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The intent of an acquisition ban would be to encourage companies to split themselves in order to maintain the ability to acquire technology. The reasoning seem
by ethbro 8y ago
The intent of an acquisition ban would be to encourage companies to split themselves in order to maintain the ability to acquire technology.
The reasoning seems simple enough -- if you obtain a dominant market position through hard work and a superior product, you currently have no disincentive against using the proceeds of that position to expand into new products.
That superior companies should be able to obtain monopolies in one category is a debatable good.
That they should be able to use their monopolies to expand into new categories seems wholly without merit.
If Amazon Basics wants to compete against Diapers.com, or Google Docs with Microsoft Office, or Facebook against Snapchat, then they should do so on the merit of their offerings, not simply by how much of their parents' money they can burn to buy marketshare.
Recognizing that the largest corporations have an inherent, unfair advantage in expansion, disincentivizing them seems like a logical way to create a more competitive, diverse, and freer market.
- mikhailt 8y agoI’m very curious about this idea, is there any good resource you can recommend on this? How does splitting companies help? I don’t understand the value or the point of this, giving the history of Ma bell and they ended up being multiple larger bells in the long run. Is the split intended to require regulation reviews when someone want to merge or purchase companies later?
- ethbro 8y agoAny split would be self-enforced. The ban on acquisitions would be the impetus to stay under the market cap. The article specifically notes that the Bell split was a bad model, as it just created multiple local monopolies. As a shareholder, I don't particularly lose as now I own stock in Google Search + Google Maps + Android (or whatever combo). Or corporations decide they want to stay big... but can no longer defensively acquire prospective competitors. Which seems to cleanly solve the problem of "No one aspires to be the next Apple / Google / Facebook, they simply want to be bought by them." It would depress valuations (as there wouldn't be a reliable acqu-exit), but that might not be such a bad thing either.