Don’t Break Them Up: Why Government Should Avoid Splitting Up Corporations

Many progressives in modern American politics would like to relive the Progressive Era of splitting up trusts and large corporations. Few, if any, of them provide any logical reasoning behind breaking up these corporations besides the cliches that are“too big too fail,” or “predatory capitalism.” In fact, it seems that this whole notion of combating large corporate entities is merely used as a way to propagate the idea of “us versus them.”

The Main Targets

Wall Street

The firms that seem to be targeted the most come from two areas in America: Wall Street and Silicon Valley (Amazon included too). After the recession in 2008, breaking up banks wasn’t on the minds of many government officials. President Obama bailed out the banks, and was able to revitalize the economy without having to split them up. In more recent years, however, many politicians have begun to come out in favor of breaking up large investment banks. Before beginning to talk about the case for and against breaking up banks, remember that our policy is to break up monopolies; not corporations deemed to be “predatory” by popular politicians. “Big banks” already don’t come close to the definition of a monopoly. When listed by global assets, the United States’ five largest banks: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs are ranked 6th, 9th, 11th, 13th and 35th, respectively. The global list is being referenced and not the domestic one, because the United States is a global economy. So already, the banks that the United States has the power to break up are already not the biggest. Not only that, but as mentioned earlier, there is plenty of legitimate competition among the “big banks.” The argument for breaking up the banks is then clearly not a legal one. And saying that the entire argument is to promote a hatred of elites would be dishonest. The reasoning behind breaking up the banks seems to be that if the financial institutions are smaller, they will cause less hurt if they struggle (the “too big to fail” narrative). However, countless big name economists, including former Chairman of the Federal Reserve, Ben Bernanke, have found that breaking up the big banks would actually cost Americans more. Bernanke pointed out that breaking up the banks would not only make the system less efficient, but smaller banks perform tasks for a lot higher of a cost. It seems to be only fringe Marxist economists and political ideologues who support the idea. All in all, breaking up the banks seems to be an idea, not a policy.

Silicon Valley

It was not until recently with Senator Elizabeth Warren that the idea of breaking up tech companies in the San Francisco Bay Area entered the somewhat mainstream of politics. Splitting up large tech corporations can be split into two main categories: Amazon, and not Amazon. During most conversations, companies are able to evade being brought into the conversation around breaking up Amazon. Although like with the banks, lots of the reasoning behind breaking up Amazon is ideology surrounding the idea of workers versus elite, there is more to the Amazon case. In fiscal year 2017, Amazon controlled 37% of the e-commerce market. If nothing is done, this number is expected to reach 50% by 2021. This is quite interesting considering that many agree that a company with above 25% market share constitutes a monopoly. However, there is uncertainty with whether a crackdown on Amazon would even be worth it. One cannot deny that there is benefit in Amazon’s size which allows it to work efficiently. A counter to this would be that Amazon may pause its innovation once it control enough of the market where it no longer needs to impress its customers. The e-commerce market is a developing one, and if no legitimate contenders to Amazon emerge, action may be warranted.

Then there is the second half of the tech industry: the not Amazon half. Similar to Amazon, many tech giants such as Apple and Google control enough of an industry where it could be argued that they have a monopoly. But the issue with that is there is nothing inherently wrong with being a monopoly. The wrong is when a monopoly begins to partake in “monopolistic behavior.” Yes, Facebook controls quite a bit of the social media industry, but who would benefit in their breaking up? It is doubtful that many would like to see 35 equally large social media sites. Believe it or not, there is definite benefit to centrality. The same goes for software. Who would want 30 different operating systems? It would be a hassle to learn all of them, if there were no central ones that a majority of people used. This applies to most, if not all, technology industries that are in question.

There is no value in breaking up a corporation for the sake of breaking up a corporation.

Baily, Martin Neil, et al. “The Big Bank Theory: Breaking Down the Breakup Arguments.” Brookings, 31 Oct. 2014,

Mehmood, Jahan Zaib, and Saqib Chaudhry. “The World’s 100 Largest Banks.” Standard and Poor’s, 6 Apr. 2018,

“Projected retail e-commerce GMV share of Amazon in the United States from 2016 to 2021.”Statista,

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