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There's precedent to this in the USA. The US Government once passed regulations that caused one of the largest companies in America to break up into three small

• bjourne 8y ago
  But the companies will all still have the same owners. So one wonders if splitting them actually helps with anything?
  • jacobn 8y ago
    I don’t know about “help”, but it will still change something - over time the different management teams will diverge (in some sense), even if the shareholders stay mostly the same.
  • r00fus 8y ago
    Per Das Wiki [1]: "The government had little choice but to return service to the commercial airlines, but did so with several new conditions. The Air Mail Act of June 12, 1934, drafted at the height of the crisis by Black (and known as the "Black-McKellar bill"), restored competitive bidding, closely regulated airmail labor operations,[n 28] dissolved the holding companies that brought together airlines and aircraft manufacturers, and prevented companies that held the old contracts from obtaining new ones." [1] https://en.wikipedia.org/wiki/Air_Mail_scandal#Effects_on_the_airline_industry https://en.wikipedia.org/wiki/Air_Mail_scandal#Effects_on_th...
  • wpietri 8y ago
    It's a legitimate concern. After Standard Oil was split up, Rockefeller still arranged meetings of the heads of the now-separated companies. However as long as the companies are well regulated and publicly traded, I think the concern diminishes over time. Each manager has an incentive to look out for their own shareholders, their own bonuses. And if activist shareholders suspect one company is subsidizing another, they can happily buy the undervalued company, raise a ruckus (and maybe some lawsuits), and profit when the subsidies end.
• nabla9 8y ago
  Anti-competition law and it's interpretation has changed drastically in the US after Robert Bork's book 'The Antitrust Paradox' (1978). Reagan administration used it as their bible.
  • wybiral 8y ago
    Laws are fluid and can change back to respond to new situations.
  • pradn 8y ago
    Yes. Broadly speaking, the law went from looking at concentration as a bad thing on its own to only looking at whether consumer prices would be impacted. The prevalent idea now is that mega-mergers will reduce prices because of economies of scale. It also doesn't help that there seems to be academic corruption or at least conflicts of interest driving the new interpretation. https://www.propublica.org/article/these-professors-make-more-than-thousand-bucks-hour-peddling-mega-mergers https://www.propublica.org/article/these-professors-make-mor...
    • not2b 8y ago
      The law was not changed. The interpretation of the law was changed, as you describe, initially by Republicans but Clinton and Obama maintained the Republican interpretation.
    • conanbatt 8y ago
      Probably why a company like amazon has achieved elusive scrutiny is that they give consumers cheapest prices but squeeze suppliers. Suppliers most definitely hate amazons dominant position.
    • sytelus 8y ago
      This is classic example of short term optimization. Sure, prices can be lower now but it might stagnate there for long time because there is no competition allowed. If it is technologically feasible, competition would find the global optimal point eventually in longer term but monopolies will settle in local minima.
• devy 8y ago
  What about Ma Bell?
• ortusdux 8y ago
  We also broke up Ma Bell back in 84 and it looks like they are on their way to fully reuniting as an even larger monopoly. https://i.imgur.com/rMFqmbt.jpg https://i.imgur.com/rMFqmbt.jpg https://www.motherjones.com/politics/2019/03/att-time-warner-doj-donald-trump-monopolies/ https://www.motherjones.com/politics/2019/03/att-time-warner...
  • mywittyname 8y ago
    That's a different failure. The government should have never allowed for the subsequent mergers.
    • smacktoward 8y ago
      The price of liberty is eternal vigilance.
    • ortusdux 8y ago
      I agree. I don't understand the point of temporarily busting monopolies. With Bell, forcing them to diversify seems to have only made them stronger.
  • pitaj 8y ago
    Ma Bell wasn't created naturally at all. It's monopoly status was granted by the federal government. This is fundamentally different from Facebook, Amazon, etc. If anything, the large ISPs like ATT, Verizon, and Spectrum should be looked at, but solving the problems of ISP monopolization will take a lot more than just breaking up territorial monopolies into smaller territorial monopolies.
    • taurath 8y ago
      Why does it matter whether a monopoly is "natural" or not, let alone that the definition of "naturally" is sort of laughable given the legal framework put in place for our government is the economy in the first place? Just as you get a lot of government run monopolies with pure socialism, you get a lot of "market-driven" monopolies with pure capitalism. Both should be broken up.
• skrebbel 8y ago
  How would this work in practice though? Eg Amazon. Bezos is a major shareholder. Imagine splitting AWS from the retail arm, which I guess would be a sensible split point. If Bezos controls both, then what would really change? I'm not critical to the idea nor supportive - I'm just curious to learn more.
