Big Tech Will Not Be Broken Up – Here’s Why

Big technology companies have never had a
greater influence over our lives than they do now and this trend is only increasing. Unsurprisingly, alongside their growing power
comes the ever-louder public that cries out for antitrust litigation. But, unfortunately for the people, big tech
is not going to be broken up and in this video we’ll see exactly why they’ll get away
with it. This video is brought to you by Dashlane. Keep all your passwords safe by registering
with the link in the description. Before we dive into the specifics we first
have to understand how the law defines a monopoly and to do that we have to go back 150 years
ago to the end of the American Civil War. When you compare the late 1800s to today,
you’ll actually find a lot of similarities. After the war had ended, a slew of new technologies
appeared all at once and catapulted businesses into an era of rapid growth. Telegraphs were invented which allowed for
instant communication across the country, while the expanding rail gave industries nationwide
reach. In the span of mere decades, the companies
that emerged during this time of innovation would grow to tremendous sizes. Now, at the time the most convenient way of
legally structuring a large business was by using Trusts. In fact, they were so popular that America
had trusts for everything: there were meat trusts, rope trusts, whiskey trusts and you
name it. One of the largest trusts, which we’ve already
explored on Business Casual, was Standard Oil, owned by none other than the richest
businessman in history, John Rockefeller. Out of the 26 rival refineries in his hometown
of Cleveland, he bought 22 outright, including 6 in a 48-hour period. It was known as the Cleveland Massacre and
Standard Oil ended up controlling 90% of America’s oil through these types of deals. It took America three decades to muster the
political will to oppose Rockefeller’s dominance and it was President Roosevelt who finally
took up the challenge. In 1906, the Department of Justice began an
antitrust lawsuit against Standard Oil that was the first of such a grand scale and whose
ruling would determine the future of Antitrust in America. It took 5 years for a verdict to be reached
and it was: guilty. Standard Oil was in violation of the Sherman
Antitrust Act because, and this is key, it restricted trade and inhibited competitors. Thus, Standard Oil was broken up; interestingly,
however, this was just the beginning of an antitrust killing spree. During his presidency, Roosevelt would pursue
45 different cases, while his successor, William Howard Taft, would almost double the number
to 80. At the heart of most of these cases was the
desire to encourage competition, sometimes even if the company in question wasn’t even
close to being an actual monopoly. This trend continued well into the 1970s,
with some cases bordering on the absurd, like when in 1966, it was made illegal for two
grocery stores to merge even though they would have just 7.5% of the market. Another funny case came in just a year later
when the government stepped in to regulate the pricing of pies in Salt Lake City. It wasn’t until the arrival of Ronald Reagan
that this absurdity would finally come to an end; as part of his sweeping economic reforms,
Reagan also requested a full review of antitrust policy to see what made sense and what didn’t. The man who shaped Reagan’s antitrust reforms
was Robert Bork, perhaps the single most important scholar in antitrust history. In 1978 he wrote a book in which he challenged
pretty much all the assumptions of antitrust law that had dominated America for a century. In his eyes, some industries just have a natural
tendency to concentrate, thus forcing competition onto them could actually just be nothing more
than government protection of inefficient businesses, or in the political context of
the time, something eerily similar to socialism. The changes he proposed were fundamentally
simple: what really matters when asking whether a company should be broken up is not whether
it is too big, but whether the consumers would benefit. This principle came to be known as Consumer
Welfare and it became a viral idea that spread among lawmakers, politicians, and eventually
became one of the defining policies that helped elect Ronald Reagan in the first place. Under the new policies, big companies were
no longer inherently evil as long as customers were OK. It is under this new and revised antitrust
framework that our familiar tech giants would come into play, but this time we’re asking
