Start-up acquisitions, venture capital and innovation: A comparative study of Google, Apple, Facebook, Amazon and Microsoft

Klaus Gugler, Florian Szücs and Ulrich Wohak

International Journal of Industrial Organization, 2025, vol. 99, issue C

Abstract: We evaluate the impact of big-tech acquisitions on the incentives for venture capital (VC) investment and innovation. Using data on several hundred acquisitions by Google, Apple, Facebook, Amazon and Microsoft (GAFAM), we study the evolution of VC investment and patenting in affected technology fields relative to control groups. The results show a clear negative impact on VC investment, while the effect on innovation depends on the acquirer and period. Over time, the treatment effects on both outcomes improve, as GAFAM firms' product and tech-portfolios become more similar. Yet, around 14% of acquisitions impact both metrics negatively.

Keywords: M&A; Big-tech; Innovation; Venture capital (search for similar items in EconPapers)
JEL-codes: D22 G34 K21 L41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:99:y:2025:i:c:s0167718725000153

DOI: 10.1016/j.ijindorg.2025.103148

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