The Historical Context of Breaking Up Tech Giants
The debate over breaking up giant technology companies has resurfaced in recent antitrust trials. The last significant instance was a quarter-century ago when Microsoft was found guilty of stifling competition in personal computer software. A Federal District Court initially ruled that Microsoft should be split into two separate entities: one for its Windows operating system and another for its Office productivity software and other applications. However, this decision was later overturned by an appeals court, which cautioned that breaking up a company is “a remedy that is imposed only with great caution, in part because its long-term efficacy is rarely certain.”
Recently, the issue has come to the forefront again in two separate Washington courtrooms. The Federal Trade Commission (FTC) has argued that Meta’s acquisition of Instagram and WhatsApp constituted an illegal monopoly in social media, seeking to force Meta to divest these platforms. Similarly, the Justice Department is pushing for Google to be broken up due to its monopoly in internet search.
“Divestiture can be an entirely acceptable remedy, depending on the severity of the harm,” noted William Kovacic, a law professor at George Washington University and former FTC chairman. “But it can be risky surgery.” The courts have long grappled with the appropriate response to anticompetitive behavior by dominant companies. As Justice Robert H. Jackson wrote in a 1947 Supreme Court ruling, if a court’s solution doesn’t foster competition, the government “will have won a lawsuit and lost a cause.”
The current trials highlight the ongoing challenge of addressing monopolistic practices in the tech industry. The outcomes of these cases could have significant implications for the structure and competition within the digital marketplace.
