There was a time when political leaders thought that bigger businesses were better because they brought efficiencies & innovation.
So, governments sought to consolidate industries into firms or allowed companies to get together & form trusts.
There are various ways, a big company or trusts can make the existence of smaller companies difficult.
Unless there is a law that protects the smaller companies and keeps a check on the monopolies of big companies; this law in US is called The AntiTrust Law (ATL).
It was first passed in 1890 in response to public outcry against price-fixing abuses by monopolies.
But evidence suggests that the 1890 ATL was weak; thousands of manufacturing firms between 1895 to 1904 merged into just 157.
As a result, huge monopolies emerged, e.g. Standard Oil Company, in 1904, controlled 91% of US oil production.
After a 5-year long court battle, Standard Oil Company was broken up into companies, which it had bought to form ‘Standard Oil Company’; this led to a competitive oil industry & consumers benefitted.
Because of its pros (point 1 above) & cons, the ATL, despite so many revisions over the years, has remained vague and its enforcement has been left to the will of regulatory-agencies, court and the President.
And this is why demands for breaking up the Big-3 (Amazon, Google & Facebook) keep surfacing as people believe this will put pressure on bodies responsible for ATL enforcement.
The proponents of ATL enforcement on the ‘Big-3’ say that these companies would not exist or be so big, if ATL was not enforced against AT&T (multiple times between 1907 to 1984), the sole telephone service provider for decades.
In 1956, AT&T was asked to limit itself to landline telephone business and to license its patent portfolio at no cost.
One of these patents was the transistor, which led to the birth of Silicon Valley and emergence of semiconductors, computers, software, video games & internet.
AT&T was also not allowed to enter the then-nascent computer industry, which was left to IBM etc. to handle; the 1984 break-up of AT&T into 8 companies is also believed to have to led to rapid growth of cellular & broadband industries.
The dominance of Big 3 matches that of AT&T – Google’s market capitalisation is greater than sum of all big media groups; Amazon’s growth in stock market invariably leads to de-growth of other retailers & FB buys whatever it sees as strong competition (Instagram for $1 billion, WhatsApp for $19 billion).
