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Antitrust Crackdown: Apple and Google Face Break-Up Threats, Echoes of AT&T's 1984 Split
Antitrust regulators are targeting Big Tech companies, potentially leading to break-up orders for Apple and Google. The actions taken against these companies could inspire regulators worldwide. Google and Apple have expressed their disagreement with the accusations.
Big Tech is facing a significant challenge as antitrust regulators on both sides of the Atlantic crack down on alleged anti-competitive practices. This crackdown could potentially result in break-up orders for Apple and Google, marking a first for the industry.
The actions taken against these tech giants could serve as inspiration for regulators worldwide, as evidenced by the growing number of antitrust probes in various countries following the initiation of cases in the EU and the US.
Since the breakup of AT&T 40 years ago, no company in the United States has faced the possibility of a regulator-led break-up until now.
Google has expressed its disagreement with the EU's accusations, while Apple has stated that the US lawsuit is incorrect in terms of both facts and law.
In 1984, AT&T, also known as Ma Bell, was broken up into seven independent companies called "Baby Bells" to dismantle one of the most powerful monopolies of the 20th century. Currently, AT&T, Verizon, and Lumen are the only surviving entities.
Regulators now allege that companies like Apple and Google have created impenetrable ecosystems around their products, making it challenging for customers to switch to rival services. This phenomenon has led to the coining of the term "walled gardens."
The US Department of Justice has issued a warning to Apple, a company valued at $2.7 trillion, stating that a break-up order is not off the table as a potential remedy to restore competition. This warning comes after Apple faced a lawsuit filed by 15 states, accusing the company of monopolsing the smartphone market, stifling competition, and inflating prices.
However, it is expected that the case will take several years to reach a resolution, as Apple has vowed to fight the allegations.
The actions taken by the US are in line with the mounting threats faced by Big Tech across Europe. Apple, Meta Platforms, and Alphabet are likely to face investigations for potential violations of the Digital Markets Act (DMA), which could result in substantial fines and even break-up orders for repeated breaches.
Margrethe Vestager, the EU antitrust chief, has played a significant role in paving the way for drastic measures. Last year, she accused Google of engaging in anti-competitive practices in its adtech business and suggested that the company may have to divest its sell-side tools to avoid conflicts of interest.
Vestager is expected to make a final decision on the matter by the end of the year.
Andreas Schwab, a European Parliament lawmaker involved in drafting landmark EU DMA tech rules, emphasised the need for bold action against Big Tech companies that flout the rules. He stated that if these companies fail to comply with the DMA, the Parliament may call for break-ups to ensure open markets, fairness, and increased innovation.
While it remains uncertain whether regulators will issue break-up orders, legal experts suggest that the case against Apple may be more challenging compared to the 1998 case against Microsoft. The highly integrated nature of Apple's system makes a break-up more difficult, unlike Google, where a break-up order could target specific acquisitions made to strengthen its key services.
Instead of break-ups, behavioral remedies and measures to ensure fair pricing and non-discrimination against developers may be more likely outcomes in the case of Apple.
Apple generates the majority of its revenue, nearly $400 billion per year, from selling hardware such as iPhones, Macs, iPads, and Watches. Its Services business, which brings in approximately $100 billion per year, follows closely behind.
Ultimately, any structural remedies, including break-ups, will be tested in courts, presenting formidable legal challenges.
Antitrust regulators are targeting Big Tech companies, potentially leading to break-up orders for Apple and Google.
The actions taken against these companies could inspire regulators worldwide.
Google and Apple have expressed their disagreement with the accusations.
Source: REUTERS