different questions than the ones people were asking John Rockefeller: it’s no longer
whether Apple, Facebook, Google, or Amazon are too big. So, what are the questions that are being
asked? Legally speaking, the most important aspect
is whether a company has durable market power, with the keyword being durable: just having
a high market share alone isn’t enough to fit this definition: Google, for example,
owns 92% of the search engine market, and yet their competition is just one click away. Google can’t arbitrarily start charging
people a dollar every time they search for something because everyone would just leave. Google has market power now, not because they’ve
killed the competition, but because they’re simply better or more convenient. The exact same logic can be applied to Amazon
as well: yes, they might be the biggest player in e-commerce, but their market share is dependent
on them continuing to serve consumers well. The case with Amazon gets interesting when
you consider its suppliers, who have for years complained at the very aggressive practices
Amazon employs when negotiating with them. Since antitrust law focuses more on consumers
Amazon pretty much gets a free pass here, although even if it wasn’t so, Jeff Bezos
can easily argue that all the suppliers have plenty of different distribution methods if
they disagree with his policies. Where it gets tricky though is when we get
to Apple: of the companies we’ve mentioned so far, Apple has by far the smallest market
share; it’s phones account for only 20% of the global smartphone market. However, unlike Amazon or Google, competition
is not just one click away. The Apple ecosystem is intentionally designed
to lock users in, which in and of itself is perfectly fine; it’s normal for Apple to
have a monopoly on iOS. The problem arises from the way they leverage
this monopoly into a different market: that of digital content. You see, by forcing every single app developer
to use Apple’s store, which charges a 30% commission, Apple is effectively extracting
economic rent: it’s not increasing the value of the Spotify music or the Audible audiobooks
you listen to on your iPhone; no, it’s just artificially inflating the price of content
to the detriment of the consumer. There’s actually an ongoing lawsuit against
Apple for exactly this issue and it may very well force Apple’s hand, but at the end
of the day you can’t really break up the iOS ecosystem, so the best outcome here is
that Apple just get to charge a more reasonable commission on their app store. Of all the tech giants the one deserving the
most antitrust attention is Facebook and you can probably guess why: because the social
media market is so difficult to properly define and value, Facebook was allowed to acquire
what was effectively its biggest competitor: Instagram. Today, while the Facebook network itself is
starting to stagnate in the West, Instagram continues expanding everywhere; and yet, even
here the question of durable market power is difficult to answer because social media
really does just come and go, and the only way Facebook can exploit its power is by abusing
privacy. Thus, there really isn’t any case to be
made for breaking up any of the big tech companies, even Facebook, just because at the end of
the day consumers are no worse off under the status quo. The ultimate question we should be asking
ourselves is whether the antitrust framework Ronald Reagan gave us is adequate to evaluate
the trillion-dollar tech giants that dominate our daily lives. It’s difficult to imagine the current administration
reworking such an important part of the legal system, but you never know. What you do know, though, is that you should
be focusing on your online privacy now more than ever and luckily for you, services like
Dashlane exist to make this a little bit easier. With Dashlane, you won’t have to remember
complicated passwords for every single account you have online; instead, you can let Dashlane
generate and save all your passwords for you across all your devices, also protecting them
with a VPN service on top. It’s a great way to stay safe online, and
just so you can see what I’m talking about, you can get a free trial of Dashlane if you
register using the link in the description. Then, if you like it, and I’m sure you will,
the first 200 of you will get 10% off their premium service if you use the code ‘businesscasual’. In any case, thank you for watching. Make sure to subscribe and to follow me on
Instagram, where you can find teasers for my future videos. We’ll see each other again in two weeks,
and until then: stay smart.

