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Breaking Up Google Will Rob Your Retirement of Billions

Jonathan Taplin authored an op-ed in The New York Times' April 22 Sunday Review making the case that it could be time for the government to "break up Google" or "regulate them like public utilities."

I couldn't disagree more vehemently.

Yesterday's antitrust laws can't regulate today's technology, but they sure as heck can certainly destroy its profit potential. And, unfortunately, yours, too.

Here's what you need to know… and how to defend your money against government meddling.

The Government Wants a Piece of Google Pie

Jonathan Taplin is no slouch. In fact, he's a very bright guy who is the Director Emeritus of the University of Southern California's Annenberg Innovation Lab.

Normally, I agree with him – especially when it comes to Silicon Valley, which he characterizes as being populated by a bunch of spoiled, ignorant brats who are clueless when it comes to the consequences of their actions… to which I'll add, "and their products."

There is nothing more frustrating to me than knowing Google – aka Alphabet Inc. (Nasdaq: GOOGL) – dominates today's digital world.

Speaking personally, I hate the fact that every digital footprint I leave is tagged somewhere by some company unknown to me that's anxious to sell it to the highest bidder in an effort to "monetize" my behavior.

And, while we're at it, I loathe the fact that the technology is increasingly being sold to medical providers, insurance companies, financial providers – all of which are using it to deliver "targeted" advertising and services to me at prices that somehow always seem higher than they used to be.

The very term is an insult.

But having the government break Google up?!

No way.

At the end of the day, the only true monopoly is the government because it's the only entity capable of using force to intervene in otherwise free markets.

The markets will take care of that all by themselves, and investors who are along for the ride will do very well by letting that happen instead of falling prey to out of touch regulators who don't understand what's going on.

Take Google's browser, Chrome, for example. It's got an 88% market share of browser traffic because competing browsers like Microsoft's Internet Explorer stinks and Yahoo's ill-fated Axis stunk. Users selected Google because they liked it and found it valuable.

The argument that antitrust regulation works on behalf of the consumer is a four letter word that I can't print. When you take a closer look, most of the people complaining about big monopolies are not consumers, but other suppliers who stand to benefit if there's enforcement action.

Naturally, regulators will try to sell the breakup as a great story.

Instead of trying to help existing and new companies develop, the government wants to compete by punishing the successful. They always have – with railroads, with oil, with airlines – and now they're going to do it with technology (and, if this idea gathers steam, with Alphabet Inc., specifically).

People don't realize it, but the Justice Department, working in concert with a wide variety of Washington agencies, has canned a number of deals over the past few years, including Sysco Corp.'s (NYSE: SYY) attempt to buy U.S. Foods, Comcast Corp.'s (Nasdaq: CMCSA) attempt to purchase Time Warner Cable (NYSE: TWX), Staples Inc. (Nasdaq: SPLS), and Office Depot Inc. (Nasdaq: ODP), just to name a few.

Things are so egregious that even Thai Union (OTCMKTS: TUFBY), which makes Chicken of the Sea, was stopped from buying Bumble Bee Tuna back in 2015, for crying out loud. Tuna fish!

 What Policy Wonks Are Missing

The last thing a regulator should want to do is hobble one of the world's most successful companies. Doing so will squash innovation and destroy hundreds of billions of dollars in shareholder value – much of which is in retirement plans.

The numbers are hard to come by, but this is especially important when you consider that individual households may own as much as 80% of the corporate equity market when you combine the estimated 38% of stocks owned directly by U.S. households with the indirect ownership associated with mutual funds, pension funds, and insurance policy investments.

I can all but guarantee that regulators haven't thought about how much wealth they'll destroy if they move ahead. And, of course, that's also part of the problem.

Companies like Alphabet are completely changing the face of what we think about regulation, utilities, government, structure – you name it – specifically because they're unconventional, innovative, and empowering. Like the other companies in the so-called "Fabulous Five" we talk about frequently, Alphabet has become so integral to our lives that it's a "must-have."

I'm not surprised in the least that the company rubs Washington's inner circle the wrong way because it bypasses what they consider to be the proper relationship between those who rule and those who follow.

Big Companies Are Not Anti-Competitive – Antitrust Laws Are

Antitrust laws have their roots in the Sherman Act of 1890 and the Federal Trade Commission Act and Clayton Act of 1914, all of which are intended to ensure lower prices, efficient competition, and higher quality in the name of consumer protection.

Here's the rub…

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About the Author

Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs High Velocity Profits, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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  1. William Rogers | April 27, 2017

    When President Reagan broke up Ma Bell it saved me $100.00 a month phone bill, everyone tried to tell me it was going to cost me more money. I could buy phones when I wanted to and hook them up without having to pay a tech. to come out and charge me 2 hours to hook up 2 little wires.
    I personally think there should be more break ups.
    Bill Rogers

    • Keith | May 1, 2017

      Good morning, Bill.

      Your point is very well taken. Thanks for taking a moment to chime in.

      Best regards and thanks for being part of the Money Map Report Family, Keith :-)

    • G13Man | May 4, 2017

      and now they have re-merged over the years
      AT&T is dead [Southern Bell bought the name and remains of the carcass and they got cellular with it ]
      Verizon has moved into Cellular nationwide getting around the copper moats they used to all have !
      And if you had stock in AT&T , you had a piece in all at the split and as they re-merged , good profit

  2. Vincent Schreiber | May 4, 2017

    Bill
    I was thinking about the ATT breakup as I was reading this, but it ocurred to me that ATT was actually a forced monopoly, followed by a forced breakup, so I don't think it applies as an example of a monopoly created by market forces, like MS, which has been consistently attacked by the DOJ, or Alphabet, which hasn't yet, but may be on the verge.

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