Breaking Up Big Tech: Lessons from AT&T

Abstract

Opinions by experts on whether the breakup of Big Tech is a valuable and viable solution range from one end of the spectrum to another. Despite strong advocacy by some to break up Big Tech companies as the best solution to the competition issues present in the technology sector, these proposals are often stated in basic terms with little specificity. Likewise, opposition to breaking up Big Tech often cites administrability by the courts as a key obstacle but does not provide specificity as to why this undertaking is out of the court’s abilities. This paper explores whether a breakup of the “Big Tech” companies is feasible given the unique nature of the technology business. Since characteristics like zero-price business models and advantageous network effects are central to today’s technology companies but were not major considerations during the last breakup in United States antitrust history—the divestment of the Bell Operating Companies from AT&T in 1984—these are novel factors that must be taken into account when evaluating any proposal to break up Big Tech. This paper also uses specific examples from the business models of each of the four Big Tech companies to determine how a division of resources in a breakup could hypothetically affect those operations. Based off of those scenarios, the paper draws inferences on whether or not a structural remedy like a breakup or spinoff is advisable and whether or not the resulting companies would be able to function properly in the market after the divestiture. Since there has been so much recent endorsement for utilizing structural remedies in the current Big Tech federal antitrust lawsuits, advocates should appropriately analyze the mechanics of breakups and spinoffs and the potential effects they could have on companies and consumers alike.