On Friday the Wall Street Journal reported that the US Department of Justice is considering an antitrust investigation into Google. This week, word has leaked that it's not the only company that has drawn the interest of federal antitrust investigators, with potential probes into Amazon, Facebook, and Apple as well. 

This comes after a small but vocal chorus of those who have already called for Facebook to be split apart and shareholders voting to split the CEO and Chairman roles at the company. Both of those initiatives have been rejected by the company. 

Congress gets involved.

Of course, Congress has decided to get in on the action, and the House Judiciary Committee says it is launching an expansive probe of the major tech industry players. Presumably, it's because lawmakers believe that the companies have too much control over our personal information, or are using their scale to exert undue influence over the markets they compete in.

Before we get too far, let's at least acknowledge that a major reason politicians are uncomfortable with tech companies amassing too much power is that it threatens their own. 

It's also important to note that while the tech industry heavy-hitters are often lumped in together, they are under scrutiny for different reasons. For example, Apple is a target because of its influence over the app ecosystem for its devices. Facebook and Google, on the other hand, draw criticism as a result of their use of the personal information of their users to target advertisements. 

Here's the thing: if the government decides to launch real antitrust cases against the tech industry, it's hard to see how there are any winners. 

The government.

Despite that several tech companies don't exactly have a great reputation lately, the government doesn't have the best track record of late in terms of antitrust cases. The last time the federal government really took on a tech company, it was an attempt to break apart Microsoft in the 1990s. Microsoft eventually prevailed on appeal, resulting in a slap-on-the-wrist settlement, and seems to be doing just fine today as the most valuable company in the world (at the time this column published).

I don't claim to be an expert in the political math, but perhaps it's enough of a win to spend millions of taxpayer dollars to simply wage the fight. 

Ironically, one of the biggest advocates of breaking up tech companies, Senator Elizabeth Warren (D-MA), uses the Microsoft case as an example of government action creating a competitive environment. An environment that allowed Google and Facebook to emerge and grow to their current state. A state at which point she now believes they should be broken apart.

Tech companies.

There's no doubt that the tech industry has problems on many fronts. From "fake news," to election security, to political bias, it's easy to pick on the big bad tech companies. It's also true that all companies are self-interested. They exist primarily to make money and a lot of that money that is about to be spent on armies of lawyers.

That's the thing, the tech companies-- even if they survive the drawn-out fight in front of them-- are likely to be battered due to the inevitable diversion of resources and attention. Instead of pouring into new products and innovative services that make the companies money by making customers happy, they'll be focused on a war that is likely to leave all sides with deep wounds.

Consumers.

An even more important question is "would it actually be better for consumers?" I'm on record as someone who believes Facebook and Google need to do a far better job respecting the privacy and personal information of its users, but I'm not sure that's a problem the government can solve.  

People clearly want to use the products created by these companies, and they willingly trade their personal information in exchange for free email and simple ways to share pictures of their kids or stay connected to their friends and relatives. All of which would likely look very different, and a lot less free, on the other side of an antitrust settlement. 

Consumers will benefit from better privacy controls and increased security of their personal information. That's not the same as "break apart the company and sell off the pieces."

Entrepreneurs and small businesses.

Millions of you run small businesses that depend on the platforms created by these companies. Whether it's selling on Amazon, making apps that are sold to iPhone users, or advertising on Facebook and Google, there are collateral implications to breaking apart these companies. 

Facebook isn't a valuable advertising venue without access to your customers and the tools to effectively reach them. The services you use from Google-- like business email, file storage, and analytics tools-- aren't going to be free when they're broken into five different companies that lack the scale and reach of the world's largest advertising platform.

These implications are both hard to predict and difficult to manage when you're trying to bootstrap your passion into a profitable business. The question is whether it'll actually help, or be a perfect example of Reagan's nine most terrifying words:

"I'm from the government and I'm here to help."

Published on: Jun 5, 2019
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