Maurice Vega

100 Responses

  1. At 4:20, the comment about anti-trust actions being like socialism is complete nonsense. I don't know whether the author of the video is responsible or whether this is an accurate paraphrase of Robert Bork. But the point is not who is wrong, but why they are wrong.

    Regardless, it's the complete opposite of the truth. Socialism concentrates power in massive enterprises. This has happened in every society that has ever practiced socialism, whether we are talking about the Soviet Union or China under Mao or Nazi Germany.

    In each and every case the bureaucrats massively favored a system of very large enterprises. If you think about what is that motivates the socialists and how they think, it is inevitable that this would be the case.

    In Adam Smith's time, that man who first wrote down the moral and economic case for capitalism and began a worldwide transformation, a good part of his argument was about the economic harm created by concentrating too much power in the hands of too few people. In his time they weren't called 'trusts,' they were called monopolies. Monopolies sold by the government to the politically powerful.

    It's a funny thing about capitalism, but there is more than one way to do it, and the consequences of the different ways of doing it are profound. It's also odd, or maybe when we think about it, it shouldn't be, about how many people that have been successful as capitalists, are anti-capitalist in their attitudes and political beliefs. But then belief in capitalism is not a requirement for being successful in it.

    It could be that this is just more evidence, as if there weren't enough already, of how profoundly counter-intuitive capitalism actually is.

  2. In each correction of the US marketplace, there has been just one man driving it. From Sherman and Teddy to FDR, Truman and Reagan.

    America has various effective and fast means of changing legislation (by international standards). Congress, the supreme courts and the courts of the various states all play a part.

    The only two things we know for certain is that 1- the American Marketplace has changed every time it has been threatened and 2- it will do so again in the future. Expect big changes in the near future. Laws will change rapidly to accommodate these changes. Possibly these changes will happen sooner than we think.

  3. i been thinking; why would the govt stop its only and top chances on spying on its people and keeping world data.

    they wouldnt. big tech companies will be saved in a recession this time around before banks are even thought about

  4. too bad, because honestly when they start acting like shadow governments, trying to sway politics towards their narrative while posing as public open platforms; they need to fuck right off.
    Go to hell Google.

  5. Prbly if a bought and paid offical was in office then , but The President atm sees what harm they are currently doing and the proof evidence facts os everywhere , something will be done.

  6. You only are watching from a business side , you dont mention how the upper echlons of these companies are all Liberal spouting progressives , its hard to believe the bias isnt in the company , and thats why they will be targeted .

  7. I disagree but time will tell as the tech giants are slowly but surely adapting policies that narrows our choices which in time will lead to revolt as we can already see in the european union.

  8. You don't need Uncle Sam to rescue you from big companies you're voluntarily associating yourself with.

  9. I think you forgot to mention the influence these companies have on our elections and social thought in general. Meaning these cases in themselves are a whole new beast

  10. A big problem is, that for instance Amazon is selling server capacities and using that money to tamper prices. This is killing the competion, as they don't have the resources to compete

  11. TEchnology is a natural way for our species to evolve into God-Like creatures. Please don't listen to "treehuggers" – any technology, including the atomic energy, could be made better and safer. If we'd listed to leftist treehuggers then we would have no medicine, no physics, everyone will be burning firewood and driving ox cats

  12. Let’s not forget that the biggest monopoly in tech was Microsoft. Yeah now the likes of Google have given them a run for their money but don’t tell me that massive market share of Internet Explorer was because it was a better product. It was shady business practices that kept out the competition for years.

  13. The problem is the horizontal integration: Google controls Chrome and Android, and they use the defaults in their favour, like having Google as the default browser in Chrome and in Android. People doesn't change the defaults

  14. The internet and Big Tech is global so references to past U S measures against monopolies is not relevant
    There are other regulatory authorities than U S and they very well might take measures that break.power of Big Tech

  15. Insightful video…as always by Business Casual. Good start to the day and came away feeling I learned something new.

  16. I don't understand why people are acting like there is a big push to break up these companies just because the media and some government officials are pushing these ideas out into the public. What exactly are they doing to hurt people. There are billions of people around the world perfectly happy and content using these platforms and see a lot of benefit in using them. This can be seen by the their massive user bases. I love apple products and use youtube and google all the time and would be upset if they tried to hurt these companies so crappier products or search engines can compete. I don't use facebook or amazon much because I don't gain much benefit personally from them. This is why America may fall as a world power and be replaced in the future. If companies in other nations were having this kind of otherworldly success in such a rapid span of time, other nations wouldn't try to handicap them. Now we are crying about our own companies being too big. In a couple decades we will be crying about how unfair it is nations like China and India are surpassing us as the new super powers of the world. More energy is wasted punishing our own companies than companies in other nations that are stealing IP.

  17. My favorite thing is that the biggest of them all, Microsoft, has no current antitrust concerns. Coincidence?

  18. 4:14 oh thats absolutely true … and in those cases the state should run them or at the very lest they should be non profit organizations..

