Breaking Up Big Tech Is Hard to Do

Innovation depends on large companies’ teams and shared technologies

By William Rinehart. He is director of technology and innovation policy at the American Action Forum.

"Here’s the problem: Breaking up tech companies means that the government would have to split up their teams and their underlying technology. It would also require a legal and regulatory system to keep each targeted company separate from the others’ markets. These restrictions would pose challenges for any company. But for highly integrated tech firms, they’d be a death sentence.

Google and Facebook rely on flexible teams that cross the normal divisional boundaries to solve problems. These multipurpose teams drive their firms’ productivity; breaking them apart would risk killing the golden goose. By encouraging coordination among their internal departments, the tech titans have developed complex and constantly shifting organizational webs. This structure would frustrate any Standard Oil-style trustbusting effort because there are so few natural breaks within the companies. Splitting up these firms would require government officials to go cubicle by cubicle—a difficult and draconian move.

Trustbusting would also require breaking up the companies’ technologies. Facebook has developed its own suite of software to address unique problems dealing with vast troves of data: BigPipe to load pages faster, Haystack to store photos efficiently, and Unicorn to search its social data, among others."

"Ev Ehrlich, a former undersecretary of commerce for economic affairs, has proposed breaking up big tech companies by spinning off their ad networks into a new company. But this move would set the industry back two decades.

Tech platforms struggled to raise revenue until they developed large, national advertising networks. “We really couldn’t figure out the business model,” remembers early Google investor Michael Moritz in a 2005 book on the company’s beginnings. Google turned its first profit only after it cultivated a dominant advertising position. Tearing apart its advertising base would destroy its value.

Breaking up these companies would also stymie innovation. The new firms formed from the titans’ components would be barred from straying into each other’s services, but many would likely be unprofitable on their own.

YouTube, for example, is widely believed to be unprofitable, but it is currently supported by Google’s other operations."

"Economics professors from Stanford and MIT have shown that getting productive ideas to the market has become more expensive. So rather than limiting innovation as their critics allege, large tech companies have picked up the slack, using their size and profitability to underwrite projects that might fail on their own."