Too Big To Fail, but Big Enough To Break Up?
Written By: Derek Stiles | April 28, 2021
The latter part of the twentieth century and the new millennium have witnessed the greatest technological wonders in human history. The past decade has literally reshaped society from social media, to e-commerce, mobile devices, and more. We are now a global community that runs solely on the currency of data.
For instance, with the advent of e-commerce giants such as Amazon, data has become the road to success. The retail giant uses algorithms that mine data to determine what people are buying, when they’re buying, and how they buy in order to drive sales through popular product types. This may sound entrepreneurial in spirit, but the outcome is a threat to businesses across the globe.
I think it is safe to say that we all enjoy the convenience of Amazon. However, as more and more products are created through data analysis, smaller businesses are pushed aside, unable to compete with the technology and horsepower that is Amazon.
Similar sentiments can also be applied to Facebook—the company that owns the world’s largest customer and prospect database. As Facebook now ventures into everything from Instagram, WhatsApp, marketplace functionality, and dating apps, at what point is enough actually enough?
It’s this type of power-imposed monopoly that is forcing the US government to take a closer look at these giants. For instance, within the past few weeks the FTC and the Justice Department reached a new agreement enabling the FTC to investigate Amazon and Facebook as it pertains to anticompetitive practices. And to add to the mix, the Justice Department is investigating the same potential issues with Apple and Google.
After all, this is not the first time we have experienced this in the US. In the 1970s and early 1980s, the US government found that AT&T and Bell were gaining a monopoly on business and broke up those companies into smaller entities.
If found guilty of such practices, what does it mean when the threat of corporate break-ups is introduced? How do corporate beak-ups impact the economy? With the weight that these corporations have, the influence on markets and more could be severely impacted, hurting investors and negatively impacting the economy. Conversely, it could also be great for the economy as consumers would have far more choices in services ranging from music to retail, e-commerce, social media, and so on. Additionally, it would give businesses more opportunity to partner with other entities.
Overall, it will be interesting to see how this plays out as it also sets a precedent for how big is too big when it comes to global business domination. Perhaps it will only be a case-by-case basis, or it has the potential to lay the groundwork for ceilings that cannot be broken. In any case, only time will tell.