Breaking Up Big Tech, Should We? | Shimmy Says Ep. 38

I've never been a fan of breaking up big tech, but maybe the real question isn't punishment. Maybe it's competition. Hey everyone, it's shimmy and welcome to Thursday.

Shimmy says, you know, before we start, just a quick word. Tomorrow, Friday, I'm gonna do another. Shimmy says, it's gonna be sort of my wrap up year, year end wrap up, look ahead.

But for now, today's Shimmy says is on, uh, something that I, I saw and I wrote an article about, it's over on Techstrong. It, you know, I'll be honest with you guys, it's not very often that I change my mind on something. But I, I recently saw a debate over at John Hopkins University, was on YouTube by an organization about breaking up big tech, big tech.

And you know, I know what you're thinking out there. For most of you, a debate, you're thinking like presidential election debates. Well, you may have some guy who's too old to put two words together and another guy that, you know, he's lying every time his lips are moving.

And the fact of the matter is, we all go in with our preconceived notions, and we're not changing our na, we're not changing our minds at all. But this debate in partnership at, with the SNF Agora Institutes, I think it's Stavos Nicoti Institute over at John Hopkins. It really was the kind of debate that you would love.

No cable TV screaming, no ratings, no applause. It was, it was smart people on both sides arguing different aspects of a, of a point. And the point was, should the US government be breaking up?

Big tech has big, big, has big tech gotten so much power economically, socially, politically, especially that it, it's, it's become, there's more downside than upsides. You know, in fact, some of these, they transcend governments and nations. They're worldwide numbers.

Um, now let me just say, I used to be against breaking up big tech or against breaking up in general, for the most part. You know, we're not in the robber baron stage. We don't have standard oil or, you know, things that were broken up for a lot of you, especially people in my generation, the only thing we've ever really seen get broken up was at and t into the baby bells as they called them.

And, you know, that worked out pretty good actually, when you think about it, because it gave birth to companies like Verizon. And the at t we know today actually reassembled a lot of those baby bells, bell South and stuff like that into what's today at t along with some cell and cable stuff. But the problem is, I used to think of, of, of this was to break up these companies, you would like, smash them to smithereens.

And quite frankly, I think they were too much of a strategic asset to the United States and to us, right? Because who's gonna fill that vacuum? Chinese companies, other companies.

Why would we break up some of the greatest successes in American corporate history? Why would we punish the, the teams at those companies who have done such an amazing job of building these hyperscalers, this magnificent seven, whatever you want to call it. I mean, these people, they innovated, they, they worked hard, they built these companies to break them up.

Just doesn't seem right. But you know what, watching this debate, I I recognize another aspect of this argument and that is breaking up these companies doesn't mean putting them outta business, right? We could still have a lot of viable companies coming out of this, and our digital economy would be better for it, right?

So I'm not talking about just casually carving these companies up. The disruption and damage to our country, to our daily life would be just too big, right? I think that's naive to think that's what we would do.

But, but there is, there is an interesting aspect to this, right? The breakup argument in this debate, I would characterize it as, Hey, we don't have to burn it all down. It was much more nuanced than that.

It was about creating competition, keeping competition, having incentives about what would happen if we didn't have this magnificent seven just defending and, and putting up roadblocks and barriers to entry, right? And I realize something and listening to these people, I may not agree with the proposition, but I'm starting to agree with part of the diagnosis, if you will. Let me be clear, I'm not advocating wholesale breakups.

It's, I'm not about punishing Meta or Google or any of them. And this certainly isn't about politics. It's not about vibes.

And I haven't gone out and become a Bernie bro and think, you know, that we've gotta, they're too big to fail and all that. But I think using a scalpel logical, targeted separations here can actually strengthen our markets, give us new growth companies, make them more competitive, and we, and we all benefit. So for instance, I'll give you an idea of what I'm talking about.

AWS what happens if they weren't tied to Amazon retail? What happens if Amazon was spun out or AWS was spun out from Amazon and Amazon's prime video business and everything was spun out from Amazon retail And we did something that, you know, ab the Amazon retail business has like stunted the growth of the retail market in this company, in this country and around the world, right? Could we make a provider at A DWS that's also competing with Amazon?

Yeah, I think so. Take Meta and Facebook for example. If we unbundled Instagram and WhatsApp from Facebook, would we see more diversity of what people use threads and Instagram and so forth, because they've melded into one big social platform that meta controls this market with?

Would it allow us, instead of having to mandate approaches to privacy, would having competitiveness between those project, between those products give us more privacy or more choice, right? I, I think that's a viable alternative. And each one of those businesses is a viable business that can go on and, and create its own path in the market.

