Smaller companies would be more nimble and efficient. Also, Google’s main dominant product (e.g. search & ads) would be forced to compete & innovate vs leveraging Chrome & Android to keep themselves dominant.
They also don’t have the communication and process overheads and don’t have existing contracts that constrain how fast and where they can go. If smaller companies weren’t possibly to run more efficiently, you’d never see startups leapfrogging established players. Economies of scale are a strength and can also be a weakness (e.g. your economy of scale to do X means you can’t do Y which is more profitable / cheaper)