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Comment by vlovich123 | Hacker News Reader

You're basically advocating for unscrambling the omelet to be easier. Should be obvious why it's harder to unmix than it is to mix.

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Splitting a large company is already done to shed and transfer liabilities. Divisional Merger Tactic / Texas Two Step. [0] [1] Keep the yoke and drop the albumen with time and patience.

[0] https://batesonlaw.com/divisional-merger-tactic-how-liabilit...

[1] https://www.creditandcollectionnews.com/u-s-supreme-court-de...

You can bet that if the board of directors could show that unscrambling the omelet would result in greater shareholder value produced, it would suddenly be really easy to do...

On a technical level it would still be a nightmare. But yes it would actually get done.

My first tech job was at HP, in 2015, started there just in time work and live through that split. That was a smoother one from what I hear but it was not a fun job to have at the time

Happened with Dow-Dupont! A three-way split, even (from a two-way merger). Took roughly two years and was the shareholders' plan from the start. By most accounts it went very smoothly.

[1] https://www.investors.dupont.com/news-and-media/press-releas...

[2] http://www.dow-dupont.com/

Progressive corporate taxation could make it happen for reasons other than dodging the ghosts of chemical sins past!

Can we stop with taxing everything you don’t like? Taxes should be equal and used to fund the government, not as tools to make people do things you like.

I question the assumption that taxes you don't like will not fund the government

"Should" needs some unpacking; there's a subjective value lurking inside.

Personally, i prefer economic incentives over coercion. My starting point: there is a degree to which society must govern entities within it.

Can we stop with pushing all of the taxes into the work-consume economy and out of the invest-return economy? The latter is eating the world, would it really hurt it to help clean up its own messes for once?

Taxes used to offset the costs of undesirable activity are the most effective and efficient taxes, but you want less of that?

What type of taxes, state or federal? Because federal taxes do NOT fund federal spending.

https://mmt101.substack.com/p/an-explanation-of-why-taxes-do...

It is a key point... if splits are encouraged and made easier (and I agree it'd be healthier for the market if the largest companies did), then liability needs to be handled carefully.

One doesn't want to create a 'snake sheds its skin' scenario where Meta (for example), stuffs all its liability in a spin-off, yet keeps the profits those actions accrued in the other entity.

I’m advocating for controlling the damage. The way I said it is cutesy, not literal.

I intended it to point out that it’s too easy to merge companies together but it’s effectively impossible to stop someone from becoming anticompetitive without a real consequence.

If we can’t make it easier to rip them apart then we shouldn’t be so slap-happy about approving them in the first place.

Why skip this part ?

> legislation needs to either make it just as hard to merge two companies as it is to unmerge them

Nothing was skipped - the point is that this is directly analagous to unscrambling an omelet. Separating mixed things is significantly more difficult than mixing them.

"The laws says X" doesn't change whether X is possible or not.

It’s quite literally not analogous as breaking up companies has happened a bunch but no one has ever unscrambled an omelet

fwiw I thought it was a good analogy. Sure splitting a company is possible and scrambling an omelette is not, but it sure takes a lot more effort to effectively undo entropy.

In a merger you can take as long as you want to go from

1. Two separate companies except at the end of the quarter we add their revenue and expenses together in a spreadsheet to transition to

2. One fully integrated organization

And usually you are becoming more efficient and saving time and money as you integrate.

Splitting a company needs to happen quickly or you'd get all sorts of weird effects where coworkers are ostensibly competitors whilst sharing resources during the transition. And you have to expend a huge amount of effort. Just a couple random complex systems that need to be untangled off the top of my head: physical property and leases, IP space for every IT service you run, multi-year contracts with every vendor from janitorial to SaaS, multi year contracts with customers depending on how the split goes, and of course all the intermingled finances and HR and spreadsheets every company in the world lives on. I'm sure there's thousands more considerations.

I agree antitrust is a big problem that needs to be solved. But "it should be the same amount of effort to merge and split a company" is just fantasy.

Do you really think it's impossible to pass legislation that makes something that's currently easy hard without making the reverse any harder as well?

Yes, because the difficulties in separating integrated pieces have nothing to do with a merger.

What makes splitting a company out difficult isn't (directly) a financial or paperwork burden - it's that tightly integrated systems are very difficult to untangle. There is nothing analagous that could be introduced in the merger process. You could add a mandatory delay, but that's not making it "as hard", it's just making it slower.

I don't understand why you think the only possible ways to make mergers harder need to be "analogous". If they put a hard cap on the size of companies allowed to merge, that would make it harder, without making it harder to break them up. It's hard to take seriously the idea that you think there's literally no possible legislation that could end up changing the relative difficulty in the way the parent comment describes when I was able to come up with an insanely trivial example without needing to think about it for more than a couple minutes.

