Published: July 2019 (5 Min Read)

Overnight we have heard that the US Attorney General and the Department of Justice are to investigate “widespread concerns” that have been expressed about “search, social media and some retail services online.”

No companies were named but the titans with which we are all familiar are those under consideration, and their share prices were weak as a result. Some of these companies’ shares are held by funds we own.

An investigation does not mean that they will be broken up. The focus will be upon whether their market dominance stifles competition and suppresses innovation. On the other hand, especially at a time when the Trump Administration is worrying about the potential loss of global leadership in tech business to China, the US might wish to protect its national champions.

“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said Assistant Attorney General Makan Delrahim of the Antitrust Division.

This might be a means of keeping the companies on the straight and narrow from a consumer’s perspective. It may also make it more difficult for these companies to buy up potential competitors which they have done in the past. If consumers benefit, then that would be a good outcome.

Corporate breakups have been rare in the US, and the investigations which precede them have taken a long time. The last major breakup of a monopoly was AT&T in 1982. In 2000 a federal judge ordered that Microsoft should be split up, but this decision was reversed on appeal.