How would a break-up of big tech work?
The news about breaking up the big tech has been making rounds on and off for some time now.
It was not a very long time ago when Facebook, Google, Amazon, and Apple did not even exist. And today, these companies have completely taken over all our lives.
Given the gigantic size of these companies and the grand market share they own, it is no shocker that the economic experts and government organizations have been debating breaking up the big tech companies.
With all the companies battling with the anti-competition watchdogs of various jurisdictions, it is a good time to look at how a break up of these big technology companies will look like and what does it mean.
Why the break-up is being discussed?
One way to understand what a post-break-up world will look like is to see why such a need to disintegrate the big tech surfaced in the first place.
The answer is simply that these companies are just “too big.” The mere size of these companies is enough to crush any competition that may want to enter their markets. The big companies have squeezed away all the breathing space for small businesses.
There is another interesting aspect to the working of these big companies. Look at Facebook and Instagram who prima facie look like wrestling each other for market share.
But the truth is that they are arms of the same giant Facebook. What should intrigue one more is how Facebook got away with buying out its competitors.
Another accusation against the big tech, which is more severe than being ‘big’ is the manipulation of their consumers. Violation of privacy, collecting personal data for third parties, and targeted advertising has raised major concerns against the big sharks.
Big tech has power over all of our personal lives, our democracies, and our economies, and without a break-up, the repercussions of this enormous power are far-reaching.
What can be expected if the fragmentation does happen?
Breathing space for small businesses
Should the break up of big tech happen, small businesses will get a chance to enter and compete in free and fair markets. There won’t be a giant company in a forever-combat mode, ready to hunt down any attempt to counter the monopoly.
Such competitive markets are essential for boosting innovation and best practices among the companies and allow them to grow at a healthy pace.
De-mergers of some anti-competitive acquisitions
Over the years, the big techs have had some controversial take-overs like Facebook taking over Whatsapp or Amazon taking over Zappos.
The United States Federal Government is specifically looking to unwind such mergers in an attempt to reduce the size of the companies and boost competition.
Freedom to choose
With more businesses getting an entry into the markets, the consumers will get an opportunity to choose whose product they prefer.
This does not mean that you will lose your Facebook Friends or your Prime access to Amazon. The companies will now be fighting for you to choose them over the competition and that they will be pushed to adopt more user-friendly approaches.
Stricter compliance with privacy laws
With post-break-up pressures of competition, there won’t be any getting away with everything that these big techs have gotten away with in the past years. The companies will be held accountable more easily by their users as they have strong competitors to switch to.
Such a threat to the growth of the company will act as a means of checks and balances to its abuse of power.
Is a break-up all good for everyone?
While smaller companies get a fighting chance in the market, there are also small businesses that stand to lose much. Amazon has single-handedly provided a platform for small enterprises to sell their product on its e-commerce platform.
Similarly, where the consumers stand to get the benefit of choices, at the same time, there is a chance of a rise in prices. The large companies have the liberty to provide their product at a cheaper to no charge at all.
When did you ever have to swipe your card to use Google or send a friend request on Facebook?
A caveat to all these predictions is that no one can for sure tell what will happen. History has witnessed that after the dissolution of big firms and companies, the field has seen competition for some time until a winner emerges again and takes away the market share of its competition.
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Frequently asked questions
1. What are the big tech companies?
- Technology companies Amazon, Apple, Facebook, and Google are often referred to as the Big 4 or the Big Tech who dominate their respective fields.
2. What does breaking up a company mean?
- Breaking up a company means division or splitting of a company into two or more independent companies. Most breakups of big tech companies occur in accordance with the mandate of the antitrust watchdogs.
3. What is an anti-competitive business practice?
- When a company engages in unfair means to keep its market position and profits intact and restrict any inter-company competition, the company can be said to be involved in anti-competitive business practices.
4. How does big tech affect the economy?
- With high technology and information services, big tech companies make significant contributions to the GDP.
5. How are monopolies broken up?
- The Government of the United States of America can legally break up monopolies through the Sherman Antitrust Act, 1890.