Breaking up Big Tech

It may seem odd, but it’s not unreasonable to say that the U.S. economy in the 1960s belonged to a company that, when it was amalgamated in 1911, was best known for its meat slicers, coffee grinders and systems to track employee punch cards. By that decade, the New York-based IBM – fat from Second World War military spending and now fully invested in computing for businesses, including the game-changing introduction of the general-use System/360 series of computers – was a colossus. At its peak, it controlled nearly 70 per cent of that market. But in 1969, the U.S. government brought an antitrust case against IBM, arguing that it held a monopoly and should be broken up into smaller parts. The suit ran on for 13 years, costing IBM and the government alike millions of dollars, not to mention the attention of IBM innovators. Even though a judge would rule the case had “no merit" in 1982, the suit hung over the formerly dominant company, and the decisions it made in an effort to settle the antitrust case – such as unbundling software and services from hardware – led to financial losses and disruption by cheaper and more efficient competitors. The antitrust case arguably made IBM less able to identify the market shift toward personal computers, and by 1980, its share of the market plunged to 32 per cent. In 1993, IBM posted a US$8-billion loss – at the time, the biggest in U.S. corporate history.