A Google Breakup Could Be Like Old AT&T

Media

Published: September 23, 2018 8:23 am

Last Updated: January 11, 2020 5:29 pm

Could Google parent Alphabet Inc (NASDAQ: GOOG) be broken into pieces? Could Facebook Inc (NASDAQ: FB) suffer a similar fate? A look back at the history of tech and telecom companies says the answer is “yes”. The best example is the breakup of AT&T, based on a 1982 court ruling. The action was due to a series of U.S. law suits which went back as far as 1974. Microsoft Corp. (NASDAQ: MSFT) nearly faced a similar challenge in 1999.

Bloomberg reports that The White House may issue an executive order which would trigger a series of antitrust investigations by U.S. government departments and agencies. The basis of the attacks may be that Google controls too much of the search business in the U.S. and uses this to support its Android operating system which supports other products like Google Maps. In Facebook’s case, it is the largest social media network by far and dwarfs competition like Twitter, Inc. (NYSE: TWTR).

Another reason Google and Facebook’s dominance could cause real government scrutiny is that between them they control two-thirds of the U.S. digital ad market. Google’s share is estimated at 37% and Facebook’s at 20% according to research firm eMarketer. The balance of American media which relies on online advertising for their businesses to survive are pressured enough that many have watched their margins disappear and seen the future of their businesses threatened.

AT&T was broken into seven regional companies and a new AT&T which kept long distance services and the research operations of the old company. A break up of Google could include a spin-off of operations like YouTube, the largest video site in America, Alphabet’s Android operating system which controls over 80% of the market share in its sector, and smaller businesses which include Google Maps and the Chrome web browser.

Does It matter that an investigation of Google and Facebook may happen in 2018 while the AT&T one happened in the late 1970s and 1980s? If the U.S. court system determines that either is a monopoly, then almost certainly not.

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