How ‘Breaking Up’ Apple and Amazon Might Actually Work
By: Will Oremus
Tags: Pattern Matching, Apple, Amazon

How ‘Breaking Up’ Apple and Amazon Might Actually Work

A banking law from 1956 offers a realistic model for regulating dominant internet platforms

Photo: Pool/Getty Images

Welcome back to Pattern Matching, OneZero’s weekly newsletter that puts the week’s most compelling tech stories in context.

“Break up Big Tech” has become a rallying cry for some, especially on the left, who see the largest tech companies’ power as a threat to innovation, small business, and perhaps even democracy. The call made headlines last year when Elizabeth Warren, who was then a leading contender for the Democratic presidential nomination, outlined an aggressive plan to do just that. And it drew fresh attention with last month’s widely publicized antitrust hearing, which featured the CEOs of Amazon, Apple, Facebook, and Google. I wrote at the time about the parallels (and differences) between that hearing and the Big Tobacco hearings of the 1990s.

Along the way, more moderate critics of the technology industry, along with its defenders, have tried to pump the brakes on the breakup train. “Breaking up big tech companies is the nuclear option,” Jeff Bercovici argued in Inc last year, in response to Warren’s proposal. “Why not try fixing what’s broken before pushing the button?” In January, a Wired op-ed’s headline implored, “Don’t Break Up Big Tech.” Author Zachary Karabell warned, “‘Break them up’ is an easy slogan, and an appealing one; but like so many easy things, it will solve little.” Some experts with impressive credentials agreed. “Just ‘break them up’ is an oversimplified sound bite, not a real policy that would restore competition in digital markets and benefit consumers,” wrote Fiona Scott Morton, a Yale economist who specializes in antitrust, in the Washington Post last year. (Only later did she disclose that she has a side gig as a paid adviser to Amazon and Apple.)

What might not be obvious from this discourse is that there are ways to break up Big Tech that amount to both far more than a “sound bite” and far less than a “nuclear option” — and which have the potential to address specific competition concerns in a coherent and carefully targeted way. This week, the chair of the House antitrust subcommittee hinted that at least one of those might soon be in the offing.

The Pattern

The antitrust assault on Big Tech is taking shape.

Bipartisan recommendations for antitrust action against the tech giants could come as soon as September , Rep. David Cicilline, D-MA, told Bloomberg on Wednesday. Cicilline chairs the House antitrust subcommittee that has conducted a year-long antitrust investigation, including last month’s high-profile antitrust hearing. That hearing was the sixth in the ongoing probe, which is expected to culminate in a report to Congress.

, Rep. David Cicilline, D-MA, told Bloomberg on Wednesday. Cicilline chairs the House antitrust subcommittee that has conducted a year-long antitrust investigation, including last month’s high-profile antitrust hearing. That hearing was the sixth in the ongoing probe, which is expected to culminate in a report to Congress. In an interview with Bloomberg TV’s Emily Chang, Cicilline got specific for the first time about what that report might say . The subcommittee is developing a “menu of options,” he said, that include updating old antitrust statutes aimed at oil and railroad monopolies; reforming federal antitrust agencies and making sure they have the resources to prosecute companies; and revitalizing private-sector enforcement.

. The subcommittee is developing a “menu of options,” he said, that include updating old antitrust statutes aimed at oil and railroad monopolies; reforming federal antitrust agencies and making sure they have the resources to prosecute companies; and revitalizing private-sector enforcement. Most interestingly, he hinted at two potential pieces of legislation that would target the tech sector in particular . One would seek to enforce principles of portability and interoperability. The second, he said, would be more ambitious in scope: “a sort of Glass-Steagall of the internet, saying you can either be a platform or you can be a producer of goods and services. You cannot do both, because they’d be in conflict.”

. One would seek to enforce principles of portability and interoperability. The second, he said, would be more ambitious in scope: “a sort of Glass-Steagall of the internet, saying you can either be a platform or you can be a producer of goods and services. You cannot do both, because they’d be in conflict.” The Glass-Steagall Act, passed in 1933, required the separation of commercial banking from investment banking. It was crafted to address the conflicts of interest that arose when banks invested consumers’ assets in securities. The legislation divided financial institutions into investment banks such as Goldman Sachs and commercial banks such as Bank of America. Its 1999 repeal was cited by some economists as a precipitating factor in the 2008 financial crisis. A “Glass-Steagall of the internet,” in Cicilline’s analogy, would address the conflicts of interest that arise when companies that own dominant tech platforms also compete with the third parties who use those platforms .

