Democratic US Presidential candidate Elizabeth Warren says we should break up companies like Apple
We have broken up many monopolies over time. Remember when we broke up AT&T
If we look back in time, Standard Oil was broken-up in 1911. At the time we thought that would be the end to John D. Rockefeller. However, he became more successful, became even wealthier and his various smaller companies did more business going forward.
Breaking up monopolies has been going on forever
So, companies who are broken-up, can recover and become strong growth engines once again. Simply being a monopoly is not enough to break-up a company. It is when they cause a negative impact on their industry in areas like, competition or innovation.
That’s when the government thinks it must step in.
Every company starts out being small and insignificant. They are cheered by the masses as they grow. Everyone loves this heroic and underdog entrepreneur of a small company taking on the world and succeeding.
Remember, in the early days, Microsoft CEO Bill Gates flew coach. CEO Jeff Bezos started Amazon on a shoestring. And Steve Jobs struggled to make Apple a success. We watched them grow. There was an emotional connection to us.
Companies cross the invisible line in the sand and become a monopoly
Then as they grow, and become more powerful, at some point they cross over that invisible line in the sand and become a monopoly. If they were to change their ruthless behavior as they matured, to welcome and encourage competition and innovation, they would be left alone to continue to grow.
However, too often, the same entrepreneurial, do anything to survive spirit, that got them to this point, is the same behavior that becomes not acceptable when they become strong and powerful.
This is when new leadership and new vision must take over. This is the point where companies often fail.
They crossed over that invisible line in the sand. Now, they are not just a monopoly. Now, they are a problem that needs to be corrected. This is when the government steps in and breaks companies up.
Warren has raised this topic as part of her campaign; however, this is a topic that has been bubbling under the surface for years. And it’s only getting worse with all the bad things that are happening with abuse of privacy and not being fair and balanced on a political front.
Debate to breakup Apple, Amazon, Google, Facebook and Twitter
There have been several US Congressional hearings where leaders of these companies were invited to make their cases. Most have showed up like Facebook’s and Twitter’s CEOs. They didn’t seem to really understand the extent of the problem they have caused, but they understand the process and want to help solve this growing problem.
Others, like Google, have not showed up, and that is not good for them. It was insulting to the Congress and the American people. Hint to Google… never antagonize lawmakers. Even if it’s embarrassing, show up. Either that or you are seen as the bad guy and you will suffer the wrath.
The question today is this: How far will this talk of breaking up tech companies go? The seed has been planted. It is starting to capture the attention of the masses. Now it is spreading to the Presidential candidates.
CEOs should not ignore these red flags
This is not a topic companies can or should simply ignore. It will only grow. Now is the time when every CEO and executives should develop their own solutions to this growing problem. There are more companies than just Apple, Amazon, Google and Facebook. Every one of them must be active in this debate.
If they let this go on its own, it will only grow and before long, they will be fighting the US Government. And as we have all learned, the US Government almost always wins these arguments.
The time is now for the CEOs of every one of these companies to create a new strategy to deal with this growing threat. It’s time to become friendlier and less hostile. To solve the problems the Government would attempt to solve, before they show up with their chainsaw to do the job.
Then maybe, just maybe, you can avoid the powerful fist of the US Government on your entire company. If you ignore this, you will lose. It’s happened before, and it will happen again. It’s just that simple. The writing is on the wall. Consider yourself warned.
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected] His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan.