How A Big Tech Breakup Would Create A Tech Industry Shake-Up

With the U.S. Department of Justice’s recently opened investigation of tech giants like Amazon, Facebook, Apple, and Google, the idea of big tech breakups has gotten one step closer to becoming a reality.

Typically, antitrust regulations are considered a liberal political move, but proposed breakups for tech giants have been gaining bipartisan political and public support. The FTC recently fined Facebook for $5 billion for privacy breaches, and the chairman expressed his intention to break up Big Tech. Antitrust investigations also recently opened against Google, and attorneys general in eight states are looking into an antitrust inquiry for Facebook.

The question that remains, though, is how proposed tech breakups would affect the giants’ smaller competitors.

However, consumer protection issues would not necessarily drive a big tech breakup, said Brian Hopkins, a Forrester analyst.

“It’s an antitrust issue. How powerful should a big company be?” Hopkins said. “What you’re seeing is a consolidation of power, and you’re giving these companies enormous power over the underlying fabric of our business.”

If a tech breakup were to happen, Hopkins said to expect a period of chaos, then reconsolidation as smaller platform vendors establish stronger positions.

Meanwhile, enterprise customers could end up paying more to AWS and Google. Right now, Amazon’s cloud service is the dominant one, but it subsidizes its cloud services with revenues from its e-commerce operations.

“It depends on what a breakup looks like, but the potential is there for prices to go up,” Alan Pelz-Sharpe, founder of the Deep Analysis consulting firm in Groton, Mass, said.

Just because the giants would be broken up doesn’t mean they would stop dominating in specific sectors. Even untethered from Google’s other apps, Google search would likely remain popular. Even disconnected from Instagram, it’s hard to imagine a world where Facebook is not a popular, omnipresent social networking tool.

Tech giants have begun lobbying in D.C., but the consensus for tech breakups is growing despite their efforts. Large companies have been a part of the global industry almost as long as industries have been around, but Colin Pape, founder of ShopCity.com, a blockchain-based local marketplace network, and Presearch.org, a search vendor, can’t see a company growing as big as Google again.

“It’s really mostly about the barriers to entry for competitors,” Pape said. “Google search is the most concentrated area for Google and its most important product as the gateway to all of their other options.”

Millions of businesses and people are affected by the practices of tech giants. However, increasingly, it looks like a shake-up is on the way.

 

Source: Search Data Management