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The return of real anti-trust might have an IT upside

by Mark Raskino  |  May 14, 2009  |  2 Comments

This week the EU took a big swipe at Intel with  a very large fine. Forget about the details of the case, who was right or whether the penalty will stand up after appeal – just think of it as one megatrend data-point.  A recent piece in Business Week suggests that Barrack Obama is breaking with the Bush doctrine of turning a blind eye to many potential anti-trust situations. Again set aside your views on those United States Presidents – just note another trend data-point.

What’s happening here?  Well a deep recession causes some deep learning and collective introspection. We have all learned that ‘too big to fail’ in fact means ‘must be bailed out’. It’s costing us all a lot in taxes. That’s causing radical thinking and debate both in the US and in Europe.

In the 60s, 70s and 80s big corporations were sometimes broken up by interventionist regulators who saw monopoly powers emerging from oligopoly situations. Holding a quarter or third of a market was cause for real scrutiny. Mergers were often stopped – not just given conditions.  In the 90’s that faded. So when we ask ourselves how we ended up with companies that are both too big to fail and internally inefficient … well it is not hard to see that some of it might have been avoided.

If it gathers momentum – what will this international policy trend bring? In every major industry we should ask ourselves if newly empowered and interventionist regulators would choose to start breaking things up into smaller parts, to make the markets more dynamic and competitive. If that started to happen there would be a lot of big systems extrication projects and each change would bring forward options for enterprise platform migrations and legacy exits. Actually from an EA modernisation perspective .. it could be interesting.

The other side of such intervention would mean fewer situations where companies are ‘too big to fail’. That in turn might allow more failures. When companies do reach the edge, usually parts of them are sold on by the administrator as a going concern. Such business unit transplants have creative destruction effects on large scale IT architectures and management practices.

Maybe we all need some of this. More modern IT – from SOA to Cloud and M-Commerce to BPM, can only deliver its productivity effects to society if it is used. If behemoth companies are incapable of finding the change energy to move off 70’s and 80’s core business platforms, the value of  technology progress is not fully realised.  Or put another way – economic growth is partly stunted by mega-corp Luddites.

Regulators do make mistakes – sometimes big ones. The short term effects of their actions might be big fines, and thus profits – sometimes jobs. But over the longer term, the value-creating force of IT might be accelerated.

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Category: analyst-life  ceo  economy  enterprise-20  management  recession  regulation  strategy  

Tags: anti-trust  creative-destruction  eu  intel  obama  recession  systems-extrication  too-big-to-fail  

Mark Raskino
VP & Gartner Fellow
15 years at Gartner
30 years IT industry

Mark Raskino is a vice president and Gartner Fellow in the CEO Research group. Mark creates advice and analysis for CEOs on technology related and digital business strategy and change Read Full Bio


Thoughts on The return of real anti-trust might have an IT upside


  1. Nick Jones says:

    But do we maybe have a situation with companies like Intel and maybe some other industries where huge is the only option because of the characteristics of the technology? Designing a new processor generation and building fabs to create it is a multi billion dollar investment that has to be repeated every 18 – 24 months or so. You just can’t afford it unless you’re a huge company.

  2. Mark Raskino says:

    Well my Semi’s business model knowledge is weak Nick – so let’s leave Intel out of it and address the question more generally.

    Yes this can be the case – its called natural monopoly and it tends to apply to utilities – railways, water etc – where the capital investments are vast. A utility can be operated privately of course – but this needs to be counterbalanced with a specialist and powerful regulator who sets prices controls and other factors to ensure the customer is protected from monopoly powers. Getting the balance right isn’t easy – notice how the UK regulator is forcing BAA (the owner of Heathrow, Gatwick and other large UK airports) to split.

    One further observation. Wasn’t GM supposed to deliver economies of scale in buying and aggregating all those car brands over the years? Perhaps sheer size doesn’t always work.



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