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Start-up Acquisitions, Venture Capital and Innovation: A Comparative Study of Google, Apple, Facebook, Amazon and Microsoft

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  • Klaus Gugler

    (Department of Economics, Vienna University of Economics and Business)

  • Florian Szücs

    (Department of Economics, Vienna University of Economics and Business)

  • Ulrich Wohak

    (Department of Economics, Vienna University of Economics and Business)

Abstract

We evaluate the impact of big-tech acquisitions on the incentives for investment and innovation. Using data on several hundred acquisitions by Google, Apple, Facebook, Amazon and Microsoft (GAFAM), we study the evolution of venture capital investment and patenting relative to control groups. The results show a clear negative impact on investment, while the effect on innovation depends on the acquirer and period. Both outcomes improve over time, as GAFAM firms become more similar in terms of their product and tech-portfolios, increasing competition. Yet, around 10% of acquisitions impact both metrics negatively.

Suggested Citation

  • Klaus Gugler & Florian Szücs & Ulrich Wohak, 2023. "Start-up Acquisitions, Venture Capital and Innovation: A Comparative Study of Google, Apple, Facebook, Amazon and Microsoft," Department of Economics Working Papers wuwp340, Vienna University of Economics and Business, Department of Economics.
    • Handle: RePEc:wiw:wiwwuw:wuwp340
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    More about this item

    Keywords

    M&A; big-tech; innovation; investment;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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