Voices from all over the political and professional spectrum have been clamoring for tech companies to be broken up. Tech investor Roger McNamee,  machine learning pioneer Yoshua Bengio,  NYU professor Scott Galloway, and even Marco Rubio’s 2016 presidential digital director have all suggested that tech companies should be forcibly separated. So, I took a look at some of the past efforts in a new survey of corporate breakups and found that they really weren’t all that effective at creating competitive markets.

Although many consider  Standard Oil and AT&T as classic cases, I think United States v. American Tobacco Company is far more instructive. 

Like Standard Oil, the American Tobacco Company was organized as a trust and came to acquire nearly 75 percent of the total market by buying both the Union Tobacco Company and the Continental Tobacco Company. But unlike Standard Oil, as soon as these companies were bought, they were integrated within American Tobacco. In 1908 the federal government filed and eventually won a lawsuit under the Sherman Act, which dissolved the trust into three companies, which in theory matched the original three companies.

Yet, the breakup wasn’t as easy as simply splitting the larger company into its original three companies, since the successor companies had intertwined processes. A single purchasing department managed the leaf purchasing. Processing plants has been assigned to specific products without any concern for their previous ownership. For eight months over tense negotiations, the government pulled apart factories, distribution and storage facilities, and name brands. Office by office, the company was pulled apart by government fiat.

Historian Allan M. Brandt had this to say in  The Cigarette Century,

It was one thing to identify monopolistic practices and activities in restraint of trade, and quite another to figure out how to return the tobacco industry to some form of regulated competition. Even those who applauded the breakup of American Tobacco soon found themselves critics of the negotiated decree restructuring the industry. This would not be the last time that the tobacco industry would successfully turn a regulatory intervention to its own advantage.

While some might think that breaking up companies would be a clean operation, American Tobacco suggests the opposite. And I’m not alone in this assessment. Here is what Robert Crandall had to say a couple of years back  in a piece for the Brookings Institution:

[W]ith one exception, the breakup of AT&T in 1984, there is very little evidence that such relief is successful in increasing competition, raising industry output, and reducing prices to consumers. The exception turns out to be a case of overkill because the same results could have been obtained through a simple regulatory rule, obviating the need for vertical divestiture of AT&T.

In other words, this method simply does not achieve competitive markets.

If you’re interested in the longer piece, you can find it over at American Action Forum.

The European Commission may order Microsoft to strip Internet Explorer from certain versions of Windows, according to a preliminary ruling against Microsoft stemming from a complaint brought by Opera. Opera claims that Microsoft is “abusing its dominant position” by bundling IE with Windows, and consequently denying consumers “genuine choice” among web browsers.

If the European Commission upholds Opera’s complaint against Microsoft, it wouldn’t be the first time Microsoft has been found guilty of antitrust violations stemming from applications bundled with Windows.

Back in 2004, the Commission ruled that it was illegal for Microsoft to bundle its Windows Media Player with Windows and ordered Microsoft to offer a Media Player-less version of the operating system. Microsoft responded by unveiling the wryly named “Windows XP Reduced Media Edition.” Unsurprisingly, the European Commission rejected the name, so Microsoft renamed the OS “Windows N.”

Despite Windows N’s fairly neutral-sounding name, consumers showed little interest in Windows N when it hit the shelves. It’s quite obvious why Windows N was a flop–why would anybody want to run an operating system lacking useful components, especially when plenty of alternatives are available online at the click of a button?

The same reasoning is sure to relegate a browserless Windows (Windows: Reduced Internet Edition, perhaps?) to commercial irrelevance. Such a product would be placed on shelves solely to satisfy regulators convinced that they’re somehow “protecting” consumers by ensuring inferior products can be had.

How would the average user even select a preferred browser in the first place without a pre-installed browser? While OEMs could always pre-install a browser, anyone who wanted to install (or reinstall) a browserless version of Windows from scratch would need to jump through hoops just to get online.

More to the point, Opera’s claim against Microsoft looks downright absurd given the reality of today’s increasingly competitive browser marketplace. Despite IE being bundled with Windows, Firefox has gained significant ground on IE in recent years. Four years ago, IE had 91% global market share, while Firefox hovered around 3.5%. Now, Firefox is almost at 21% market share, and IE recently dropped below 70%.

Firefox’s ascent did not happen because of a mass exodus of users from Windows to other operating systems. To be sure, Windows has faltered a bit as of late, but Firefox has gained the following of a massive number of Windows users who elected to download and install Firefox as a replacement for Internet Explorer. This illustrates that users are perfectly willing to pick their favorite application for a given task, even if that means downloading a third-party app on the Internet. Plenty of other programs, like VLC and Google Desktop, have taken off among Windows users even though these apps largely duplicate the functionality of bundled Windows components.

Where does all this leave Opera? Unlike Firefox, Opera is still a laggard in terms of market share. Blaming Opera’s inability to gain a large user base on the bundling of IE with Windows, however, is entirely misplaced. The folks at Opera may feel that going after Microsoft might help them peel off a few users-or, at least, get Opera’s name out there in the press-but Opera’s biggest enemy is certainly not Internet Explorer.