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Make or Buy Decisions and Data Sharing

Author

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  • Dubus, Antoine
  • Legros, Patrick

Abstract

Firms may share data to discover potential synergies between their data sets and algorithms, eventually leading to more efficient mergers and acquisitions (M&A) decisions. However, data sharing also modifies the competitive balance when firms do not merge, and a company may be reluctant to share data with potential rivals. Under general conditions, we show that firms benefit from (partially) sharing data. By doing so, they can merge conditionally based on high synergies. Compared to a laissez-faire situation, the presence of a regulator allowing or refusing the M&A may increase or decrease data sharing, with a concomitant increase or decrease in consumer surplus. Hence, regulation can lower the surplus of consumers it is willing to protect. We revisit the Google/Fitbit acquisition through the lens of this interplay between strategic data sharing and antitrust policy.

Suggested Citation

  • Dubus, Antoine & Legros, Patrick, 2026. "Make or Buy Decisions and Data Sharing," CEPR Discussion Papers 21125, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21125
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    File URL: https://cepr.org/publications/DP21125
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    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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