Companies exist in large part to avoid transaction costs of using several autonomous market agents (the thesis of _The Nature of the Firm_ http://www.cerna.ensmp.fr/Enseignement/CoursEcoIndus/Support... by Ronald Coase, 1937)

Vertically integrated companies can avoid more transactions costs, making them more valuable.

The author doesn't seem to appreciate why large, vertically integrated companies are fundamentally valuable.