U.S. agencies are taking on Big Tech companies for their supposed monopolies. Whether it’s the Federal Trade Commission (FTC) looking into the cloud computing market or the Department of Justice’s (DOJ) complaint against Google regarding its ad tech, antitrust suits are increasingly targeting firms for being “too big.” FTC Chair Lina Khan has even published a Yale paper alleging that market concentration inherently keeps out competitors. Despite what Khan and others might think, a look back at history reveals that simple market forces displace dominant firms all the time.

America’s five largest tech firms, Google (Alphabet), Apple, Facebook (Meta), Amazon and Microsoft, are often lumped together with the title GAFAM. The oldest, Apple, is less than 50 years old. It was only in 2009 that Apple broke into the Fortune 100, while Google remained off the list, behind Dell. None of the largest tech firms have occupied their current spots for very long and were able to displace the previous market-dominant firms without the state intervening on their behalf.

One such market-dominant firm that is no longer at the center of the tech industry is IBM. At one point, IBM was considered a monopoly over the entire tech computing space. Its competitors were deemed so insignificant that they had the title of the “seven dwarves.” In 1967 IBM was estimated to have a 70 percent share of the computer market, a position it maintained until the late 80s. By that point, its losses were so significant that it ended up selling its IBM PC to Lenovo in 2005, officially ending what was at one point considered the only real option for computer consumers.

A similar story took place with AOL, which undertook one of the first attempts to capitalize on the invention of the World Wide Web. AOL, or America Online, was the world’s first major internet service provider, offering internet, emails and user forums. The firm was so popular in the 90s that at one point half of all CDs had the AOL logo. Despite remaining the dominant internet service provider until the early 2000s, AOL failed to adapt to the switch from dial-up to broadband internet access. This failure meant that AOL went from being the only major internet provider consumers could choose to complete obscurity.

These drastic changes in market concentration occurred without any government entity breaking up IBM or AOL. If proponents of “big is bad” argue that market concentration inherently stifles innovation, how would they explain how some of the largest innovations in recent history occurred in markets where single firms had 70 percent market control or more?

Clayton Christensen, a Harvard Business professor, offered one explanation for this phenomenon in his book, “The Innovator’s Dilemma.” He demonstrates how market-dominant firms often fall victim to their success. When a firm creates a model for meeting consumer demands, it often focuses on maximizing its approach to meet its most demanding consumers’ wishes. This natural movement toward highly demanding consumers will inevitably lead the company to ignore low-end consumers. An entrant firm can capture these low-end consumers and etch out a niche that, when grown, can begin to pull away at mainstream consumers too. Once this occurs, Clayton explains that the market is disrupted, and the entrant has an opportunity to overtake the dominance of the incumbent.

Expanding on why market-dominant firms lose their dominance, other studies have pointed out that entrenched firms tend to create inflexible systems. When a firm is used to operating a certain way, it becomes costly to adapt to a changing market. This can be the case because of existing infrastructure, stagnant shareholder interests and leadership and outdated business environments.

Looking back at the IBM example, entrants like Microsoft and Apple were able to take advantage of IBM’s bureaucratic and inflexible business model by creating a whole new market to appeal to ignored consumers. Thus the Personal Computer (PC) market was born. IBM still created PCs, and once dominated that market, too. Its history as a mainframe computing company limited its creative approach, ultimately ending its market dominance. Antirust efforts that are based on the premise that large firms inherently suppress competition ignore history. Out of the top 10 largest firms today, none of them held that same spot 50 years ago. Market-dominant firms naturally become stagnant and open themselves up to displacement by competitors. The only permanent monopoly is one that the state creates. In lieu of that, the invisible hand routinely cycles through large firms to meet the needs of a changing market.