  19. 5:50 … or have better marketing … something that everyone convincingly skips over … you can bed a bad company sell worse products at higher prices than the competition … if you have the right marketing … just ask apple

  20. I usually love your content but i think this video misses the point on a couple key points.

    One click away isn't good enough to justify complete dominance of a market and the absolutely vast amount of personal data they have on consumers. There is no foothold from where competitors can attack because the sheer size and cultural force of companies like google. It sounds horrendously naive to think the one click argument holds up.
    In politics ppl say once there is a vote ppl can change the system and i can't see a distinction between that and what you are doing here

  21. Interesting set of arguments predicated on some rather interesting … assumptions.

    Anti-trust law is not about economics… it's about power. Always has been. As the FAANG group threaten to subvert government power through their confluence of intelligence, information processing, currency issuances, etc…

    Yeah – Uncle Sam will indeed stick his foot up their ass.

  22. Nothing about how AT&T, the bell system, was broke up, when there wasn't really a reason to break it up?

  23. Everyone loves to ignore one thing, history and human nature. The only reason this iteration of society is still standing is because of the immense amount of products being shoved into potential dissenters faces. The problem is that any instability that prevents that flow of products is going to result in the society ripping itself apart. The moment your quality of lives drop you will tear this all down inside of a week.

  24. Amazon will be ok since they work in the interest of the consumer whilst Apple tries to extract the most profit out of the consumer as possible whilst locking them in. Google will be fine since they also work in the interest of the consumer, whilst Facebook has major privacy issues predicated upon their social media monopoly and control of politcal narrative so they might be in trouble. Also, the real consumer is the companies who pay for advertisements on these platforms so they might club together. The ppl who use social media platforms may revolt and stop creating free content for these platforms. I would still bet on status quo being maintained though.

  25. Tech companies are here only for 2 decades so there is no guarantee for big tech to survive for 100 + years

  26. Apple is fine.

    There's a reason Samsung is such a worthy competitor. Their phones are more open; its the reason my entire family owns one.

  27. Amazon is not an e-commerce company. Amazon is a software company. If you go to netflix you used amazon, you swipe your credit card anywhere amazon, you go to 60% of websites, amazon. E-commerce is a side gig

  28. Well this video was awesome. Why don't you make a video on the entepueneral ideas for the future.

  29. 7:55 I didn't think instagram was really a "competitor" to facebook at the time they acquired it. Hadn't been on my radar as a facebook competitor at the time anyway.

  30. Another reason why they can't be broken up is bcoz there are lot of people working. If you break up a company, just imagine what would happen to all those people.

  31. it doesn't mean they can lock people , people make them giants as they offer their good services . for example , remember when Nokia had the highest market shares in mobile phones before 10-12 years ago , and when they weren't able to offer a good or new products they fall immediately and people adopt their rivals products as they offer better products (or software) . same for these companies , at certain point when they not able to offer good things they will fall with all their what called Monopoly .

  32. Pretty Narrow scope, especially on Google (alphabet). Here's some examples:
    If Google OWNS all of THIS:
    1) the Primary Platforms on which advertisers mean to advertise (Chrome, Search, YouTube, GMail, WebStore, etc.)
    2) the Ad Systems managing these ads (AdSense, Ads, etc.)
    3) the Ad Server Platform which HOSTS these ads (DoubleClick, now named "Google Ad Manager")
    4) the Ad-Space BIDDING process (Exchange Bidding and DoubleClick Bid Manager now folded into "Google Marketing Platform")
    5) the source of Ad Revenue for Publishers (DoubleClick Ad Exchange and AdX now in "Google Ad Manager")
    6) and enforces Ad Format and Latency rules which all but REQUIRE use of these technologies, Google is suddenly in FULL CONTROL of–not ONLY the PRICES of Ads online (enough for Anti-Trust) and is positioned to disable ANY competition from even opening shop, but they can (and DO) Decide WHERE THESE ADS WILL GO. Google can DECIDE what parts of the Internet can be Monetized AT ALL.

