The titans of Silicon Valley aren’t going down without a fight. As calls to break up big tech grow louder, major players like Amazon (AMZN), Apple (AAPL), Facebook (FB), and Google (GOOGL) are already cooking up plans to take on government regulators looking to investigate them over possible antitrust violations. But analysts say the tech giants know themselves that breaking up is good for everyone.
“The markets got it wrong. As soon as some of the smart analysts break out their pencils and look at the sum of the parts analysis, they’re going to find that these companies are worth more broken up than they are as individuals,” NYU Stern School of Business professor Scott Galloway told Yahoo Finance, adding that Instagram is worth $300 billion on its own. “Any time you look at breakups, three months, three years, five years, 10 years on, almost always the broken up companies are worth more than the original.”
Proponents of a breakup say the big four tech companies — Amazon, Apple, Google and Facebook — have simply grown too powerful and the only way to curb that growth is through government intervention.
Galloway noted that the tech giants would likely never support a break up because that “would involve no longer being king of the iron throne, and only being queen of Westeros.” he said. “They're power hungry, and the only loser here — the economy wins, job growth wins, VC-backed companies win, taxation wins, regulation wins — the only loser is the person in charge, and that's the CEO who no longer reigns over this large company.”
This isn’t the first time the government has intervened to break up monopolies. In 1984 the U.S. Justice Department forced AT&T (T) to divest and break up into smaller regional telephone companies and in 2001 the U.S. took on Microsoft Corp. (MSFT). The process will be very slow but the scrutiny is necessary, Galloway said.
“I think we’re starting, for the first time, to have an honest conversation that we would be better off with [smaller tech firms] than these four sith lords who started benign, but then turned to the dark side,” he said.
Nick Rose is a producer for Yahoo Finance.