In new research, Anik Bhaduri discusses how current antitrust enforcement is insufficient to address the economic influence of Big Tech companies. He argues that their market power stems from their privileged position on financial markets and their unique organizational structures, and antitrust reforms should therefore be complemented with reforms to corporate and securities law to effectively address the concentration of private power.
Antitrust authorities around the world have spent the better part of the last decade trying to rein in Big Tech. They have sued Google for monopolizing online search, fined Meta for privacy violations, investigated Amazon for abusing its platform dominance, and scrutinized Apple’s App Store practices. Despite record penalties, landmark court victories, and sweeping new legislation like the European Union’s Digital Markets Act, Big Tech’s dominance shows no sign of waning. These companies continue to acquire rivals, invest in potentially anticompetitive projects, and absorb regulatory fines as routine costs of doing business. It is evident that something is missing from the regulatory understanding.
The standard antitrust story focuses on how Big Tech dominates product markets: killer acquisitions, self-preferencing, hoarding proprietary data, and the suppression of emerging rivals. However, these narratives fail to account for the privileged position that Big Tech companies occupy in capital markets, which enhances and entrenches their dominance in product markets. In an upcoming chapter in the Research Handbook on Antitrust and Finance, I argue that the ongoing antitrust reforms against Big Tech must be complemented by corporate and securities law reforms.
Shareholder primacy does not enable anticompetitive behavior
The established narrative among scholars studying corporate law to inform antitrust attributes the consistent illegal conduct of Big Tech enterprises to shareholder primacy: companies seek to earn higher profits for their shareholders using whatever means possible. However, a closer look suggests that this view is fundamentally flawed, as shareholders frequently criticize corporate management for involvement in illegal activities.
In 2022, Alphabet shareholders requested a report on the macroeconomic costs of disinformation spread on its platforms. The report expressed concern that while Alphabet may profit from disinformation and other potentially illegal behavior, its shareholders, who have stakes in other companies, may lose overall if disinformation harms the broader economy. Another proposal expressly alleged that the company failed to manage regulatory risks and jeopardized shareholder value.
When shareholder proposals fail, investors have taken management to court. Investors have sued the management of Meta for failing to manage breaches of user privacy during the Cambridge Analytica scandal and misrepresenting loss of revenue. Alphabet has faced a shareholder lawsuit alleging that the company’s persistent antitrust non-compliance constitutes a breach of directors’ duties. While all these suits were settled by the companies with substantial pay-outs to the shareholders, these lawsuits make it clear that the illegal behavior is not driven by increasing shareholder value, and is, in fact, contrary to shareholder interests.
Dual-class shares and indexing lead to empire-building
The ability of company management to pursue risky ventures and disregard shareholder complaints is explained, at least in part, by the growing prevalence of dual-class shareholding structures among tech companies. While ordinary shareholders have access only to cash flow rights with a diminished voting power, founder-CEOs typically retain substantial (and often complete) control rights over the company despite their low equity stake, effectively allowing them to bet on their investors’ money. While proponents argue that such structures are essential to shield visionary founders from short-termist institutional investors, critics have argued that the insulation of management from shareholder oversight undermines corporate governance and fosters managerial inefficiencies. Even in companies without dual-class shares, founder-CEOs sometimes enjoy a superstar status on account of their charisma and perceived indispensability, and accordingly, are insulated from board oversight in a manner similar to that in dual-class companies.
For Big Tech companies, the governance problem is compounded by their positions in any capitalization-weighted index, with the big seven tech enterprises accounting for 30% of the S&P 500. The size of these companies requires these funds to hold their stock. As such, institutional investors are effectively compelled to buy in regardless of governance concerns. As one analysis noted, not holding the 10 largest stocks on the S&P in 2024—which were almost completely tech-related—would have resulted in a performance drag of 8.6 percentage points, the largest since 1991.
In winner-take-all digital markets where network effects entrench incumbents, investors face a stark choice: buy into highly anticipated tech IPOs, or risk missing out on the next Google. As index funds keep acquiring Big Tech stock, market capitalization rises further, attracting yet more investment from funds that benchmark against the S&P 500. This inflates these companies’ valuations independent of underlying performance, granting them access to extraordinarily cheap equity and debt capital. The top five tech companies in the United States hold 82% of all cash and marketable securities held by the entire U.S. tech sector, a concentration of financial firepower with no close historical parallel outside of government.
