even the entire tech industry. A lawsuit would likely target just one of the biggest tech businesses.
There are a number of pending antitrust cases that have already been brought against businesses like Facebook. While it’s not unusual for these cases to be dismissed or fail, even one victory could cause major changes in the tech landscape.
If successful, this action would be the first major trustbusting action in the U.S. since the breakup of the Bell System in 1982.
In the meantime, smaller legislative moves may impose stricter regulations on Big Tech. For example, one recently introduced bill would forbid Big Tech platforms from favoring their own products.
Together, the Big Five represent a major portion of the U.S. economy, and each of the businesses was one of the few to come out of COVID-19 having increased its market cap by a significant margin.
The break-up of the Big Five would almost certainly have a major impact on the tech industry and the economy at large — but economists aren’t in agreement as to what that impact would be.
The breakup could help to make the tech market more competitive. Overnight, one or more of the Big Five would be broken down into smaller companies that would compete with each other — opening up room for startups or new businesses to enter the market.
These new companies could generate further business in the form of companies supporting the tech industry.
For example, new ecommerce businesses may need to partner with marketing agencies and packaging companies. Other startups may need to work with business lawyers who understand the different business structures available and their advantages and disadvantages.
The companies that come after the breakup would also have significantly less power over consumers. They would be less likely to have the power and access needed to gather massive amounts of data on any individual consumer.
Smaller platforms are also less likely to benefit from anti-competitive behavior, as consumers and vendors could both turn to other platforms as needed.
At the same time, consumers may also face rising prices. Platforms like Amazon have an immense amount of leverage and large supply chain networks. These resources allow them to more effectively negotiate with vendors and store items closer to where consumers live. Smaller merchants may struggle with higher operating costs and longer delivery times.
Tech industry research and development may also become much slower. Companies like Alphabet and Apple have the resources to invest massive amounts of money into cutting-edge research on topics like AI and quantum computing. Smaller companies may not be able to achieve as much as these tech giants.
The growing power of the Big Five has many arguing that the companies should be broken up.
Legislation or an antitrust lawsuit could break up these companies, potentially having a major impact on the tech landscape. Overnight, we would likely see major changes — probably in the form of new companies and more competition, but also rising prices and slower industry research.