While commercialism has traditionally shaped the restructuring of large corporations, it's now more likely that major tech companies will face forced restructuring along national or regional lines, writes Paul Budde.
IN A RECENT discussion with Dutch colleague Hendrik Rood, we spoke about the global political and economic landscape shifting toward a more autarkic model, reminiscent of the interwar period.
Protectionism and national security concerns are driving governments to exert greater control over critical industries, including technology. I also like to refer here to the article published in Independent Australia a few weeks ago, titled: 'Europe must stand firm against the unchecked power of U.S. digital giants'.
This trend could lead to a geographically driven breakup of Big Tech firms, similar to historical precedents in the banking, telecom and oil industries.
Shift from globalism to autarky
In recent years, there has been a notable retreat from globalism. Driven by trade restrictions from the U.S.– initially targeting China and now extending to the European Union, Canada and most Western economies – these actions are inevitably leading to a greater focus on self-sufficiency, trade barriers, and technological sovereignty.
This shift is also influencing regulatory policies, making it more likely that major tech companies will face forced restructuring along national or regional lines.
The geopolitical motivations for such breakups include national security concerns, regulatory pressure and economic sovereignty. Governments are wary of foreign control over critical digital infrastructure and user data.
The EU’s Digital Markets Act (DMA) and Digital Services Act (DSA) are already forcing structural changes in tech firms operating within its jurisdiction. Additionally, governments want to ensure that the economic benefits of Big Tech operations remain within their borders rather than being repatriated to corporate headquarters abroad.
Historical precedents
There is a long history of government-mandated corporate breakups in response to economic and security concerns. Some notable examples include the breakup of the American Telephone and Telegraph Company (AT&T) and Western Electric in the 1920s, which separated the Bell Telephone Manufacturing Company (BTMC).
Similarly, the dissolution of Standard Oil Trust in 1911 resulted in multiple entities, leading to the formation of today’s ExxonMobil, Chevron, and others. More recently, telecom companies around the world have been divided into separate postal and telecom companies to prevent excessive market concentration.
A contemporary example is Yandex – once Russia’s largest tech company – which has been forced to split into separate domestic and international businesses due to geopolitical pressures following Russia’s invasion of Ukraine. This mirrors the growing trend of technology firms facing political barriers to cross-border operations.
Potential scenarios for Big Tech
Major technology companies may be forced into geographic restructuring if this trend continues.
Possible outcomes include:
- Alphabet (Google's parent company) splitting into Google U.S. and Google Europe, as European regulators already require localised compliance;
- Amazon being divided into separate U.S. and EU entities, following a model similar to Unilever’s historical corporate structure;
- Meta (formerly Facebook) operating independently in different regions due to regulatory restrictions on data transfer and privacy laws; and
- TikTok becoming detached from Chinese control, as the U.S. has already imposed bans on TikTok in certain government settings, with further steps potentially leading to an outright separation of TikTok America from its Chinese ownership.
While commercial market forces have traditionally shaped corporate restructuring, the emerging trend is toward geopolitically driven corporate separation.
Past Big Tech antitrust efforts sought to divide companies based on product lines. The breakup of Google in the U.S. was initiated under the previous Administration but has now been set aside by the current regime.
Instead, the next wave of breakups may be geographical, reflecting the increasing fragmentation of the global economy. Governments are already laying the groundwork for such moves.
If this trajectory continues, the tech industry may soon undergo its most significant transformation in decades.
Paul Budde is an IA columnist and managing director of independent telecommunications research and consultancy Paul Budde Consulting. You can follow Paul on Twitter/X @PaulBudde.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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