This easy access to capital, insulated from meaningful investor discipline, paves the way for “empire-building,” with managers preferring to reinvest surplus cash into expanding their empire rather than distributing dividends to shareholders. Economic theory and evidence from the conglomerate merger waves of the 1960s and 1970s suggest that diversification-driven acquisitions are typically value-destroying, as they overwhelm managerial capacity and generate organizational inefficiency. Big Tech’s decade-long acquisition spree, with Alphabet acquiring 214 companies and Meta acquiring 65 companies until 2018, exhibit many of the same pathologies, with a growing body of academic work suggesting that many of these acquisitions are pursued without any clear view of how they can improve shareholder value. Almost two-thirds of businesses acquired by Big Tech have been shut down following their incompatibility with the acquirer’s business model or technical platforms, indicating that many of the acquisitions undertaken by these enterprises do not benefit shareholders.
Capital markets advantage to product markets dominance
This corporate governance dysfunction and financial privilege has a direct bearing on product markets, compounding and aggravating competition issues in ways that are not addressed by antitrust law. First, the financial firepower allows Big Tech enterprises to invest substantially more into innovation than their smaller competitors. The five largest U.S. tech companies invested approximately $227 billion in research and development in 2024, an amount higher than the annual R&D expenditure of most countries. This allows them to pursue long-horizon research into AI, quantum computing, and other frontier technologies that smaller, capital-constrained competitors cannot match. The concern is not just that they spend more, but that their financial depth allows them to absorb losses on speculative projects indefinitely, effectively using their balance sheets as a competitive weapon.
The second concern stems from the dependence of tech start-ups on the incumbents for financial as well as technical support. In the absence of robust startup funding from traditional venture capital, which has increasingly shifted toward revenue-generating companies rather than early-stage ventures, Big Tech’s corporate venture capital arms have become the dominant funding source for many startups, accounting for 68% of the total value of AI deals in 2025. This turns these giants into financial gatekeepers and allows them to effectively constrain the startup’s ability to innovate in ways that threaten the incumbent’s revenue streams. The contractual relationship between Microsoft and OpenAI, requiring the latter to rely exclusively on Microsoft Azure for cloud services in exchange for the funding and technical support provided by the former, reflects how incumbents can influence the business strategy of emerging ventures using financial leverage.
Third, and perhaps most importantly for antitrust, dual-class shares directly undermine the deterrent logic of competition law. Antitrust fines are levied on the company, and therefore borne by shareholders. The theory is that shareholders will then use their governance rights to discipline managers who incur costly regulatory penalties. However, in companies with dual-class stock, shareholders cannot effectively discipline management, no matter how large the fines become. The result is that penalties are systematically misdirected, and investors bear the cost while the manager who authorized the anticompetitive conduct retains power and continues the same behaviour. Meta’s alleged willingness to pay the Federal Trade Commission billions of dollars to drop charges against CEO Mark Zuckerberg for personal liability in the data leak lawsuit exemplifies how agency costs within the company can affect deterrent mechanisms.
A New Deal for the digital age?
Historically, there was a consensus that the regulation of big businesses required a combination of antitrust, corporate law, and other regulatory instruments. In the 1930s, U.S. President Franklin D. Roosevelt explicitly acknowledged that “the existing antitrust laws are inadequate” to address the concentrated economic power of large holding companies. His administration responded with a coordinated package of corporate governance and securities reforms, including the Public Utilities Holding Companies Act of 1935, which prohibited pyramidal company structures involving more than two tiers, and an intercorporate dividend tax that made conglomerate financing costly. Crucially, these reforms were entrusted to the U.S. Securities and Exchange Commission rather than antitrust authorities, and by 1950 had led to the dismantling of many major conglomerate groups in public utilities. More recently, Israel’s Anti-Concentration Act of 2013 attempted a similar cross-disciplinary intervention, limiting the tiers of pyramidal ownership and refocusing antitrust analysis on economy-wide concentration rather than narrowly defined relevant markets.
Curiously, contemporary attempts at regulating Big Tech remain predominantly confined to antitrust and tech regulation without any attention to the financial markets in which these entities operate. Pending legislative proposals in the U.S., similar to the EU’s Digital Markets Act, address product-market conduct without touching the financial and organizational structures that sustain Big Tech’s dominance. In light of the overwhelming evidence that these tech enterprises can easily pay fines without modifying their behavior, it is unclear how these new enactments will bring about any meaningful change in the business conduct of Big Tech. While the proposal of breaking up Big Tech giants is appealing in rhetoric, unscrambling of large enterprises as an antitrust remedy has yielded limited success in the past.
It is therefore crucial to explore how the corporate and organizational structure of Big Tech enterprises enhances and entrenches their market power, and inquire whether and how corporate and securities regulation can be used to limit such concentration of private power. Corporate governance reforms constraining the power of the founder-CEO and mitigating agency costs will not resolve all concerns associated with economic concentration, but it represents a necessary complement to antitrust in the broader effort to constrain the accumulation of private economic power in the modern economy.
Author’s Disclosure: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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