The law could make mergers executed provisionally for up to X years, with a binding plan to "unmerge" that must be updated every Y months. The FTC already half-does this with post-merge divestiture requirements.

This still amounts to "don't mix" which is far easier than unmixing once it's happened.

Yes, that's the point, making something hard means that sometimes it will not happen. Only comparing to the cases where it does happen is missing the entire point.

Yes, this is obviously the ask: why doesn't government unmix the omelet. Your very body unscrambles the omelet and makes you. It's what intelligent things do when they are moving agency into the proper places.

what is the purpose of regulation except to resist entropy in such strategic places?

Progressive corporate taxation would give the market an incentive to do spinoffs and undo the merger wave.

Or we could just roll antitrust policy back to what it was before Ronald Reagan and Robert Bork installed the Consumer Welfare Standard, the idea that companies must be allowed to merge if they can scribble a tall tale with crayons on butcher paper about how the merger will benefit consumers, for sure, pinky promise. This is obviously mega-rigged, it comes from the Robber Baron era, it was defeated before (look up Louis Brandeis) and it can be defeated again (look up Lina Khan). They didn't even change the talking points (dontcha know, the Standard Oil monopoly reduced the price of Kerosene by 70%?!) -- time is a flat circle when it comes to anti-trust policy. Let's spin it back to the part of the circle where we win.

Progressive corporate taxation would lead to every company splitting its revenue and expenses across 50 shell companies, without actually splitting operations.

...which is common today.

I like globalisation on its face. The second-order effects are a bitch. I don't want to go full protectionist, bit we should swing the needle back a bit.

Not if the gaggle of shell companies was difficult to invest into or had enough rights to make it a strategic threat. But sure, wave those infomercial-hands some more and maybe you'll convince me that I can't use a screwdriver.

Undoing mistakes is usually difficult and costly, but still worth doing on the road to not making the mistake again. Grandfathering in the subversion of the economy and our democracy is worth fighting.

No, they're advocating for more scrutiny of whether the omelet is going to be very bad for everyone who isn't part of the omelet (yes, this metaphor is weird, but I didn't introduce it)

That’s one half. The other, more interesting half, recognizes that unscrambling the egg is difficult, so we must take more precautions before scrambling it in the first place.

I’ve been saying that an easy solution is just don’t allow companies with even modestly large overall sizes to merge or acquire other companies. At all. For any reason.

I think that despite this reform being a blunt instrument it would work surprisingly well.

It would allow companies that should have declined to decline and it would give massive incumbents a major incentive to innovate in-house.

He's saying that if we can't unscramble the omelet then we should make damned sure the omelet will be healthy before allowing it to be scrambled.

I don't think it's particularly unusual for a company to spin off another company?

That is about as bad of an analogy as you can make

PE companies do it all the time.

PE companies do it with very little regard for if any of the pieces are viable and survive after the fact, so their model isn't one I'd suggest following.

Maybe if a large company is anticompetitive and the parts would not survive on their own, we should be letting those pieces fail

From a public policy perspective it doesn't matter if some pieces are unviable and fail to survive. Across the entire economy, this creative destruction allows for quickly reallocating resources to more productive uses. Most of the companies that take PE investments do so because they're badly managed and unable to obtain capital from other sources; they would likely fail anyway. At least the PE investment gives them a chance to survive and brings in more financially disciplined management.

There's many examples of companies who were conducting a low growth, long-term viable business. And where then PE stepped in, ripped out the most profitable part(s), and discarded the less-profitable parts as a dead husk.

In the process, the public lost the benefit that less-profitable part provided. Besides ripping up a company that was doing fine as-is.

You call that "reallocating resources to more productive uses". Yes that may be what's happening in some cases. But not always.

Less-profitable != non-beneficial to the public. At this point I regard PE entities as value-extraction machines. Which sometimes, but rarely, work with the public's benefit in mind.

And let's not get started on cases where PE secured loans, sold off a company's assets, only to lease them right back. Leaving company deprived of their assets & debt-laden, going under shortly after, while PE firm runs off with the goodies. Most people would think of that as theft & destruction. But in high-finance world it's named differently & somehow legal.

its not unheard of for large public companies to do spinoff. a few examples that seem to have worked out fairly well

Phillip Morris / Altria / Kraft / Mondelez

HP / HPE / Agilent / Keysight

large corporations spin off divisions into separate companies all the time

Eh, thats a bit of a False analogy. spinning off a division of a company is easier than fully integrating another.

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