Politicians sometimes talk about breaking up companies, but it rarely happens. There are lots of reasons for this. Firstly, a lot of companies are really hard to break up. Sometimes this is just a natural fact about companies. But other times, break ups are made artificially harder. For example, Facebook (now Meta) deliberately made itself hard to break up as a defensive business strategy. Essentially, when political discourse about breaking up Big Tech started heating up, Facebook worked on integrating Messenger into Instagram and its other products. It tried to tie all the code together in a hard to untangle web so that regulators would get scared by the challenge and give up on untangling the company’s previously separate product lines.
Beyond business challenges inherent to breaking up firms, there are also legal challenges. Essentially, breaking up companies on antitrust grounds is nearly impossible because the courts have adopted a radically narrow standard of consumer harm. Further, courts hate to drastically intervene in markets. As a result, few antitrust cases ever result in breakups anymore. Because of the challenges inherent in breaking up firms, natural, artificial, and legal, breakups rarely happen. This is why when politicians talk about breakups, few voters really believe them.
But elite colleges are different. They’re quite easy to break up, and you don’t need to go through the courts. Essentially, the key component of elite colleges isn’t their campuses, nor is it their professors, nor is it even their qualified student bodies. There are plenty of campuses, professors, and qualified students to go around. The key component of elite colleges is their resources, also known as endowments. These resources enable elite colleges to maintain strong brands by being ranked higher than other schools. The endowments allow elite colleges to afford things that other schools can’t. Furthermore, the large endowments operate through flywheel effects, because the more resources a school has, the higher its ranking, and therefore the more resources it is likely to attract from donors and others.