Is big tech too big? Do companies like Facebook, Google, Amazon, and Apple represent monopolies that distort markets? Or are they just giving consumers what they want?
In recent months, calls to “break up big tech” have been growing louder in the United States. Meanwhile, on this side of the Atlantic, the European Union has been levying multi-billion euro fines in an effort to curb anti-competitive practices. However, doubts have been raised about whether EU fines are really forcing tech giants to change their behaviour, or whether they are simply now considered part of the cost of doing business in Europe.
Technically, the EU has no direct power to break up tech companies if they are US-based. However, it could restrict a company’s ability to operate in the European market unless they divest part of their operations. In 2001, the European Commission successfully blocked the merger of two US-based companies, General Electric and Honeywell, despite the deal having received a greenlight from US antitrust authorities. Whether a breakup would play out in a similar fashion (especially given a more protectionist President in the White House) is an open question.
What do our readers think? We had a comment sent in from Davide arguing that big multinational companies clearly have monopolies and are retaining their dominant position by buying up any start-ups that could grow into competitors. So, at what point does the EU say: “The fines clearly aren’t working, we need to consider breaking up some of these big tech companies”?
To get a reaction, we put Davide’s comment to Margrethe Vestager, outgoing European Commissioner for Competition. How would she respond?
For another perspective, we put the same comment to Michael A. Cusumano, Sloan Management Review Distinguished Professor at the MIT Sloan School of Management, and author of The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power. What would his response be?
My response is that we always need to be careful when we break up companies. One of the features of the platforms he’s talking about is that they use one business to subsidise another business. So, for example, Google gives away software for operating systems. So, if you take away its ability to do search and sell advertisements, then it’s going to have to sell the software for smartphones, and that would make smartphones more expensive.
In the case of Facebook, they’ve acquired Instagram and WhatsApp as well as the primary Facebook social network. So, in that case, I agree, there’s maybe too much messaging power that has gone to Facebook. So, in some cases I think I am in favour of breaking up some of these companies or preventing them from acquiring startups in a similar line of business. In other areas, where there’s strong synergies across the businesses or you have a free service being funded by a paid service like ads, I think you want to be more careful before you break up companies.
Should the EU break up big tech companies? Or should it rather try to make the data companies own more open? Let us know your thoughts and comments in the form below and we’ll take them to policymakers and experts for their reactions!
Apart the fact that certain services (like Facebook, Twitter or Youtube) are defined by their spreading and popularity I don’t think it’s going to be an easy task. After all EU didn’t even managed to create a real market competition in services like electricity, gas, water or garbage disposal providers.
The EU should create big tech companies.
In this instant, the EU & Margrethe Vestager are on the right track! Good job!
Why is it that 15 out of the 20 biggest global tech companies are from the US? The EU has only one (1)! Soul searching! Surely, this EU “tech- deficit” has to be addressed urgently!
Breaking up? The EU has no direct jurisdiction (competence) to break up any foreign registered company- be they US, Chinese etc- but:
“Google was fined recently $1.7bn for strangling competition in the advertising market.” The EU will hopefully use such and similar income from its anti trust legislation to incentivise growth in the EU tech industry- not waste it on EU bureaucracy.
Why not consider using the “penalty income” to attract and offer special deals to the brightest and the best from the US Silicon Valley, support tech innovation & tech education at home to close this obvious gap and give the EU economy a push?
Urgently scrutinize and stop selling home grown top tech companies to the Chinese!
Tech companies would probably have a better chance of breaking up the EU at this point in globalization.
They can try. Multinational companies now have as much if not more power than any country’s government.
Does it still completely count as a US based company, when all of their main financial offices are here in the Netherlands.. Since we’re a tax haven…
As long as the ultimate parent Company is in the U.S., yes. Same way the IRS looks at it.