Jan W. Illens

Breaking up Google is a terrible idea with horrible chain reactions of events which have a very high potential of destroying small businesses and small developer's livelihoods.

There, that is the summary of my thread. If you're pressed for time, that is what I will leave you with. But if you have some minutes to spare... allow me to show you how the DOJ considering breaking up Google is another way of saying "blowing up SMEs into oblivion".

Let's begin.

Aug 14, 2024 at 4:39pmWeb
Show threadJan W. IllensAug 14, 2024

What does breaking up a company even mean?

Breaking up a company in the context of a DOJ-ordered antitrust action generally means legally mandating the company to separate its various business units or subsidiaries into independent, standalone entities. The goal of such a breakup is to reduce or eliminate "monopolistic power", increase competition, and prevent "anti-competitive practices" that harm consumers and the broader market.

Show threadJan W. IllensAug 14, 2024
*Divestiture of Business Units*
Separation into Independent Companies: The most common form of breakup involves forcing the parent company to divest certain business units or subsidiaries, turning them into independent companies. These new companies would operate separately from each other, without the control or influence of the original parent company. For example, if Google were broken up, its search engine, advertising platform, YouTube, and Android could be split into separate entities.
Show threadJan W. IllensAug 14, 2024
Sale to Third Parties: In some cases, the DOJ may require the company to sell specific parts of its business to third parties, such as competitors or private investors, rather than simply spinning them off into new companies. This is intended to ensure that the market remains competitive and that no single entity retains excessive market power.
Show threadJan W. IllensAug 14, 2024
*Structural Remedies*
Preventing Re-Monopolisation: The DOJ may impose conditions to prevent the newly separated companies from merging back together or from engaging in similar anti-competitive practices in the future. This could involve restrictions on future mergers and acquisitions or rules governing how the new entities can interact with each other and with competitors.
Show threadJan W. IllensAug 14, 2024
Governance and Management: The DOJ might also impose specific requirements on the governance and management of the new entities to ensure they operate independently. For instance, the new companies might be required to have separate boards of directors, independent management teams, and distinct corporate governance structures.
Show threadJan W. IllensAug 14, 2024
*Legal and Regulatory Oversight*
Court Supervision: The breakup would typically be overseen by a federal court, which would approve the specific terms of the breakup and monitor compliance. The court might appoint a monitor or trustee to oversee the divestiture process and ensure that the breakup is implemented fairly and effectively.
Show threadJan W. IllensAug 14, 2024
Ongoing Antitrust Regulation: Even after a breakup, the DOJ and other regulatory bodies would continue to monitor the newly formed companies to ensure they do not engage in anti-competitive practices or attempt to re-establish a monopoly position in their respective markets.
Show threadJan W. IllensAug 14, 2024
*Market Impact*
Increased Competition: The primary goal of breaking up a company is to increase competition in the market. By creating multiple independent companies, the DOJ aims to prevent any one entity from having too much control over a particular industry. This could lead to more choices for consumers, lower prices, and increased innovation.
Show threadJan W. IllensAug 14, 2024
Potential Disruption: While the intent is to promote competition, a breakup can also lead to short-term and even long-term market disruptions. Consumers and businesses that rely on the services of the original company might experience changes in service quality, pricing, or availability as the new entities adjust to operating independently.
Show threadJan W. IllensAug 14, 2024
Speaking of market disruptions, let's look at the most modern version of this action taking place. I got a bunch of letter for you, so you tell me if they mean anything to you. TAT&. Or AT&T, can't remember. It is such a small company now that I won't be able to tell you what the correct spelling is. /s
Show threadJan W. IllensAug 14, 2024
Ah yes, AT&T. The DOJ’s most famous breakup case in the modern era was against AT&T, which held a monopoly over telephone service in the United States. The case began in 1974 when the DOJ filed an antitrust lawsuit against AT&T, alleging that the company was using its monopoly power to stifle competition.
Show threadJan W. IllensAug 14, 2024
In 1982, AT&T agreed to a settlement that resulted in the divestiture of its local exchange service operations. This led to the creation of seven independent regional companies, known as the “Baby Bells,” while AT&T retained its long-distance service and manufacturing arms.
The breakup of AT&T is considered one of the most significant antitrust actions in U.S. history. However, some eventually reconsolidated through mergers over the following decades.
Show threadJan W. IllensAug 14, 2024
Did that go done without setbacks? Oh, hell... NO. Before the breakup, AT&T provided a fully integrated service from long-distance calls to local calls and equipment. There were concerns that breaking up the company would lead to a disjointed and less cohesive customer experience, with the “Baby Bells” focusing on local service while AT&T continued with long-distance service.
Show threadJan W. IllensAug 14, 2024
And yes, there was significant disruption in service integration as customers had to deal with multiple companies for different aspects of their telephone service. This led to confusion and inconvenience for some users, particularly in terms of billing and customer support.
Show threadJan W. IllensAug 14, 2024
The breakup lead to higher costs for consumers due to the loss of economies of scale. As was feared, the smaller companies would be less efficient and that the competition would not be sufficient to keep prices low. Costs increased significantly for certain services, particularly long-distance calls. It wasn't until VOIP emerged that these problems were fixed.
Show threadJan W. IllensAug 14, 2024

Another major concern was that the breakup would lead to a decline in service quality. This was particularly worrying for rural areas where maintaining high-quality service was more challenging.

Initially, a lot of regions experienced a decline in service quality, especially in areas that were not as profitable for the newly formed Baby Bells. However, as competition and regulatory frameworks evolved, many of these issues were addressed, and service quality eventually improved in most areas.

Show threadJan W. IllensAug 14, 2024
There were fears that the breakup might stifle innovation in the telecommunications sector, as the new, smaller companies might not have the same resources to invest in research and development (R&D) as AT&T.
And initially it did slow down some innovation efforts. Only after the rise of mobile technology, the internet, and new service providers innovation picked up again. People argue that mobile internet wouldn't have been so big if AT&T wasn't broken up first.
Show threadJan W. IllensAug 14, 2024
Regulating a single large company was seen as more straightforward than overseeing multiple smaller companies. There were concerns that the breakup would lead to regulatory challenges and increased costs of oversight.
The regulatory landscape did become more complex, with multiple companies requiring oversight and coordination. Tax dollars can be printend anyway, so why would it matter?
Show threadJan W. IllensAug 14, 2024

Don't get me wrong, I do not defend or attack any side here. I just want people to realise what the effects were on society, technology, government, tax money, consumers, business and more... when you break up a company on the scale of AT&T. Even today.

Speaking of today, how much more impact would something like that have today? How many small business rely on parts of Google's services to find new customers or users of their app etc.

Let's find out.

Show threadJan W. IllensAug 14, 2024
While there were valid concerns at the time, the long-term effects of the AT&T breakup were generally seen as positive. It led to increased competition, which spurred innovation, improved services, and ultimately lower prices for consumers. However, the transition period did come with challenges, including temporary declines in service quality and increased costs in certain areas.