. For instance, Apple presumably would no longer be allowed to both control iOS and offer services such as Apple Music that go head-to-head on iOS with rivals such as Spotify. Amazon might no longer be allowed to produce its own lines of clothing and household goods to rival those of third-party sellers on its site. (Its cloud division, Amazon Web Services, has similar issues.) Google, perhaps, would have to give up on services such as Google Shopping, which allegedly benefits from high placement in its own search results. It’s less clear to me which of Facebook’s existing products would run afoul of it, if any. Likely, Facebook’s social networking dominance would be targeted through some of the other mechanisms Cicilline mentioned ; he specifically called its acquisition of Instagram “illegal.”

; he specifically called its acquisition of Instagram “illegal.” At the risk of getting wonky, an even better analogy than Glass-Steagall might be the Bank Holding Company Act of 1956 , which banned banks from holding ownership stakes in non-banking industries. The concern was that bank holding companies could boost their own non-banking businesses over those of rivals with favorable loan terms, or nudge their loan clients to patronize their other businesses. That sounds a lot like how Apple, Amazon, and in some cases Google allegedly tilt their platforms to favor their own services.

, which banned banks from holding ownership stakes in non-banking industries. The concern was that bank holding companies could boost their own non-banking businesses over those of rivals with favorable loan terms, or nudge their loan clients to patronize their other businesses. That sounds a lot like how Apple, Amazon, and in some cases Google allegedly tilt their platforms to favor their own services. If this sort of legislation came to pass, the result would be a form of “breaking up Big Tech,” as some of the giants would likely be required to sell off or shutter some of their business lines. It echoes at least one part of Warren’s plan, which called for “large tech platforms to be designated as ‘Platform Utilities’ and broken apart from any participant on that platform.” Yet it would likely leave intact the core of each business , and would not necessarily require the tortuous untangling of, say, Apple’s hardware products from iOS, or Amazon.com from Amazon Web Services, which seems to be what some opponents of breakups have in mind. No doubt the details would still be tricky and heavily litigated. But they’d be unlikely to cripple the tech giants in the ways that would leave them unable to compete globally with Chinese rivals, which is a fear that the U.S. tech companies have been busy stoking.

, and would not necessarily require the tortuous untangling of, say, Apple’s hardware products from iOS, or Amazon.com from Amazon Web Services, which seems to be what some opponents of breakups have in mind. No doubt the details would still be tricky and heavily litigated. But they’d be unlikely to cripple the tech giants in the ways that would leave them unable to compete globally with Chinese rivals, which is a fear that the U.S. tech companies have been busy stoking. There are some persuasive arguments for going much farther than a Glass-Steagall or Bank Holding Company Act to rein in the internet’s behemoths. Longtime digital rights activist and blogger Cory Doctorow made the case for robust antitrust action in a new book published on OneZero this week , called How to Destroy Surveillance Capitalism. The book is especially worth reading for anyone familiar with Shoshana Zuboff’s influential 2019 book The Age of Surveillance Capitalism, which Doctorow builds on and critiques. Zephyr Teachout’s book Break ’Em Up and Tim Wu’s book The Curse of Bigness are two other recent works that view size itself as the crux of the antitrust problem.

, called How to Destroy Surveillance Capitalism. The book is especially worth reading for anyone familiar with Shoshana Zuboff’s influential 2019 book The Age of Surveillance Capitalism, which Doctorow builds on and critiques. Zephyr Teachout’s book Break ’Em Up and Tim Wu’s book The Curse of Bigness are two other recent works that view size itself as the crux of the antitrust problem. But Cicilline’s comments to Bloomberg suggest that a full dismantling of Silicon Valley’s dominance is unlikely to be an outcome of the current investigation. That may disappoint critics such as Doctorow, Teachout, and Wu. At the same time, it should puncture the notion that breaking up Big Tech is something to be feared — at least, by anyone other than the tech giants themselves.

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