As Big Tech CEOs prepare for antitrust hearing, Morgan Stanley’s vice chairman says breaking them up ‘doesn’t make any sense’

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  • Morgan Stanley Vice Chairman Robert Kindler said breaking up the largest technology companies “doesn’t make any sense.”
  • He said while there were existing laws around privacy and price fixing, forcing spinouts didn’t have obvious consumer benefits, and breaking up Amazon may actually hurt consumers.
  • “What would we have done during this pandemic if we didn’t have companies like Amazon?,” he said.

The drumbeat to break up the biggest technology companies is getting louder, but Morgan Stanley Vice Chairman Robert Kindler isn’t playing that tune.

Kindler, who is also Morgan Stanley’s global head of mergers and acquisitions, told CNBC’s A View from the Top that breaking up the biggest technology companies “doesn’t make any sense.” In particular, he says, Amazon’s lower prices and same-day deliveries during the pandemic are clear consumer benefits that originated from the company’s size and scale.

“I think companies like Amazon have been absolutely terrific for the economy and for the consumer,” Kindler said. “What would we have done during this pandemic if we didn’t have companies like Amazon? I just can’t imagine that people don’t think that these are fantastic things that all of these huge companies have brought.”

Amazon CEO Jeff Bezos, Facebook CEO Mark Zuckerberg, Apple CEO Tim Cook, and Alphabet and Google CEO Sundar Pichai will all testify Wednesday before the U.S. House of Representatives’ antitrust subcommittee. The questions they’ll receive could be a window into the thinking of 15 members of Congress, who will then make recommendations on potential remedies such as new competition laws or company breakups. The House Judiciary antitrust subcommittee has been looking into Silicon Valley’s market share dominance in businesses including digital advertising and e-commerce for more than a year.

The subcommittee is expected to examine Facebook’s market share of social media, including its ownership of WhatsApp and Instagram, along with its co-dominance of digital media advertising with Alphabet’s Google. The subcommittee is also expected to probe Apple’s control over applications through its App Store policies and Amazon’s stifling of competition by leveraging third-party merchant data to champion its own products.

“There is growing evidence that a handful of gatekeepers have come to capture control over key arteries of online commerce, content, and communications,” House Judiciary Chairman Jerry Nadler said when the committee announced its bipartisan investigation last year. “Given the growing tide of concentration and consolidation across our economy, it is vital that we investigate the current state of competition in digital markets and the health of the antitrust laws.”

Politicians and technology executives have spoken up in the past two years about the growing dominance of the largest technology companies — specifically Amazon, Apple, Facebook and Google — whose combined market valuation is nearly $5 trillion. Elizabeth Warren, a potential vice presidential choice for presumptive Democratic nominee Joe Biden, has repeatedly argued for the breakup of big tech. Ex-Facebook executive and venture capitalist Chamath Palihapitiya said last month he believes the world’s largest technology companies will be broken up this decade.

“Are they going to get broken up? Yes. Will every single government go after them? Absolutely. State, local, federal … all around the world,” Palihapitiya said. “First, they’ll get taxed to death, then they’ll get trust-busted.”

But Kindler said breaking up companies like Facebook and Alphabet would serve little consumer benefit, and, in the case of Amazon, may actually harm consumers. He noted there are laws in existence to prevent price fixing and privacy issues but questioned the notion of a breakup based on size alone.

“I don’t see the reason why you would break them up,” Kindler said. “What are you going to spin out, Instagram? YouTube?…Do I think these companies have not served the consumer? Of course they have. I think it’s been one of the great things that’s happened to the consumer.”

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