The push to break up Big Tech companies has become a popular refrain among politicians and pundits on both sides of the Atlantic, and, here in the U.S., both sides of the aisle. In response to a federal judge’s ruling in August that Google had an illegal monopoly over search traffic, the Justice Department has proposed that the company sell off Chrome, the world’s most-used web browser, as a remedy. While drastic, this may seem like a clean solution to Google’s dominance in search: Yank apart the distribution network.
Yet few antitrust cases have ended in breakups in recent decades, with the last major example being AT&T more than 40 years ago. This rarity stems from a fundamental Catch-22 in tech antitrust: The very factors that make these companies targets are also what make them valuable to consumers.
The strongest case for corporate breakups centers on scale and network effects. Scale means companies can drive down costs and increase efficiency as they get bigger. Network effects occur when products become more valuable as more people use them—think of how social media platforms are more useful when your friends are on them. In both cases, size can create powerful feedback loops that entrench a company’s position, leading some to argue that only structural separation can restore competition. The 1984 breakup of AT&T, for example, introduced competition by separating local and long-distance telephone services.
However, scale and network effects are what enable businesses to provide significant benefits to consumers. Scale is not a harm. We want companies to grow. Large organizations can leverage their size to create better products, invest more in innovation, and offer services at lower costs. Breaking sections of a company apart risks losing these consumer benefits. This is why achieving scale or large network effects do not, in themselves, violate antitrust law.
The shift away from breakups reflects both evolving market structures and a recalibration of antitrust priorities. Earlier breakups, like Standard Oil in 1911 and AT&T in 1984, targeted companies with geographically distinct operations. In these cases, the potential scale-related harms of a breakup were relatively contained when the companies were broken into smaller geographic monopolies. In addition, for Standard Oil, the monopoly stemmed largely from facilitating collusion rather than efficiency-enhancing scale, making the breakup less disruptive for consumers.
Tech companies since AT&T exist in a different world. Their operations are more integrated and their reach is more global, magnifying the potential consumer harm from breakups. For example, forcing Google to sell Chrome, as the DOJ has proposed, could harm users who rely on the seamless integration between Chrome and Google’s other services. Chrome’s synced passwords, bookmarks, and browsing history across devices make it more useful for consumers across apps and devices. Breaking these connections could make the browser less valuable while potentially raising costs if the separated companies have to rebuild these features independently.
“Large organizations can leverage their size to create better products, invest more in innovation, and offer services at lower costs. Breaking sections of a company apart risks losing these consumer benefits.”
Simultaneously, antitrust thinking has evolved significantly since the 1980s to prioritize consumer welfare over simple metrics like size or market share. This shift is often attributed to Robert Bork’s influential 1978 book The Antitrust Paradox.” While Bork was a conservative, the consumer welfare standard has gained broad acceptance across the political spectrum, with both Democratic and Republican administrations embracing it since the 1980s. Courts now focus more on consumer welfare than in merely size or market share. This dual shift—more benefits from scale and increased focus on consumer outcomes—has raised the bar for justifying corporate breakups. It’s no longer enough to argue a company is large; regulators must now demonstrate that breaking it up would benefit consumers more than it would harm them.
The Federal Trade Commission’s recent complaint against Amazon ignores this reality. The FTC repeatedly cites “scale” as a key problem, albeit by couching it in the idea that Amazon prevents “rivals from gaining the scale they need to meaningfully compete.” But this framing implicitly critiques Amazon’s own scale and efficiency. When Amazon’s size allows it to offer lower prices or better selection, it naturally captures sales from competitors. If a consumer chooses Amazon for a purchase, that sale is “prevented” from going to a smaller retailer. But this is precisely how markets are supposed to work—it’s the essence of competition, not an antitrust violation.
Scale isn’t unique to tech. Consider a large supermarket chain that achieves economies of scale in distribution. If it uses this advantage to offer lower prices or better selection, smaller grocers might struggle to compete. But this outcome is a result of efficiency, not anticompetitive behavior.
The benefits of scale extend beyond individual companies. Large, established platforms create ecosystems that support numerous smaller businesses. This is where true network effects come into play—as Amazon itself demonstrates. The company launched Amazon Marketplace in 2000, opening up its store to third-party sellers, which now account for more than 60 percent of products sold. As more sellers join Amazon’s marketplace, it attracts more buyers, which in turn attracts more sellers—a classic positive feedback loop. In the non-tech world, think of how large shopping malls provide foot traffic for small retail tenants. These are benefits to consumers, not some market failure to be corrected.
Critics argue that these ecosystems can also be used to stifle competition, and there’s merit to this concern. They warn that dominant firms may become complacent, leading to higher prices and less innovation. However, breaking up these companies could produce the same negative outcomes by destroying the efficiencies that benefit consumers. This difficulty underscores the challenges of structural remedies; these are not simple monopolies that can be cleanly divided without some harm to consumers.
In antitrust enforcement, there are no easy solutions, only trade-offs. The challenge lies in crafting remedies that address anticompetitive behavior without stifling innovation or harming the very consumers they aim to protect.
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