Should the U.S. government break up big tech?

Economic and tech experts debate the pros and cons of breaking up tech giants like Meta and Amazon.

As a bidding battle ensues between Netflix and Paramount for Warner Bros. Discovery, many have raised antitrust concerns about the consolidation of the movie industry, yet it isn’t the first industry to see a handful of big players start to dominate the market through mergers and acquisitions. As major tech companies like Apple, Amazon, Meta, and Alphabet gradually acquire and absorb emerging players, including potential competitors, the federal government has brought several antitrust lawsuits against them over the past few years.

To debate whether the U.S. government should break up major tech companies, The Hopkins Forum, a live debate series from Johns Hopkins University and Open to Debate, recently brought four experts to the Hopkins Bloomberg Center to discuss the topic. Explore their arguments on the pros and cons of breaking up these tech giants.

Reasons not to break up big tech

Arguments against the breakup of big tech companies focused primarily on economic factors and precedent set by the consumer welfare standard, which has been the foundation of U.S. antitrust policy for more than 40 years. It evaluates whether business actions or mergers would harm consumers. Experts arguing this position said this standard should continue to guide antitrust and competition policy.

It would weaken the consumer experience

Under the consumer welfare standard, “the case for breaking up big tech collapses,” said Geoffrey Manne, president and founder of the International Center for Law & Economics. He pointed to prices.

“Digital services are a deflationary force,” he said. “Search is free. Maps are free. Two-day shipping has revolutionized logistics. The price of complaining about big tech on big tech platforms? Also zero.”

Jennifer Huddleston, senior fellow in technology policy at the Cato Institute, argued that consumers could also lose certain product features like Amazon Prime two-day shipping or integrated search results. She also said consumers could see fewer new product launches, and cheaper distribution options for small businesses could disappear.

“Our opponents essentially promise a world without downsides, where you can break up the phone in your pocket, and somehow it still works just as well,” Manne added. “Their case relies on pretending these tradeoffs don’t exist or simply aren’t that important.”

“Digital services are a deflationary force. Search is free. Maps are free. Two-day shipping has revolutionized logistics. The price of complaining about big tech on big tech platforms? Also zero.”

– Geoffrey Manne, president and founder of the International Center for Law & Economics, on why big tech doesn’t violate the consumer welfare standard

It would stifle innovation

Manne and Huddleston said breaking up tech giants would also stifle innovation.

“We can’t reduce this debate to a ‘big is bad, and small is good’ mindset, because the reality is that for our tech ecosystem to function, we’re going to need mergers and acquisitions,” Huddleston said. “We’re going to need small players and large players. It can’t be as simple as one or the other.”

In addition to investing in improvements to their existing products, larger companies also have the resources to heavily invest in emerging fields like AI and quantum, they said. Without those investments, innovations from other players may not even have the infrastructure to get off the ground.

“But if you break up a company, you may disperse those resources in ways where we’re not able to be the global leader or be globally competitive when it comes to some of these really cutting-edge technologies,” Huddleston added.

The markets, not the government, should decide the fate of a company

“If we’d been having this debate 20 years ago, we would have been talking about ‘Is Myspace a natural monopoly?’ How Yahoo had won the search wars,” Huddleston said.

In this way, she argued, tech giants may seem mammoth now, but a new and disruptive player could still enter the market.

“What we know is that oftentimes regulators’ crystal balls are broken,” Huddleston said. “They don’t know how that market’s going to evolve or when it’s going to evolve.”

And breaking up big tech could alter antitrust precedents in other sectors, she said.

“This isn’t just about tech,” she added. “This is about what role can the government have in the American economy overall.”

Manne added that some arguments for breaking up big tech focus on doing so to address specific concerns outside of economics, such as privacy or content moderation. These, he said, should be handled with separate laws outside of antitrust.

Reasons to break up big tech

Advocates for breaking up big tech explored how this would impact people not just as consumers, but as citizens, too, citing economic and political reasons to decentralize power in the tech sector.

It would be better for innovation

More competition begets more innovation, serving as “the engine of American growth,” said Bharat Ramamurti, founder of The Bully Pulpit and former deputy director of the National Economic Council. He cited past examples in which the U.S. government recognized major firms were so powerful they stifled competition in their industry, such as the U.S. railroads in the 1900s, Standard Oil in the 1910s, Hollywood studios in the 1940s, and AT&T in the 1980s.

Big companies are able to “exercise monopoly power” to maintain dominant positions in their market and only make minimal improvements to their products, Ramamurti said. When they also own the core infrastructure of the digital marketplace, they act as gatekeepers that dictate the rules for how other players operate in it.

“There are a few roads to market, and these guys control them,” said Matt Stoller, director of research at the American Economic Liberties Project.

“There are a few roads to market, and these guys control them.”

– Matt Stoller, director of research at the American Economic Liberties Project

It would be better for the economy

In addition to stifling innovation that can boost the economy, tech giants also harm consumers, Ramamurti said.

“There comes a time when the concentration of power means that the consumer doesn’t really have that choice anymore, and it’s up to the government, and up to us as citizens, to decide together that we need to make this change,” he said.

When a few major players control vital infrastructure, the concentration of power also creates vulnerabilities, he added, pointing to the Amazon Web Services outage in October that caused widespread disruptions for banking, airlines, hospitals, and more.

It would be better for democracy

Consolidation of power is dangerous both politically and commercially, as it can beget authoritarian actions, Stoller said. When big tech companies consolidate their market power, they are not only able to stave off rivals, but they also begin to grow their political power and gain the ability to sway the government in their favor.

In his 10 years working between the Senate and the White House, Ramamurti said lawmakers couldn’t ever pass a comprehensive data privacy bill despite public and bipartisan support. He pointed to one key reason why.

“Because extraordinarily powerful tech firms are able to use a variety of political tools—not just lobbying, not just campaign spending, but soft and hard power—to basically stop the types of privacy protections that we, collectively, the American people want to impose,” he said. “My main argument about breaking up these firms isn’t necessarily political, but we should be clear-eyed that the political impact that they have as one giant firm, as opposed to several different firms, is significant.”

Still, in Ramamurti view, breaking up this political power is “a necessary step” to achieve other protections like data privacy.