    Using this ONE example of a Monopoly owned by Alphabet (they have a FEW, actually!), Google has leverage to render MANY industries UNABLE to COMPETE by using the same strategy used with YouTube and their old Google Play platform, offering millions of albums for the price of one (fetching less than a penny for artists).
    Drawing users by the Millions to access High-Value Content with Unimaginably low cost barriers that NO competitor fresh on the scene could hope to rival, is Google's strategy to harvest their REAL gold…
    Which is THEN used (among whatever scary Policing Profile aggregation and AI manufacturing) to offer a Targeted Advertising product that can simply NOT be matched by any other company hoping to get started in the business.

  33. This documentary is very insightful – but not for the reason the producer thinks. In describing the Bork theory on anti-anti-trust, stating "in the end a monopoly is good if its good for the consumer" says it all. That's it! That's the poison pill. That explains why the 1% began taking all the money and the middle class vanished. Like a crack-head who had been pushed into trying it, the mindless consumer is ordained king at the expense of all else; including (1) democracy (Citizens United allows the corruption and pay-off all our politicians), (2) fair competition (endless mergers and hostile take-overs eliminate competition and innovation) and equal opportunity (Walmart takes over every city and town crushing all the Main St shops). Efficiency is like a narcotic that has poisoned our souls and is slowly killing our society. Human beings are not as efficient as machines so soon most of us will become increasingly worthless. Those of you who think you will innovate (against the billionaires) only hear the success stories, not the other 99.9% of the stories of people's lives being ruined trying. Capitalism is supposed to work by allowing free markets, with competition to make the best product at cheapest price. But anti-trust laws were created because the wiser of us realized what unregulated capitalism would cause. This is why all of our industry was allowed to consolidate into giant companies that all moved away from the USA in search of cheaper labor (slavery/sweat shops) in other immoral deregulated countries. If this had been properly regulated, we could still have actual competition, with local ownership of more prosperous businesses, more innovation by allowing start-ups a chance before getting squashed, and more opportunity for all for better employment and therefore higher paying jobs because of natural redundancies caused by 'inefficiency'. Every time there's a merger, competition is reduced and 50% of the jobs vanish. In the name of efficiency, we have increasing automation, wage stagnation, and a small ruling class and an exploding peasant class with fewer prospects every day. Efficiency and deregulation is what has destroyed America by making the 1% super-rich, and the rest of us totally left behind. I get it now. I know that wasn't your intention. But unregulated capitalism=slavery. We had that once and we're heading that way again. That is why we had a labor movement, and need one again. This notion of enabling the trusts to reform and consolidating power for the sake of efficiency is the serpents fang that bites us with its poison. This is what's destroying democracy and stealing away our country from us. Thank you!

  34. Really? Anybody remembers BlackBerry/Nokia/Vaio/ what happened to them? Yeah….there is no such thing as a Big tech company cannot be broken, Huawei can still be next if their new Ark OS don't gain steam.
    My point is, just because they are big companies doesn't mean that they are untouchable and invincible, I can agree that they can endure rough times and all but in the end anything can crumble down to ashes.

  35. Health insurance companies and telecommunication companies should be broken up before tech companies. They are at the very least responsible for exploiting consumers with unchecked pricing power and limited competition. They aren't like tech companies that improve our standards of living. The way they use and handle our data is one thing, but nothing useful would come from breaking them up. Especially Amazon

  36. It's not even capitalism anymore because there is no competition. They're just giant beasts eating up anything they can and absorbing smaller companies to "innovate". There is no creativity left too. Yuck.

  37. Though it's correct, This video is very superficial. This doesn't cover the issues about how politics actually work and how bills are passed, you might have guessed it, LOBBYING.

    The final victim of antitrust litigation was Microsoft, since then companies got alert and started investing significant in legal and political budget.

  38. Instagram,Facebook are not that much popular in the United States anymore.Twitter and SnapChat are getting a lot more popular now.

