The Bell Breakup of Today: Expectations for Marketers if Google and Facebook are Broken Up or Nationalized
Over the course of the decade that spanned the 1970’s and early 1980’s, an Antitrust lawsuit came to fruition against AT&T, eventually leading to the breakup of the Bell System. Prior to this legal saga, AT&T was the sole provider of telephone service throughout most of the United States.
The same case is being made in the United States for digital search engines, platforms, and ecommerce technology. Citing the Bell Telephone System as a common example, politicians, media, and embedded government agencies have all hinted subtly or not-so-subtly that some of the biggest names in the digital space could face a similar fate in the near future.
Facebook, Amazon, Google, and Twitter – among others – are all very much under the gun. With states signing breakup resolutions and Antitrust hearings revving up, it’s beginning to shift from political lip service to something more real. Reasons cited range from the size of market share, to calling-card qualities of monopolization, to buying and killing competitors, to political bias and putting an unfair finger on the scale of otherwise free and fair elections.
I won’t get into the litigious minutia of why these cases and calls are different than the breakup of the Bell system, but if there are legs to a possible breakup of these tech giants, the landscape of digital marketing and content is going to change forever.
How would these entities be broken up? What would the user impact be? What services or advertising mechanisms would be changed or eliminated in the process? What can agencies and businesses do NOW to prepare for such an event?
Using the Bell System as a case study and applying modern technology, as well as keeping the current political climate in mind, can inform what we do now.
Recalling history and applying it to potential breakup today
The breakup of the Bell System was mandated on January 8, 1982 by an agreed consent decree providing that AT&T Corporation would, as had been initially proposed by AT&T, relinquish control of the Bell Operating Companies that had provided local telephone service in the United States and Canada up until that point. This effectively took the monopoly that was the Bell System and split it into entirely separate companies that would continue to provide telephone service. It had been a decade-long legal battle initiated by the United States Justice Department against AT&T as the sole provider of phone service throughout most of the country. By 1982, AT&T knew it would lose the lawsuit and then developed a plan to break itself up.
Eventually the Bell System’s various entities were merged into Regional Bell Operating Companies (RBOCs), or “Baby Bells”. AT&T’s value was devastated.
What’s critical to know here is that the companies were broken up first by service and then regionally. The breakup led to competitors nationwide, like Sprint and MCI. It also diversified products among telephone companies and advertising avenues, leading to products and services like Yellow Pages, telephone hardware equipment, and computer service offerings.
A logistical nightmare, the Bell System and AT&T were split by both service verticals and regional verticals. Because the internet has made us a more connected world where long-distance calls don’t happen domestically, the television isn’t the centerpiece of our homes, and data is more easily collected from people, the blowup of today’s tech giants may look similar in some ways but dramatically different in others.
Namely, a regional breakup seems nearly impossible. But a service and data breakup for each entity is compelling, possible, and – if these proposals gain any meaningful ground – achievable. That is the most intriguing part for marketers. It may also be the scariest.
Initial cross-platform marketer expectations in the case of breakup or nationalization
In the introduction, I mentioned the “Big 3 and a Half” tech giants. These are the platforms and companies under the most scrutiny – by Congress, by media, and by society as large. Twitter notwithstanding, these platforms could be the next face of civic antitrust in America. In fact, they may even be made examples of during a straight-up government takeover.
In these scenarios, there are principles to expect no matter which platform you’re interacting with as a user or as an advertiser.
What to expect if tech platforms are broken up
As we saw with the Bell System breakup, products and services will be divided.
But in what way will they be divided?
That’s difficult to predict. It requires looking at how the platform makes money. Without getting into details, Google makes money through the Google ads, Google Play, Google Cloud, Chrome browser, and Android mobile operating system. Facebook makes money through advertising placement and payments. Amazon makes money through online retail products, third party seller commission, Amazon Web Services, and Amazon Prime.
There are complicating legal factors all along the way (especially because these are now international companies), but it is conceivable that a breakup may happen around service lines for each: Google gives sovereign management to YouTube, its advertising product and browser operations.
Facebook retains a large portion of advertising and becomes a larger entity with holding companies underneath it to manage payments and Instagram advertising.
Amazon retains most control of its retail product environment, but must divest its 3rd-party seller program, its streaming service, and its data products.
In any case, if you’re a marketer, what you really need to prepare for is a different interface and diversified usage. We’re all accustomed to going to Google for our YouTube ads, going to Facebook for our Instagram ads, and having Amazon run our applications on their servers. If platforms are broken up by service, you might be able to reasonably expect better customer service and maybe even better performance if specific services are more fragmented.
However, marketers will need to prepare themselves to work on a new assortment of platforms to reach the normal audiences they’re accustomed to reaching. Expect to learn new terminology, new semantics, new work with different UI’s, and new expectations to install more tracking codes on your websites or conversion pages.
In the case of the Bell Breakup system, services that were distinct from one another were divvied up by relevant services. Being that each of the tech giants are global entities and the infrastructure is not regional, it would seem that a split in services would be the most practical way to break up. If there were to be some kind of domestic regional breakup, begin preparing research into regional markets and how ad performance differs in each.
What to expect if tech platforms nationalized
If the state grabs hold of any of the aforementioned tech giants, there may not be anything that functionally changes. You can probably expect innovation within the platform to grind to a halt. There may be a series of new regulations to advertise on a government platform or to buy products on a government market, but beyond that, it’s hard to imagine anything changing dramatically about the way marketers interact with a platform.
In this scenario, advertising on these platforms could disappear altogether. SEO could even cease to be a legitimate thing, as fairness – not necessarily qualifications or relevancy – would be prioritized in a government-run system. If this is the case, remarkable content is going to matter more than ever. Your company or organization to be found or chosen online, will need content that stands on its own. Prioritize long-form, educational blog content and have it be on topics within your industry that stand the test of time.
It’s tough to say what this scenario might look like, but having good fundamentals when it comes to your website content is the best thing you can do right now.
Be it Facebook, Google, or Amazon, the message remains the same
If tech platforms are to break up like the Bell System or are nationalized in any form, the prescription remains the same: explore different platforms now and experiment with smaller players that may inherit a windfall of opportunity online. Alternative marketplaces to Amazon can be found here. DuckDuckGo is an alternative to Google that shows more of a democratized approach to data and collection on search – which will be curtailed, eliminated or nationalized for government purposes on Google.
Check it out, learn its features, and explore how new search platforms emerging. Other browsers that rival Google Chrome are already emerging and showing a new path away from data collection – including a total erasure of cookie tracking and behavioral. Again, data is a huge part of what all of these platforms monetize. That function will go away for private vendors if the platforms are broken up or nationalized in any dramatic way. Explore how these browsers are able to be monetized without it.
As far as social media platforms go, Facebook being broken up would most-likely mean a windfall of benefit for other already existing platforms. The first place to get acquainted would Facebook’s ad merchant partners, as they would be the likely beneficiaries should the social media giant need to divest assets or service capabilities.
Very few can predict what would happen should these tech giants be broken up or nationalized, but taking the knowledge that the Bell System and AT&T were both divvied up first by service can give you insight into what you should be researching right now. The rhetoric is only going to get more intense.