Something very interesting is happening right now in the United States (US).
The CEOs of some of the largest US tech companies are testifying before an antitrust hearing in the US House of Representatives.
Yes, Facebook’s Mark Zuckerberg, Alphabet’s Sundar Pichai, Jeff Bezos of Amazon.com and Apple’s Tim Cook are fronting a congressional committee examining whether these companies should be broken up using US antitrust laws. It’s quite the show.
What are antitrust laws?
‘Antitrust’ is an American term that we would translate into ‘anti-monopoly’. The US has had antitrust laws for more than a century, and they have been wielded once in a way that impacted the world.
More than a century ago, the Standard Oil empire of John D. Rockefeller was determined a monopoly and forced to break up into several smaller companies.
Incidentally, these companies now form most of the major oil companies in the world today. It’s also worth pointing out that the antitrust process massively increased Rockefeller’s wealth.
Will this mean a big tech breakup?
Well, it can’t be ruled out yet. The tech company CEOs have been peppered with tough questions.
The US congressional committee noted that Facebook purchased Instagram back in 2012 because it saw the then-fledgling company as a potential rival.
It noted that Apple charged a substantial fee for third-party transactions on its App Store platform.
It criticised Alphabet for curating a “walled garden” of the internet and “weaponising” its Google search function.
And the committee accused Amazon of being misleading when Bezos denied the company used data from third-party sellers to boost sales of its own products.
The accusations all point to the misuse of market position and power. And that is technically grounds for antitrust action (potential tech breakups).
All in all, it has been an episode of high drama.
But I don’t think too much will come of these hearings.
Even if it does, and Facebook was split into Facebook, Instagram and Whatsapp, or Alphabet into Google and YouTube, what happened with Standard Oil shows this could lead to even more wealth for the company owners.
However, if even one of these big tech companies is broken up, it will be a momentous day. Watch this space!
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Alphabet (A shares) and Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, and Facebook and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, and Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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