I’ve been learning about the AT&T breakup in the 1980s, and it’s fascinating to see the parallels with Google today.

The same arguments were made back then. Smaller lines of business were artificially subsidized because AT&T could charge more for long-distance calls. When the breakup happened, it initially led to a short period of higher prices and worse service. However, the deregulation that began with the Nixon administration paved the way for the internet industry to thrive. AT&T was specifically banned from participating in certain areas so they couldn’t stifle innovation by pricing out new entrants. Over time, this decision gave us today’s market, where multiple carriers compete to provide consumers with better services.

With Google, we’re seeing the same debates. Without search subsidizing other products, things like Chrome or Gmail might not remain free. However, if history is any guide, consumers ultimately benefit in the long run, as do shareholders. Breaking monopolies often spurs innovation and competition, even if there’s short-term disruption.

For a deeper dive into AT&T’s evolution—from being a government-sponsored monopoly for 70 years to being broken up—I recommend reading The Master Switch. It’s an excellent exploration of the topic.