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Big tech could be headed for legislated breakup

 

Big tech could be headed for legislated breakup

John Best

The first anti-trust movement came about early in the last century when President Theodore Roosevelt passed legislation that broke up monopolies in railway, steel, oil and meat packing-to name a few. Now one of America’s leading business experts predicts we are headed for another round of anti-trust legislation aimed at tech giants like Facebook, Twitter, Apple and Amazon. Scott Galloway is a Professor of Marketing at NYU Stern School of Business where he teaches Brand Strategy and Digital Marketing to second-year MBA students and is the author of the Digital IQ Index ®, a global ranking of prestige brands’ digital competence. In 2012, Professor Galloway was named “One of the World’s 50 Best Business School Professors” (Poets & Quants). Professor Galloway is also the founder of several firms worth hundreds of millions of dollars.

In an appearance on the Smerconish Show on MSNBC Saturday, Galloway predicts we are heading into a new era of anti-trust activity. While the US  election was in full roar, almost unnoticed, was a report issued by the US House of Representatives that said  Amazon, Apple, Facebook and Google had exercised and abused their monopoly power and called for the most sweeping changes to antitrust laws in half a century. In a 449-page report said the four companies had turned from “scrappy” start-ups into “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

Galloway predicts that in the face of anti-trust legislation, the big companies will “prophylactically” break themselves up, not so much out of fear of regulation, but because the companies broken into their constituent parts will be worth much more than they are today. While the anti-trust investigations were actually started by the Trump administration, Galloway predicts the activity will accelerate under the Biden regime.

In an article for Business Insider Galloway wrote, “We should also stop thinking of the breakup of big tech as punishment for doing something wrong, or that they’re bad people. We break companies up to restore competition to markets, which is the gangster app for a growing economy that demands better behavior. As a result, there are more options from other players who must then … behave better.”

Galloway told Smerconish Saturday that prior to the pandemic it took 20 years for e-commerce to reach 18 percent of shopping, now it is 28 percent, meaning the pandemic brought about a decade of growth in the sector in just a few months. He said Amazon took 25 years to reach the 500,000-employee mark and this year added another 500,000 in twelve months. Apple took 40 years to reach one trillion dollars in capitalization—it added its second trillion in 22 weeks. He noted that Amazon now has reached 82 percent of American households, either through online purchases or its streaming service. He predicts Amazon will move into healthcare and become the biggest player in that sector in 2 to 3 years; and in doing so may actually bring down the cost of health care.

Galloway predicts the anti-trust movement will first hit Google and Facebook before it attacks Amazon and by that time, he predicts Amazon will have broken itself up; AND the most valuable company by 2025 will be one of Amazon’s spinoffs.

The full Galloway interview by Michael Smerconish on CNN can be found here

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