Nascent competition and killer acquisitions in digital markets: a decade of acquisitions by Big Tech

Abstract Acquisitions in digital markets by dominant companies such as Google, Apple, Facebook, Amazon, and Microsoft (GAFAM) raise, among others, concerns related to the elimination of nascent competition. While demands for merger control reforms in this segment are proliferating, there are still important controversies and insufficient studies. Therefore, this study evaluates, based on theoretical and empirical research, the relevance and frequency of nascent competitors’ and killer acquisitions in digital markets. To this end, we rigorously define important concepts. Then, we investigate and classify all acquisitions made by the GAFAM between 2009 and 2018, considering the targets’ ages, main activities, and whether they were shut after acquisition. The results indicate that most acquisitions did not have a clear horizontal effect, and that the GAFAM companies often purchase inputs, talents, or complementary products. However, the study also identifies and examines possible nascent competitors and killer acquisitions, including several not analysed by antitrust authorities or significantly explored in the literature. Therefore, we recommend cautious reforms to merger control rules, while balancing the risks of unnecessarily harming innovation.