The courts are once again considering the possibility of breaking up a giant technology company, a decision that has not been revisited since Microsoft was found guilty of anticompetitive behavior 25 years ago. An antitrust trial involving Meta began recently, with the Federal Trade Commission arguing that the company had maintained an illegal monopoly in social media through its acquisitions of Instagram and WhatsApp. The Justice Department will also present arguments on why Google should be broken up to remedy its monopoly in internet search. Experts caution that while divestiture can be an acceptable remedy, it can also be risky surgery with uncertain long-term efficacy.
The goal of antitrust remedies is to create a competitive environment that leads to more new ideas, companies, innovation, and lower prices. This challenge has become increasingly significant as regulators seek to rein in the power of tech giants in various industries. Antitrust cases against companies like Google, Apple, and Amazon are currently ongoing, with potential breakups being the worst-case scenario for these companies. In the past, breakups have been effective in improving competition, such as the breakup of Standard Oil into smaller entities in 1911 and the divestiture of AT&T’s local phone business in 1982.
While a breakup is a structural solution that can shape markets and stimulate competition, there are alternative measures short of a forced sell-off that can also have a positive impact on competition. For example, IBM unbundling its hardware from software in the 1960s led to the rise of the commercial software industry and increased competition. Microsoft, in a settlement in 2001, agreed to restrictions that opened the door to new competition in browser software and search, which benefited Google. The current focus is on Meta and Google, with the possibility of orders to sell off certain assets if the government wins their antitrust cases.
In the recent antitrust trial involving Meta, the government accused the company of overpaying for Instagram and WhatsApp to maintain a monopoly in social networking, a charge that Meta denies. The potential remedy in this case could be a court order to sell off these assets. Similarly, in the case of Google’s internet search monopoly, the government has proposed remedies such as requiring Google to sell its web browser Chrome or spinning off its smartphone operating system Android. Google has pushed back against these proposals, arguing that they would harm consumers and is planning to appeal any court decisions.
Experts differ in their opinions on the effectiveness of breakups as antitrust remedies, with some supporting structural solutions as a clean and self-executing option to stimulate competition. However, any breakup order is likely to be appealed, and the higher courts have shown skepticism towards such remedies in recent years. The Supreme Court, in a 2021 decision against the National Collegiate Athletic Association, emphasized the importance of judicial restraint in antitrust matters, cautioning against judges acting as “central planners.” Despite these challenges, the courts will continue to grapple with the complex issues surrounding antitrust cases involving tech giants and the potential remedies to restore competition in various industries.
