What are Baby Bills?

Baby Bills is a fanciful nickname that is given to companies that would possibly result if a large corporation was broken into a number of smaller entities. The origin of the name has to do with the founder of Microsoft Corporation, Bill Gates. From time to time, there has been some speculation regarding what hypothetical companies would emerge if the Justice Department in the United States were to determine that Microsoft needed to be broken up, similar to that happened to AT&T during the 1980s. The actual nickname of Baby Bills is a take-off of the nickname assigned to the number of Bell companies that resulted from the breakup of AT&T during that time, since those entities were known as “Baby Bells.”

Along with use as a term to collectively identify the companies that would presumably emerge from a similar split-up of Microsoft, Baby Bills is increasingly used whenever there is reference to possibly destructuring a huge corporation that has taken on some of the attributes of a monopoly. While there are some negative connotations associated with the nickname, such as an underlying assumption that the huge corporation in question may be skirting close to existing antitrust laws, there is often no intent to convey a suggestion of misdeeds on the part of the corporation when this term is used. Rather, Baby Bills is a somewhat colorful way to describe what could happen if any large business chose to break into a series of smaller business entities.

The idea of referring to companies that emerge after a restructuring of a large business as babies has long been a part of business nomenclature. In most cases, the original corporation, usually known as a mommy or daddy company, is said to give birth to the new smaller entities. Those babies are then free to make their own business deals, set their own goals, and in general function as an entity that is separate from the original corporation. There may still be some contractual ties, making it possible for all the entities involved to still benefit from a working relationship with one another.

Today, use of the term Baby Bills is no longer used only in reference to companies emerging from Microsoft. Increasingly, any business or series of businesses that are from a larger company and exists as separate business entities that are independent of that larger company may be referred to as a Baby Bill. As long as Microsoft remains one of the most recognizable companies in the world, the term is likely to continue to be used with some regularity, at least until another fanciful nickname for the same type of phenomenon catches on with the financial and business communities.