Google, I mean, look, the fact is we're already looking at Google in the eu, Google search business was a monopoly. Now with the advent of ai, yeah, we're getting some AI searches, but what has Google done? They built their AI into the search.

YouTube is the second biggest search market in the world. Gemini, their AI's built into all of that. And then because of that search, they dominate the online advertising space.

And if that's not enough, through Android, they dominate a, a majority of the cellular market as well. Should one company do all of those things? If we were to break Google up into a search company, an AI company, the YouTube business is a separate business, Android is a separate business.

They'd all be powerful industry leading separate businesses, but they'd make way for other companies to grow in between here, to have more, to have more opportunities, right? To not to stifle the competition. Would we be worse off for it?

I don't know. Microsoft, look, there's a company that we've discussed before for, for antitrust issues when they had a lot more market of the desktop space. But today you have Microsoft, that's one of the two dominant players in video game consoles.

Office 365. Yes, Google is, it gives it a run for its money. But you know, if you take Office 365 out of the way, is Microsoft Azure still one of the top three clouds?

Probably not. I think Oracle would be, but you know, these, there's an argument to be made around Microsoft too and, and then GitHub and, and their AI business. Could these be independent businesses that are still viable and, and let us move along.

What about the app stores, right? Apple controls access to your phone and Google controls access to your phone, depending if you're on Android or iOS through that app store. Should the app store be ruled by the same company that's making the os making the phones?

I think it, I think we'd have a better reality if we had multiple app stores that were viable and maybe spinning them off is the right way to go. And that's the point here. How do we make a healthy competitive market that fosters innovation?

I've always been a fan of that, even if I haven't been a fan of antitrust, breakups, competitive markets. Letting the market work is when we all succeed. You know, we've all heard, we haven't seen a lot of innovation in, let's say cell phones lately.

Well, we don't have a lot of cell phone innovation 'cause we only have two platforms that we work on, right? We need to change the incentives. We, we need to stop asking how do we make this better?

And start asking, how do we make sure no one catches up? Right? That's what these companies are asking.

History tells us it's important that when spaces open up, competition is fostered, unexpected things happen. New combinations, new way of looking. New companies, new ideas.

Innovation comes from 360 degrees. You, it's hard to predict what'll happen. You can't design it, you can't create it.

But you know, the market is a funny thing. And when you let it run, why, when you let it run like that, it, it's great. There's also, I want to just pause here for a second.

'cause there's also another aspect to it, and it's the geopolitical argument, right? It used to be that the government was, was the one talking about keeping big tech in check. But you know, let's face it, today in today's government, big tech owns the check, writes the check.

And you know, I'm not, I realize that by trying to break some of these companies up, are we handing an advantage to China? Nature of pos a vacuum? Will China fill the vacuum?

Maybe. But I think if we're smart about it, not and long term, I am sure we will be stronger for it by having more competition, more tech companies, more innovation, more choice. Instead we're betting that Apple keeps its edge.

That Google keeps its edge, that meta Amazon keep their edges and that carries risk, especially in this AI driven world where we find ourselves now where computing and data are macroeconomic levers and a failure there makes a failure that ripples across with catastrophic consequences for all of us today. Look, it's hard to disrupt, it's hard to capture market when you're competing against these hyperscalers, right? We need a reality check here.

'cause let's be honest, I'm not saying we're gonna do all of this tomorrow to do it right? It has to be done thoughtfully. You have to be, you have to use a scalpel, not a shotgun.

The nuances have to be understand whereby competent people, you have to have bipartisan support behind these things. And today we don't have that. Those are, as a matter of fact, all those things I just mentioned to you, kind of in short supply.

But ultimately I do think it may be the right thing for all of us. It's a roadmap that we need to figure out. It's a conversation.

We need to have this debate that I watched on Hopkins and it's on YouTube, and you could get it on my article from Textron. It, it didn't have all the answers, but it gave me something more valuable than just the answers. It really forced me to rethink a position that I held, that I was really comfortable and, and, and positive of for too long.

And realize there's more, there's more to this. There is another answer there is, there is some huge upside to breaking up big tech this shimmy. I hope you've enjoyed this.

Shimmy says, um, as I mentioned, I'll be on tomorrow with my Yearend Shimmy says, which if you think this was a big idea, I got bigger ideas there. But if you don't catch me tomorrow and this is the only one you catch before the holidays, happy holidays, everyone. Happy New Year.

I'll be doing Shimmy says next year too. So stay tuned every Thursday. But this shimmy, I'm out Shi.