  39. Hello mr Jordan. I'd like to know if you will upload on skillshare lessons about commodities and forex market. i really liked your lessons on the platform and, since i have interest in those subjects, i'd like to know if you plan on doing that. thank you for your attention and stay smart

  40. What I pulled from this video: We need a new Teddy Roosevelt. The one after that will go too far, but the pendulum probably still needs to swing in the other direction in any case. In the same way that 90% of the oil market was too much for Rockefeller, 92% of the search market is too much for Google. Real capitalism must promote competition. When companies do so well that they eat up the entire space, something has to be done. Yes, Google is the best search engine. But that is because they have the most data, which feeds into their algorithm and allows them to keep being the best search engine. This creates an impenetrable wall for innovation. I don’t care how great your core algorithm is; without massive amounts of data to train it, it has no value.


  42. App stores big issue isn’t so much it’s fee. Although that blows. But it’s insistence on being anti adult content. I own the device I should be able to load whatever damn app I like on to it. If apple don’t wish to provide a platform for those apps others then fine. But I ought to be allowed to download apps through other means. It has the ability because you can do exactly that on the web on a Mac. And iOS is based on the same basic architecture as Mac OS. So I believe they should just allow the same practice on apps. And I think if they don’t they will end up in serious hot water. Also 30% is obscene for essentially a checking service. Developers can provide their own servers for downloading the app. I think it’s a major flaw on apples part. And what they have overlooked is it’s a primary reason Android is leader on market share. It’s unsaid but because adults want porn. If that was a capability on apple suddenly you’d see a rebalancing towards apple very quickly.

  43. But they ARE monopolies. If Google or Facebook were to triple their advertising price, people would still be forced to pay and advertise there. Regular users won't leave these platforms because nothing has changed for them, therefore advertisers will have to stay and pay whatever ridicolous price they are asking if they want their products to be shown where people are. This IS a monopoly. There is NO alternative to them.

  44. The antitrust lawsuits throughout the world are useless
    take the case of Facebook
    that lizard man is selling user data to the people who are desperately exploiting it
    the user data includes people's interests, locations, events, organisations, demographics, history, account details and in 1.9 million cases their medical records
    And what they get as punishment a 0.019% of their revenue
    Facebook is not bothered at all they are planning a corporate hist by sampling amending 34 characters on two lines of the terms and conditions page this will enable Facebook to send any amount of any personal data to any bidder. And the US law can take a a walk.

  45. "92% of the search engine market" wasn't as scary sounding when no one knew what a "search engine" was.

  46. these are good points, but i do think that consolidation has now become absurd. for instance, allowing comcast to merge with nbc-universal. i think the pendulum will always be swinging, and right now the relatively light touch the government has with major corporations has non-economic effects, such as the perception of corruption.

  47. Google is not the best search engine anymore. They filter your search results to match their political agenda.

  48. Clearly you have not studied history.. remember standard oil .. nvm you dont, as you would know that company was bigger and stronger than all big tech companies combined. Still it got split in 34 seperate companies and still those companies were like (for example exonmobile). So spare me the pseudo mumbo jumbo. Nothing can survive government interference.

  49. Sigh! I used to know – and talk to – SO many people.
    Now I can't even get them to LOOK UP.
    Didn't see that coming in 1970…1980…1990.

  50. Amazon is so much more than just ecommerce. It's easy to forget of all the other services they own because of all the different names. Which is of course isn't neccissarily a violation of antitrust as mentioned at the end

  51. Aside from consumer protections, working conditions are a significantly viable area to be contended with. A glimpse at various farming businesses illustrates that salient point.

  52. Ronald Reagan started our country into a downfall with his trickle down economics it's called Reaganomics which is give money to the rich and take it from the middle class now there is no more middle class and with Donald Trump there is no more country how do you feel about yourself now ass holes fuck you fuck Ronald Reagan fuck Donald Trump fuck Nixon these are all Republicans fuck Republicans

  53. I'm actually amazed that you failed to consider the deceptive practices, shadow banning, censorship, misdirecting and refusing to place paid ads by thousands of small businesses while fraudulently taking their money relevant to consumer welfare. To say nothing of the highly coordinated, grotesque abuses intended to manipulate the political process to serve the aims of those very companies leadership, and their own political ambitions.

  54. Have you tried buying Apple Music subscription with an Android phone? Or market through Facebook / Instagram? It's getting more expensive and inconvenient with every year. That's the whole point.

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