As part of her platform in her run for the Democratic nomination, U.S. Senator Elizabeth Warren has proposed breaking up tech giants Amazon, Apple, Facebook, Google. Her plan involves passing legislation that would designate platforms with more than $25 billion in revenue as “platform utilities,” which would be barred from using those platforms to sell their own products.
Her competitor in the race for the nomination and fellow Senator Bernie Sanders has his sights set on the banks and introduced a bill to break up any financial company that has a total exposure of greater than 3% of gross domestic product. This would include J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo & Co., Goldman Sachs and Morgan Stanley as well as Berkshire Hathaway and Prudential Financial, MetLife and American International Group.
It’s not just politicians who want to decide just how successful we can be. Chris Hughes agrees with Senator Warren in calling for the breakup of Facebook--a company he co-founded.
When did we get to the point where we penalize success?
I don’t understand what’s going on here. What are we telling the next generation? When you become successful and build and grow a big business, we are going to make sure we take you to a level that will allow the government to benefit more than you and then we’re going to dismantle what you’ve built. Do we really want to stifle innovation, growth and prosperity?
Facebook and its successes
Bringing the conversation back to Facebook, Hughes, who left the company in 2007 (hundreds of millions of dollars richer for his involvement), is concerned it has become too dominant a player in its industry. It has too much power. How is what Facebook has achieved any different from what other huge multinationals have achieved? Successful businesses grow, often by buying up competitors. So long as no anti-trust laws have been broken and competition still exists, what’s wrong with Facebook dominating in its space?
Mark Zuckerberg started the company from his dorm room at Harvard and became one of the world’s youngest billionaires by innovating and outperforming. Today, Facebook is a platform that many people use to grow their businesses. What’s going to happen if it’s broken up? Who loses?
In the meantime, what does all this talk of too big and too successful to continue mean for investors? Not much. Talk is talk unless and until legislation is put in place to break up the Facebooks, Amazons, Googles and Apples of the world, which, hopefully, is not likely, at least in the near future. My advice to investors: stay focused. Continue to look for and invest in good firms with strong performance, including the tech giants.
My advice to politicians and lawmakers:
Let the laws of capitalism work. Let the market decide. The U.S. and Canada are supposed to be countries where you can start a business, work hard and succeed at the highest levels. Why do we want to stop that?
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Source: Elizabeth Warren Wants To Break Up Apple, Too, The Verge