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Acquire and leave”: Effects of startups acquisitions by digital ecosystems

Author

Listed:
  • Anna Y. Stavniychuk

    (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russia)

  • Olga À. Markova

    (Russian Presidential Academy of National Economy and Public Administration (RANEPA), Moscow, Russia)

Abstract

Digital ecosystems penetrate many areas of modern life, they integrate many services and are growing partially through acquiring start-ups. These can lead to a rise of their market power, which in turn has caused the increased attention of antitrust regulators in recent years . The new changes into the Russian antitrust law contain the requirement for scrutiny for mergers above 7 billion of rubbles. This additional criterion is designed to include the acquisitions of startups by digital ecosystems that currently do not need to be announced to the Russian antitrust service. As for economic literature, there is no consensus on the way mergers with startups affect markets, in particular, venture capital market. The purpose of this work is to assess the effects of mergers of digital ecosystems with Russian startups in different niches of the venture investment in these niches. Methodologically, our study is based on economic theory and particularly on industrial organisation, antitrust economics; we also use econometrics while estimating causal inferences. We perform econometric analysis of panel data and matching to evaluate the effect of mergers of digital ecosystems with startups. In our quantitative analysis we use data collected from the website Rusbase, which gathers information on deals with Russian startups building primarily on open sources. In our study, we conclude that niches where digital ecosystems more actively purchase or invest in startups tend to be lower investments, smaller total and average purchase prices, which may indicate some washing out of investments in such niches. However, the effect we see may be present due to the changing popularity of niches and/or bringing forward of investor decisions, and not to the kill zone that is claimed to be one of the downsides of such mergers, since we observe a short-term increase in the number of investment decisions in a niche during the period when a startup is acquired by the digital ecosystem.

Suggested Citation

  • Anna Y. Stavniychuk & Olga À. Markova, 2023. "Acquire and leave”: Effects of startups acquisitions by digital ecosystems," Upravlenets, Ural State University of Economics, vol. 14(5), pages 83-105, November.
    • Handle: RePEc:url:upravl:v:14:y:2023:i:5:p:83-105
    DOI: 10.29141/2218-5003-2023-14-5-6
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    References listed on IDEAS

    as
    1. Auzan, Alexander A. (Аузан, Александр) & Komissarov, Alexey G. (Комиссаров, Алексей) & Bakhtigaraeva, Asiia I. (Бахтигараева, Асия), 2019. "Sociocultural Restrictions on the Commercialization of Innovations in Russia [Социокультурные Ограничения Коммерциализации Инноваций В России]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 4, pages 76-95, August.
    2. Stepan Zemtsov & Alexander Chepurenko & Alexander Mikhailov, 2021. "Pandemic Challenges for the Technological Startups in the Russian Regions," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 15(4), pages 61-77.
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    4. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
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    6. Geoffrey Parker & Georgios Petropoulos & Marshall Van Alstyne, 2021. "Platform mergers and antitrust," Bruegel Working Papers 40796, Bruegel.
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    More about this item

    Keywords

    digital ecosystems; antitrust law; acquisitions; venture capital; platforms; impact assessment; panel matching;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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