Digital Platform M&A Strategy in Two-Sided Markets: A Data-Driven Approach Using Fuzzy-Set Qualitative Comparative Analysis

Digital platforms play a crucial role in the digital economy, with mergers and acquisitions (M&As) becoming more frequent and showing distinct characteristics compared to traditional markets. We examine 190 M&A cases involving Chinese digital platforms from 2003 to 2024, with a particular focus on how startup acquisitions contribute to the growth of these platforms. The findings show that Chinese platforms are generally younger and tend to engage in larger M&As. Using fuzzy-set qualitative comparative analysis (fsQCA), the study identifies seven distinct types of M&As. The empirical results indicate that during the growth phase M&As primarily target user resources and data to enhance network effects and algorithms. In the maturity phase, M&As focus on ecosystem development, integrating upstream and downstream operations. Startup acquisitions are mainly aimed at technological integration, market expansion, or rapid acquisition of user data from emerging markets to establish competitive barriers. Startup acquisitions often lead to the integration of startup products into dominant platform ecosystems.