  • hangonhn 8y ago
    That was the case when Standard Oil was broken up and it's not a problem. The retail arm becomes free to get their cloud computing needs from others -- say Azure or Google. Bezos can't force them to get a worse deal at AWS simply because he owns the AWS. A lot of the arguments for breaking up companies come from this. It can make the components more efficient once they're freed from the shackles of being locked in. Likewise, the crappy parts of the big conglomerate can't coast on having a guaranteed customer. This is the whole point of capitalism. Monopolies are the anti-thesis of capitalism.
    • jonny_eh 8y ago
      Except the Standard Oil break-up was considered a failure. The new companies all reported back to Rockefeller. https://www.npr.org/sections/money/2019/02/15/695131832/antitrust-1-standard-oil https://www.npr.org/sections/money/2019/02/15/695131832/anti...
      • hangonhn 8y ago
        I don't think it's fair to say the break-up was a failure even if in the near term they still coordinated. In the long term, the oil companies competed with each other. Even if Rockefeller became wealthier, it only adds to the original point: breaking up monopolies unlock value for shareholders and increases efficiency. I highly doubt anyone in the main stream schools of economics would call the Standard Oil breakup a failure. That Rockefeller wasn't punished is immaterial to the breakup itself. The point here isn't to punish Bezos or anyone else. It's about efficiency and fairness. In that sense, that goal was accomplished. No single oil company today wields the power that SO once did. Also, those guys meeting up together at Rockefeller's house to coordinate would likely be illegal today and probably was back then too.
• Gpetrium 8y ago
  One of the perceived risks of breaking up the tech giants is that they will be at a competitive disadvantage to their foreign peers. The degree of competitive risk at the time of Boeing's split was perceived as lower. As long as Americans are ok with losing some areas of advantages, they should move forward.
  • walterbell 8y ago
    There are other regulatory tools to level the playing field with foreign companies.
    • node-bayarea 8y ago
      Dems/libs are fools when it comes to this. They never have the backbone to take on foreign Govts. I'm totally against this because we are in a globalized world and these companies need to be large and strong to out-compete with others across the world.
      • Despegar 8y ago
        Saying "we are in a globalized world" makes it seem like that is just the nature of things and not the outcome of specific policies taken by primarily the US in the post-WW2 era. Corporate concentration is against capitalism, and dealing with global competitors can be dealt with with the tools we already have, like the current administration is with trade policy.
        • Gpetrium 8y ago
          It is not as simple as it looks. Some degree of globalization already existed for tens of thousands of years, whether through colonialism, Asia-MiddleEast-Europe trade and many more. Even though there are ups and downs in the cycle of regional/global trade, it has continued to move towards more integration, especially due to technological innovations seen in the past 500 years. Nations that decide to close down in certain areas, may find themselves in a competitive disadvantage to peers making use of data, economies of scale, technology, labour, etc. This is something we have seen happen in history.
• lotu 8y ago
  The problem is this type of vertical splitting doesn't solve the problem of large tech companies. It's like treating a burst appendix with a kidney transplant. The problem of Amazon is that it is effectively the only online shopping place, and thus can act as a Monopsony in hiring it's workers for warehouses, splitting AWS out of that doesn't fix that problem. Maybe you could require that distribution centers be owned by separate companies. This might work but locally each Center would still be a Monopsony and thus cause the same problem. Maybe if you capped the size of distribution center you could force lots of smaller ones to be built, but at this point I worry that you are going to end up making shipping slower and more expensive. The problem of Google is they are very dominate in the Ads space splitting out the Ads portion into another company would not solve that. Facebook's problems is everyone has put their data in Facebook has friends in Facebook and feel compelled to keep using it. I don't see how splitting up the company into, Instagram, What's App, and Facebook solves the network effects of those apps. Splitting up tech companies is not a punishment to make the CEO feel bad or change their ways. It is a technique to change how we need the market works to benefit the large population. As such we need to think about how to split them, the effects, and most importantly if the effect achieves the intended result.
  • onlyrealcuzzo 8y ago
    If we had a progressive corporate tax, I think all the problems would sort themselves out. You want to build a trillion dollar company? Fine. Corporate tax rate of 50%. You're a small business with less than $1M in revenue. Cool. Corporate tax rate of 0%. Big companies will break up to take advantage of the tax code. Problem solved. Instead, the bigger you are, the harder you can lobby for tax breaks. Currently, if you're a $1M company, that sucks. You pay 20%+. If you're Amazon, you pay $0.
    • jamroom 8y ago
      I agree 100% and have long felt this is the right approach. Basically the bigger you get, the harder it gets to keep getting bigger.
      • 8y ago
• tmaly 8y ago
  I think it was Stigler, the nobel laureate, that had done quite a bit or research on monopolys and the effect of mergers and acquisitions on jobs. https://promarket.org/stigler-monopolies-competition-tough-weed-not-delicate-flower/ https://promarket.org/stigler-monopolies-competition-tough-w... It was back in 2001 that I remember reading a newspaper article on this