In the early 1980s, which company was required by the Justice Department to be broken up for being too powerful?

• A. AT&T
• B. Microsoft
• C. IBM
• D. General Electric

Answer: (A)

Regulatory actions to curb monopolies and restore competition are being tested here. In the early 1980s, the Justice Department moved to curb a dominant player that controlled most of the country’s telephone service and much of the related equipment market. Because one company had such extensive control over both local and long-distance communications, there was little room for competition to grow, innovate, or lower prices for consumers. The government required that this company break up, leading to the dissolution of its integrated Bell System into several separate regional carriers and the separation of its equipment operations from the network operations.

This outcome was specific to that situation and timing. The other firms listed were not subjected to a breakup order in that era. Microsoft’s major antitrust concerns arose later, IBM faced various antitrust actions at different times but not a forced breakup in the early 1980s, and General Electric did not undergo a breakup under DOJ antitrust pressure then.