The year was 1911. After years of staggering growth, control over pricing, and legal run-ins along the way, Standard Oil is ordered to be busted up by the U.S. Supreme Court. Standard Oil was forced to split into 34 smaller companies, some of which survive today in the form of ExxonMobil (XOM -2.30%) and Chevron (CVX -1.74%). The Supreme Court ruled against Standard Oil on the basis of the Sherman Antitrust Act, which had been minted a couple of decades prior to prevent exactly the anti-competitive behavior the oil giant was involved in.

As the saying goes, "History doesn't repeat itself, but it often rhymes." Fast forward to 2019, and the Federal Trade Commission (FTC) and the Department of Justice (DOJ) are reportedly looking into the practices of big tech companies -- namely Google parent Alphabet (GOOGL -0.02%) (GOOG 0.10%), Facebook (META 0.20%), Amazon (AMZN -0.34%), and Apple (AAPL 0.06%). The players have changed, but many of the same rules apply today, and antitrust laws could be brought to bear against technology. Investors could be in for some shock-and-awe treatment from the Feds, but there's no need to panic.

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Image source: Getty Images.

Antitrust what?

First, let's review what antitrust laws are. According to the DOJ website, there are three primary mandates: the aforementioned Sherman Antitrust Act of 1890, the first law to really crack down on monopolistic practices that restrict competition; the Clayton Act of 1914, which was passed to clarify and supplement the Sherman Act; and the Federal Trade Commission Act of 1914, which also created the FTC.

The idea behind all three laws was to crack down on anti-competitive practices, like collusion between competitors and mergers and acquisitions that lessen competition or increase prices on consumers. Regarding monopolies, the DOJ website reads as follows under the Sherman Act:

The Sherman Act also makes it a crime to monopolize any part of interstate commerce. An unlawful monopoly exists when one firm controls the market for a product or service, and it has obtained that market power, not because its product or service is superior to others, but by suppressing competition with anti-competitive conduct. The Act, however, is not violated simply when one firm's vigorous competition and lower prices take sales from its less efficient competitors; in that case, competition is working properly.

Based on this definition alone, it will take some effort to pin down the big tech names under fire. On one hand, they have grown to massive scale because they're disruptive to incumbent businesses by offering a superior service or lowering prices (like Amazon). On the other hand, though, acquisitions are common in the tech world -- think Facebook's buyout of WhatsApp and Instagram. Sometimes, a takeover is to capture growth from an upstart; other times, it's to consolidate market share in a key business segment. These deals have been going on for years relatively unchecked, and now it's an issue after the fact.

Granted, we don't know yet why the DOJ and FTC are mulling an investigation. Technology names have been in media frenzy-induced trouble and in lawmakers' crosshairs for years now. Facebook's Cambridge Analytica debacle that surfaced in early 2018 is a prime example.

Data privacy and abuse of the internet are not new concerns, and to be fair, it isn't limited to just the biggest internet names. In today's digital and data-driven world, many large businesses display signs of questionable practices. In early 2018, I wrote about Southwest Airlines'(LUV -0.84%) lawsuit against a small start-up to keep internet traffic flowing direct to their website.

Whatever the reason for the possible investigation, ganging up on tech is about the only thing lawmakers seem to agree on at the moment. But should investors panic?

What could happen...

Even if mega-tech is going to be the poster child for a crackdown of internet stocks, it will likely take years for any action to be taken. Action could be taken, though. In the past, antitrust laws have been brought down in glorious fashion. Standard Oil was the first example, as it was split up into dozens of smaller energy companies. AT&T (T -0.16%) is another example, which was broken up into several regional phone operators in the 1980s. Even with those drastic measures, shareholders were just fine. Successors to both of those companies continued to develop, merged with each other later, and business grew.

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Image source: Getty Images.

It's just my conjecture that something less dramatic will take place, as is usually the case. The DOJ and FTC could decide to levy restrictions on business practices, like what happened to Kodak several times. The company had a monopoly on camera film and agreed to not sell private-label product in the 1920s. Later, in the 1950s, it was required to license out its color film-processing business. Other businesses over the years have simply been required to pay fines -- albeit sometimes hefty ones -- because of unfair or monopolistic business practices.

Let's focus on Google for a moment, since the search giant has arguably been in the hottest of water with regulators over the years. Besides coming under fire for privacy and data practices along with Facebook last year, Google has also faced scrutiny over its digital-advertising duopoly. (Facebook is the other dominant party in that industry.) Across the Atlantic, Google has been fined three separate times by the European Commission over its search and Android businesses, totaling over $9 billion.

Perhaps fines are all that will happen to Google, Facebook, Amazon, and Apple if the DOJ and FTC do move ahead with an investigation. Or maybe some more disruptive regulatory activity will be laid down on the technology disruptors -- perhaps requiring a breakup, like Google needing to separate its search business from its mobile operating system business. Only time will tell.

No matter what the action, though, it's important to remember that many businesses that have had to make antitrust adjustments in the past did just fine in the long term. The ones that didn't (like Kodak) didn't die because of the law.

The real success of a company isn't competition or lack thereof, but rather its ability to innovate and change with the times. As long as Google, Facebook, Amazon, and Apple continue to advance -- whether they remain intact in their current forms or not -- investors have no need to fret.